The call for zero transaction charges by commercial banks in Nigeria has grown louder, following Sterling Bank’s recent announcement to eliminate fees on mobile and online transfers.
This move, unveiled on April 1, has reignited discussions about financial inclusion and customer-centric banking practices while raising questions about the sustainability of such measures in a revenue-driven industry.
Sterling Bank’s policy eliminates charges for online transfers conducted through its mobile app, as well as fees for ATM card issuance.
Despite initial skepticism due to the announcement coinciding with April Fools’ Day, many customers have since confirmed that they were not debited for mobile transfer charges. The policy has been described by stakeholders as a potentially game-changing development in Nigeria’s financial ecosystem.
The current landscape of banking charges
Nigerian banks currently levy a variety of charges for transactions, which include N10 for transfers below N5,000, N25 for transfers between N5,001 and N50,000, and N50 for transfers above N50,000. There is also an additional 7.5% VAT on transaction fees.
These fees have generated significant revenue for banks. For example, in 2024, Zenith Bank earned N80.05 billion from electronic transaction charges, a 54.51% increase compared to the N51.8 billion recorded in 2023.
Similarly, United Bank for Africa (UBA) generated N284.7 billion from electronic business transactions in 2024, representing an 85.9% growth in its e-transaction revenue when compared with the N157.1 billion recorded by the bank in 2023.
GTCO Plc also recorded N56 billion in electronic-related fees, alongside substantial earnings from account maintenance charges and forex commissions.
While these revenues are crucial to banks’ operations, they often impose a heavy financial burden on customers, many of whom frown upon the charges.
Sterling Bank’s zero-charge policy has sparked a renewed push for more customer-friendly banking practices.
Customer Perspectives: Zero Charges vs. Service Quality
The debate over zero charges versus service quality has revealed differing customer priorities.
A customer from Benin City, Kiki, prefers zero charges despite experiencing poor customer service.
“Many people will stand in the queue for a long time waiting to be attended to, but you will see bank staff eating, walking about, or even gossiping among themselves. Their customer service is so poor that it can force a loyal customer to close their account,” she told Nairametrics.
“However, that small amount, when deducted, reduces the round figure in your balance. I’d rather have zero charges than better service.”
Conversely, another customer, Anthony, values efficiency and convenience over cost savings.
“I prefer paying charges for faster service. This is why many of us use PoS agents instead of waiting in banks with poor service.”
However, zero charges could potentially attract more customers to banks, especially if combined with improved service delivery.
While infrastructure upgrades in 2024 disrupted services across major banks like Sterling Bank, Zenith Bank, and GTCO, such measures indicate the need for banks to balance modernization with seamless service delivery.
How sustainable is this?
Sterling Bank’s zero-charge policy has also drawn criticism, with some questioning its sustainability.
A senior management staff at a major bank suggested that Sterling’s announcement might be a marketing strategy aimed at gaining attention.
“I know they always have these advertising angles or promotional angles that create some sort of curiosity. I know them to be looking for relevance in this kind of stuff; they are notorious for things like that.”
He referenced past controversial campaigns by the bank, such as its 2022 Easter message comparing the resurrection of Jesus Christ to rising Agege bread, which faced backlash for insensitivity.
In its Easter celebration messages in April 2022, the bank shared a post with the quote, “Like Agege Bread, He Rose” across its social media handles, but the message attracted widespread criticism from many Christians, including the Christian Association of Nigeria (CAN).
“They’re trying to be creative but are not even sensitive to the culture and the religion of their customers. I didn’t even take them seriously,” he said in a chat with Nairametrics.
On the other hand, CEO of the Centre for the Promotion of Private Enterprise (CPPE), Muda Yusuf, views the zero-transfer-charge policy as a step toward promoting business sustainability.
Speaking with Nairametrics, he emphasized the importance of “compassionate capitalism,” urging businesses to support vulnerable segments of society, particularly in a challenging economic environment.
“If a business operates in an environment where citizens are groaning in poverty, it should learn to give away part of its profits, even if it could maximize them. This is what makes up business sustainability,” Yusuf stated.
He expressed hope that other banks will take a cue from Sterling Bank.
What you should know
Under its new policy, Sterling customers will enjoy free transfers for all local transactions conducted via the bank’s mobile app.
- This translates into significant savings, particularly for individuals and new small business owners who make frequent daily transfers.
- The move was met with widespread reaction across social media, placing pressure on industry peers to follow suit.
- As the financial sector grapples with balancing profitability and customer satisfaction, Sterling Bank’s initiative could set a precedent for more customer-focused banking practices.
- While the policy has sparked both praise and skepticism, its long-term impact will depend on whether other banks follow suit and how customers respond to this shift in the banking landscape.
