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Zenith and First banks cut dollar spending limit on Naira debit cards

Following the longstanding scarcity of foreign exchange which no doubt has negatively affected the country’s economy, two of Nigeria’s leading commercial banks, Zenith Bank Plc and First Bank of Nigeria have announced reduced limit on international spending transactions using their naira debit cards to $20 and $50, respectively per month.

By this review of spending limit, customers of these banks can only use their Naira debit cards for foreign transactions not above N10,000 for Zenith Bank Plc and N22,000 for First Bank of Nigeria in a single month.

Zenith Bank in a note emailed to its customers earlier on Wednesday and sighted by BigNaira added that international ATMs and point of sales (POS) transactions would be temporarily suspended.

“Please be informed that we have temporarily suspended the use of Zenith Bank Naira cards for International Automated Teller Machine (ATM) cash withdrawals and POS transactions,” the email said. “Additionally, the monthly card International spend limit for web transactions has been reviewed from $100 to $20.”

Zenith urged account holders needing a higher spend limit to approach its branches and “request for a foreign currency debit or prepaid card, which are available in US dollar, pounds and euro variants.”

In a similar case, First Bank on Thursday, announced that due to “current market realities on foreign exchange,” it reduced the spending limit.

“We’ve reviewed cross-border transaction limits for the Naira Mastercard and the Naira Credit Card to $50 monthly. For increased transaction limits, please use your Visa Debit Multicurrency Card, Visa Prepaid (USD) Card and Visa Gold Credit Card to enjoy transaction limits up to $10,000 and other exciting benefits.”

What you need to know

The Naira debit card was designed for Nigerians to use their naira-denominated debit cards to pay for transactions billed in US dollars online. What this simply means is that for every foreign or dollar based purchase made online, debits are made directly from their naira accounts at current exchange rates.

This is not the first time Nigerian banks have reviewed dollar based transactions using Naira debit cards. In 2018, GTCO’s Naira debit card spending limit was as high as $3000 which later was reviewed by the bank down to $1,500.

As of 2018, GTCO’s Naira debit card spending limit was as high as $3,000 per month and this was when Dollar inflows into the country were fair, but within two years, things have gone worse for the country.

Since the beginning of the outbreak of COVID-19 in 2020, Nigeria has struggled to earn FX, especially from the sale of crude oil and this has put huge pressure on the local currency.

For two different times this year, the Central Bank of Nigeria (CBN) has had to adjust the value of the Naira to the Dollar this year first from N306 to N360 and then to N380.

On March 25, 2020, GTCO announced a yet another spending limit policy which reviewed it to $1,500 from $3000 per month.

“We would like to inform you that the monthly spending limit on your GTBank Naira Mastercard has been reviewed from $3,000 to $1,500 for your international online and POS transactions effective March 25, 2020,” the bank had said in a message to its customers.

However, as shocks from plunging crude prices gripped the country, reducing its dollar inflows, the lender once again reduced its international spending limit from $1,500 per month to $500 per month in the same March. Less than six months later, the lender further reduced the spending limit from $500 to $100 per month.

One year after, it has reviewed the spending limit to $20.

Meanwhile, GTCO is not the only Nigerian commercial bank that has gone through this lane. UBA February 24, 2022 also announced a downward review of its dollar spending limit to $20.

“In line with our promise to keep you updated on services, we have reviewed Naira Card limits for international transactions, and this will take effect 1st of March, 2022,” the bank said.

“Remember you can use your UBA Dollar, Pounds or Euro Card for international POS, ATM, and web transactions,” UBA’s mail read. “If you do not have one and would like to subscribe, please visit a branch close to you.”

There are wide speculations that more Nigerian banks will make the announcement in the coming weeks. Sterling Bank and Union Bank have also reportedly said their new limit was also $20 a month.

Nigerians have reacted with displeasure on social media against the new limits as they restrict their ability to pay for international transactions like Netflix subscriptions, ads on Facebook, Twitter, and other platforms.

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