The new CBN withdrawal policy will have a significant impact on businesses.
UPDATE: This post was first published shortly after CBN announced its withdrawal policy. The financial regulator has now revised the policy to indicate that individuals and corporate bodies can respectively withdraw a maximum of N500,000 and N5 million weekly, but under strict conditions.
If you live in Nigeria or operate a business in the country, you can no longer withdraw more than N20,000 cash per day or N100,000 per week from Point-of-Sale (PoS) terminals or ATMs.
Likewise, for over-the-counter (OTC) withdrawals at the bank, you are limited to withdrawing N100,000 as an individual and N500,000 as a corporate business owner.
But, if you desire to have more cash in your possession, you’ll have to pay a 5% fee as an individual and a 10% fee as a business owner on any withdrawals above those limits.
This is the new policy put in place by Nigeria’s financial regulator, CBN, to drive its cashless policy and citizens’ adoption of its recently launched digital currency—the eNaira. The announcement comes after the CBN revealed the reissued N200, N500, and N1000 banknotes to mop up the N3.23 trillion currency currently in circulation—85% of which the institution says was being held outside of banks.
How does this new CBN withdrawal policy affect payments for businesses and customers?
This withdrawal policy simply means one thing: businesses and customers must now heavily rely on available digital payment mediums in their day-to-day transactions.
By having limited access to cash, customers paying for their favourite items or services must now utilise other payment channels such as mobile banking apps or USSD for funds transfer or use their debit cards over PoS terminals.
While these mediums seem reasonably straightforward, there are huge concerns, however.
What are the existing payment concerns?
Nigeria’s digital infrastructure, while developing at an impressive rate, is currently fraught with challenges that frustrate payment processes.
These are the common problems with popular digital payment mediums:
- Bank transfers through mobile apps or USSD
Technical network issues continue to pose a major challenge to interbank transfers. Service downtime between the issuer bank and beneficiary bank, or service errors on mobile banking apps and USSD are frequent causes of delayed or failed transfers.
This is why many bank customers now only prefer to make intra-bank transactions using the banking institution whose network service they trust the most.
- Transactions over PoS terminals
Although PoS transactions have become quite popular among Nigerians, many customers are still wary of the pitfalls of using their debit cards in PoS machines.
Apart from a high card failure rate (there’s a 13-15% failure rate of card transactions on PoS terminals), customers are sensitive about PoS transactions because of their chances of being exposed to card theft by fraudsters.
Fraudsters are known to steal their victims’ card details and use the information to carry out fraudulent withdrawals or multiple online purchases, and many customers believe this occurs when they use their cards on PoS terminals.
What is the solution to the challenges posed by the new CBN withdrawal policy for businesses and customers?
To adhere and adjust to this CBN withdrawal policy, business owners will have to provide easy and reliable payment alternatives for their customers.
Some of the ways you can avoid the many challenges associated with card transactions and interbank transfers are to utilise other digital mediums such as virtual accounts, mobile money, and crypto to collect payments.
For instance, virtual accounts are easy-to-generate online accounts with lesser charges compared to real bank accounts.
Paying customers will be required to make transfers from their bank accounts to a static or dynamic virtual account number provided by you, and your funds will be subsequently deposited into your real bank account.
With a unique virtual account offering like Bani’s, your customers will also have the option of transferring to their preferred bank when making payments. This will make the process smoother and increase the chances of transfer success, among other benefits.
Summarily, business owners will need to start adopting new payment collection methods that will make it easy for customers to pay for their favourite items or services while adapting and adhering to the new CBN withdrawal policy.
If you want to know more about our virtual accounts and their many benefits for your business, book a call with our sales team today.
