Nigerian banks have reduced the amount that their customers can spend on international transactions. In response to a CBN directive, most banks reduced their customers’ spending limits from $100 to $20. Six Nigerian banks may join the First Bank in suspending their naira debit cards and other international transaction cards.
Beginning September 30, 2022, customers of First Bank of Nigeria will be unable to use their Naira Mastercard, Naira Credit Cards, virtual cards, and Visa Prepaid Naira card for international transactions. Prior to the recent announcement, First Bank customers used their naira debit cards to make international transactions of up to N20 dollars every month.
First Bank took the initial step
First Bank has asked its customers to use its Visa Debit Multicurrency Card, Visa Prepaid Dollar Card, and Visa Gold Credit Card for international transactions with limits of up to $10,000, according to a statement.
The Central Bank of Nigeria (CBN) has hinted that it will stop selling foreign currency to banks by the end of the year. According to reports, the CBN governor, Godwin Emefiele, has stated that the era of bank customers hoarding dollars and other foreign currencies is coming to an end. He stated that it could happen by the end of 2022. The black market or parallel market exchange rate between the naira and the dollar has risen to N712 per dollar since the beginning of the year, resulting in a N140 per dollar depreciation this year.
The rise in the exchange rate has had an impact on the Nigerian economy, not just the financial sector. As a result, Nigerian financial institutions are implementing measures to reduce currency inflationary pressures and their impact. First Bank will not be the only bank in the country to prohibit international transactions on the majority of their credit cards.
As the naira falls in value, some of these banks have reduced the amount of money their customers spend each month. As a result, their international transactions may be halted.
The following banks may suspend international transactions on Naira cards: UBA: In February 2022, the bank was the first to limit its international trades. International transactions were reduced from $100 to $20. Zenith Bank announced in March of this year that it would reduce its international transaction limits from $100 to $20. It also ceased all global ATM operations and POS transactions. GTB: In March of this year, the bank reduced its international spending limit from $100 to $20. Sterling Bank: In March, the bank issued a statement reducing monthly international transactions from $100 to $20.
Union Bank: In March of this year, the bank reduced its spending limit from $100 to $20.
The banks’ decisions were influenced by CBN directives aimed at preventing money laundering and maintaining forex liquidity, according to the apex bank.