By Omodele Adigun
As COVID-19 triggered exponential increase in electronic-payment adoption, five Nigerian banks have incurred N80.75 billion expenses in fees and commission just as the value of digital transactions rose to N111.29trillion in nine months.
The five lenders, UBA, Zenith, Access Bank, FBN Holdings and GT Bank have their earnings gutted by a whopping N80.75 billion in e-payment channel fees and commissions during the nine months period of 2020, which coincided with the COVID -19 lockdown. The figure, however, represents 29.8 per cent increase over the N62.19 billion fees and commission expenses in the prior nine-month period, investigation has shown.
The banks also made N127.3 billion income as more customers turned to electronic banking options in order to escape COVID-19 infections.
Fees and commission expenses are charged for the provision of services rendered on internet banking, mobile banking and online purchasing platforms.
These expenses include costs incurred by banks for providing alternative platforms for purposes of internet banking, mobile banking and online channels.
Experts, however, blamed the high fees and commission expenses incurred by the banks on the upsurge in customers’ online transactions as the only option during the COVID -19 restriction.
Also during the period Ecobank said it recordedfive per cent increase in its transactions done through digital channels while only five per cent was physical where branches were still open.
Its Group CEO Ade Ayeyemi, who had earlier predicted the increase said “Cashless society is accelerating in Africa through the pandemic. COVID-19 is the greatest accelerator of our time. We are going to have more and more of digital transactions.
In one of the countries, banks were closed within 48 hours. People quickly switched over to ATM channels. Before COVID- 19, 90 per cent of our transactions were digital, while the remaining 10 per cent was physical. But during COVID 19 (lockdown), we saw 95 pr cent of transactions done through digital means, while only five per cent was physical where branches were still open.
“As governments are using digital platform to give palliatives to the people, more customers are becoming accustomed to the digital platforms. It is cheaper, safe and delivered at affordable prices. Cash is bulky, it is more difficult to deliver to the people. COVID 19 is the greatest accelerator of adoption. People have tasted it and they liked it.”
Analysis of the expenses show that United Bank for Africa (UBA) Plc came tops, maybe because of its pan-global status, having spread its tentacles to 20 countries in Africa, Europe and USA.
The bank recorded the in the sector by reporting N28.77 billion fees and commission expenses in the third quarter of the year as against N19.92 billion recorded same period in 2019.
Analysis of the 2020 figure shows that trade-related expenses moved from N982million recorded same period in the previous year to N2.15 billion in the nine months of 2020. Funds transfer expenses closed nine months of 2020 at N2.38 billion as against N2.33 billion reported same period in 2019.
Commenting on this performance, its Managing Director, Kennedy Uzoka, added:
“Our direct sales agents, Agency Banking network and Digital Banking propositions have positioned us at the forefront of financial inclusion across geographies where we operate”. During this period, the bank provided support to customers across its footprints, assisting them to navigate the negative impact that COVID-19 had on livelihoods, businesses and social life.
An analyst, Mr Rotimi Fakayejo, who is the CEO of Enterprise Stockbroker Plc, disclosed to an online platform that the hike in fees and commission expenses by banks was due to the fact customers had online transactions as the only option during the period. He added that the increase of customers at every bank during the period also contributed to aggressive increase in fees and commission.
During the period, Zenith Bank Plc reported N16.67 billion fees and commission expenses, representing 33 per cent increase over N12. 57 billion reported in the previous nine months.
Access Bank Plc, on its part,recorded N16.04 billion as fees and commission expenses , in the same nine- month period of 2020, a 47.4 per cent increase over the N10.89 billion reported during the third quarter of 2019.
FBN Holdings Plc recorded N14.4 billion during the period as its own fees and commission expenses, a 7.3 per cent leap from what was reported in the previous year, while GTBank reported N4.67 billion as against N1.88 billion in the nine- month period of 2019.This represented a 148.45 per cent leap in its fees and commission last year.
Meanwhile,the value of transactions via the two digital payment platforms- Nigeria Interbank Settlement System (NIBSS) Instant Payment System (NIP) and Point of Sales (PoS) terminals – rose to N111.29 trillion from January to September , 2020.
The two platforms recorded a 44 per cent growth in value of payments when compared with an aggregate of N77.49trillion recorded in the corresponding period in 2019. A breakdown of data from NIBSS showed that NIP grossed N105.3trillion from January to September while PoS deals were worth N6.4trillionn during the same period. In the nine months of 2019, total NIP transactions amounted to N75.53trillion, while PoS payments were valued at N2.24trillion.
In January 2020, instant money transfers valued at N10.3trillion were reported by NIBSS, compared with N8.11trillion in the same month in 2019.
In the following month, the value of NIP transactions was N9.97trillion compared with N7.47trillion of NIP deals recorded in February 2019.
The banks grossed NIP transactions valued at N10.97trillion in March 2020 as against N8.58rilliotn in the same month during the prior year.
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