On October 26, 2022, the Central Bank of Nigeria (CBN) redesigned the Naira currency notes and placed limits on bank withdrawals to curb money laundering and promote digital payments. This led to a scarcity of physical cash, causing many Nigerians to adopt various e-payment channels as means of carrying out transactions. However, the CBN recently confirmed the removal of bank withdrawal limits and the evacuation of banknotes from its vaults to commercial banks across the country. This move is expected to ease the circulation of banknotes of various denominations, revive the PoS business, reduce the incidence of money laundering, promote a cashless economy, and ease the looming bank transfer glitches experienced in using mobile apps or codes.
Removal of Withdrawal Limits Eases Pressure on Payment Channels in Nigeria
In October 2022, the Central Bank of Nigeria (CBN) implemented a policy to redesign the Naira currency notes and place limits on bank withdrawals, resulting in a scarcity of cash that persisted for several months. This move was aimed at curbing money laundering and promoting digital payments in the country.
As a result, many Nigerians had to rely on e-payment channels such as mobile transfers, USSD codes, and PoS services to carry out their transactions. However, the shortage of physical cash caused a range of problems, including increased withdrawal charges, suspended ATM operations due to insufficient cash, and delays in bank transfers due to a high number of requests.
On March 24, 2023, the CBN confirmed that it had evacuated banknotes from its vaults to commercial banks across the country to ease the circulation of banknotes of various denominations. The Apex bank also lifted the withdrawal limits.
This decision is expected to ease the hardship that Nigerians have faced for months due to the controversial naira redesign policy. Fintech operators have also noted that the spread of banknotes and the removal of withdrawal limits will have significant effects on digital payment channels, leading to operational adjustments.
Daniel Uka, a PoS operator, said that the removal of withdrawal limits would revive the PoS business and increase its rate of adoption, which had been hindered by the scarcity. He added that there would also be stability in charging customers for PoS services.
According to Uka, everything will go back to normal, and the easy access to cash would result in less stress for business owners who had turned their shops into PoS businesses and charged almost double for transactions. The spread of banknotes and the removal of withdrawal limits are expected to have a positive impact on the Nigerian economy by promoting digital payments and easing the pressure on payment channels.
Removal of Withdrawal Limits and Cash Spread to Ease Bank Transfer Glitches in Nigeria
According to a fintech expert who wished to remain anonymous, the spread of Naira notes and the removal of withdrawal limits will ease bank transfer glitches experienced in using mobile apps or codes. She explained that the number of people trying to access online transfer sites at the same time can sometimes overwhelm institutions with weak systems or infrastructure, leading to transaction failures. With the removal of withdrawal limits and increased accessibility to cash, there will be a reduction in requests for mobile transfers, which will start working effectively again.
Similarly, Bola Deji, a banker at one of Nigeria’s tier one banks, believes that the removal of withdrawal limits and cash spread will ease the long queues of people waiting at ATM machines to carry out transactions. According to Deji, during the period of cash scarcity, there was an unprecedented number of people queuing at ATM stations and banks. However, with the removal of withdrawal limits, every payment channel will become active and functional, making it easier for people to get cash, do transfers, and subscribe without having to queue for extended periods.
CBN Removal of Withdrawal Limits to Ease Pressure on Payment Channels in Nigeria
In October 2022, the Central Bank of Nigeria (CBN) implemented a policy to redesign the Naira currency notes and place limits on bank withdrawals, resulting in a scarcity of cash that persisted for several months. The redesigning of the N200, N500 and N1000 notes and the new limits on large cash withdrawals were aimed at curbing money laundering and promoting digital payments in Africa’s largest economy.
During this period of cash scarcity, many Nigerians had to rely on various e-payment channels like mobile transfers, USSD codes, PoS services, among others, to carry out transactions and continue their daily activities. However, the shortage of physical cash led to several problems, including increased withdrawal charges, suspended ATM operations due to insufficient cash, and delays in bank transfers due to a high number of requests.
On March 24, 2023, the CBN confirmed that it had evacuated banknotes from its vaults to commercial banks across the country to ease the circulation of banknotes of various denominations. The Apex bank also lifted the withdrawal limits. This decision is expected to ease the hardship that Nigerians have faced for months due to the controversial naira redesign policy.
Fintech operators who spoke with BusinessDay said that the spread of banknotes and the removal of withdrawal limits will have a significant impact on digital payment channels as there will be adjustments in operations. The removal of withdrawal limits is expected to revive the PoS business and increase its rate of adoption, which was hindered by the cash scarcity. According to Daniel Uka, a PoS operator, the cash scarcity had crippled most of the plans for businesses and led to the suspension of most existing businesses. He stated that it will revive fully now, and those who have suspended their PoS business will come back to business fully. The stability in charging customers for PoS services, which was becoming a new norm in the period of naira scarcity, will also be restored.
Similarly, a fintech expert who wished to remain anonymous said that the spread of Naira notes and the removal of withdrawal limits will ease the bank transfer glitches experienced in using mobile apps or codes. She explained that the number of people trying to access online transfer sites at the same time can sometimes overwhelm institutions with weak systems or infrastructure, leading to transaction failures. With the removal of withdrawal limits and increased accessibility to cash, there will be a reduction in requests for mobile transfers, which will start working effectively again.
In conclusion, the CBN’s decision to remove withdrawal limits and evacuate banknotes from its vaults is expected to ease the pressure on payment channels in Nigeria. The spread of banknotes and the removal of withdrawal limits will have significant effects on digital payment channels and revive the PoS business, leading to a positive impact on the Nigerian economy.
CBN Limits on Bank Withdrawals Aimed at Curbing Money Laundering in Nigeria
In an effort to curb money laundering and promote digital payments, the Central Bank of Nigeria (CBN) redesigned the Naira currency notes and placed limits on bank withdrawals on October 26, 2022. The new limits were imposed on large cash withdrawals, while the N200, N500 and N1000 notes were redesigned.
The scarcity of physical cash that followed led many Nigerians to adopt various e-payment channels like mobile transfers, USSD codes, PoS services, among others, as means of carrying out transactions and continue their daily activities. However, the redesigning of the Naira currency notes and the new limits on large cash withdrawals are aimed at making digital payments the norm in Africa’s biggest economy.
The Apex bank hopes that these measures will reduce the incidence of money laundering in Nigeria and promote a cashless economy.
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