During a visit to an ATM stand in Lagos, we spoke with a customer who shared that eight out of ten ATMs are either out of service or have no cash. “This Bank never has money in their ATM,” she said.

“Even when they do, it’s usually only until noon, and then they stop working. The only option is to go into the bank and make transfers yourself.”

Techeconomy engaged with an insider at one of Nigeria’s top-tier banks to understand why this problem seems unending. We wanted to know: Why aren’t banks keeping their ATMs filled? Do they deserve the sanctions imposed by CBN?

In response, the insider said, “That’s a broad conclusion for a bank that has over 800 branches. I’m not sure how many branches the customer has visited before arriving at that. However, I can tell you several challenges faced by banks in Nigeria and not just ours, but it is heavier on us because of our high number of branches.”

He continued, “Yes, there is a CBN sanction on banks when your ATMs are not dispensing. The regulatory body expects the bank to load their machines when there is an obvious epidemic in the sector called “POS.”

The PoS Epidemic: A Growing Concern

The PoS (Point of Sale) phenomenon has become a big issue in the Nigerian banking sector, contributing heavily to cash shortages in ATMs. 

With the high reliance on PoS agents across the country, many Nigerians are using them as alternatives to traditional banking transactions. However, PoS agents, who often carry large sums of cash for transactions, are now becoming primary players in the liquidity problems facing banks.

“PoS agents are constantly on standby at ATMs and business locations, to collect and buy cash from customers or businesses,” the insider explained. 

“While these agents may seem to help by making things easier and providing access to cash withdrawal or deposit, in the larger scheme, they’re creating problems. The fact is, businesses are becoming more reliant on PoS agents rather than making traditional cash deposits in banks.

“They are making things difficult for both the masses and the Banks.”

This has caused a drastic reduction in the amount of cash flowing into the banking system, leading to shortages at ATMs. It’s reported that in some urban areas, PoS agents have begun hoarding cash to capitalize on the high demand, further straining ATM services.

While the CBN sanctions are meant to encourage better service across ATMs, it’s still not clear how effective they have been. The insider acknowledged the CBN’s role in attempting to regulate ATM cash availability but also noted the complications faced by banks in meeting these demands, especially when dealing with the PoS issue.

“Yes, the CBN expects us to have cash readily available at ATMs, but what is the bank to do when there is a continuous shortage of cash in circulation? How many companies are still making cash deposits? Most businesses rely on PoS agents now,” the insider said.

According to the Nigeria Inter-Bank Settlement System (NIBSS), the number of PoS terminals in Nigeria surged by 129% over the past three years, with an increasing percentage of Nigerians using PoS services daily. This growth in PoS usage has greatly impacted the ability of banks to maintain sufficient cash flow in their ATMs.

This ATM cash shortage crisis is not an isolated banking issue; it is intertwined with Nigeria’s economic challenges. The scarcity of cash is just one symptom of larger financial challenges the country is facing, including inflation and the ongoing transition to a cashless economy.

The government’s vision of digital financial inclusion, paired with inflation and currency devaluation, has placed high pressure on the banking system. As cashless transactions become more prevalent, many Nigerians are still challenged with access to physical currency for daily needs. These economic factors have compounded the challenges banks face in providing adequate ATM services.

Addressing the Root Cause: PoS Regulation

The key to solving the ATM cash issue lies in addressing the root cause—the unchecked proliferation of PoS agents. While PoS services are undoubtedly improving access to cash for many Nigerians, the increasing demand and the role PoS agents play in withdrawing cash from the banking system are draining the liquidity needed to sustain ATM networks.

The insider stressed, “Before banks can begin to solve the ATM shortage, there needs to be a conversation around regulating the PoS sector. We need to ensure that businesses are encouraged to deposit cash back into the system, rather than hoarding it.”

“The menace of POS first needs to be tackled.”

Meanwhile, the apex bank had recently stated that “Ensuring seamless cash flow is paramount to maintaining public trust and economic stability. The CBN will not hesitate to impose further sanctions on any institution found violating its cash circulation guidelines.”

The statement further read, “The CBN’s investigations and monitoring will continue to scrutinise cash hoarding and rationing, both at bank branches and by Point-of-Sale (POS) operators. The Central Bank is working with security agencies to crack down on illegal cash sales and operational violations, including enforcing POS operators’ daily cumulative withdrawal limit of N1.2 million.

“The new policy on cash-based transactions (withdrawals) in banks, aims at reducing (NOT ELIMINATING) the amount of physical cash (coins and notes) circulating in the economy, and encouraging more electronic-based transactions (payments for goods, services, transfers, etc.)”

Starting March 1, 2025, Nigerians won’t need to worry about saving money, because their banks will be doing the saving for them—one ATM withdrawal at a time—just that you can never access the funds. Sounds like a well-planned heist, right? Except this one is perfectly legal.

Nigerians will now be paying through their noses just to access their own funds, thanks to the Central Bank of Nigeria’s (CBN) latest policy blessing the banks with a multi-trillion-naira windfall in ATM charges. 

Let’s break it down.

The Billion-Naira Cash Grab Disguised as Policy

Under the new policy:

• On-Us Transactions: Withdrawals at your bank’s ATM? Free. (Phew.)
• Not-On-Us Transactions: Withdraw at another bank’s ATM? That’ll be ₦100 per ₦20,000.
• Off-Site ATMs: Withdraw from an ATM that isn’t inside a bank? That’s ₦100 per ₦20,000 withdrawal, plus a surcharge of up to ₦500.
• International Withdrawals: Fees are “based on cost recovery,” meaning whatever the international acquirer charges will be passed directly to you.

At first glance, ₦100 per withdrawal doesn’t seem like much—until you do the math.

How Banks Will Make ₦2.2 Trillion from Your Money

…and that’s just based on one withdrawal per active account a month

With 311.6 million active bank accounts in Nigeria, even a single monthly withdrawal per account could generate huge profits:

• Domestic Withdrawals: ₦100 x 311.6 million = ₦31.16 billion per month.
• Off-Site ATM Withdrawals: ₦600 per withdrawal x 311.6 million = ₦186.96 billion per month.

That’s over ₦2.2 trillion per year—not from lending, not from business investments, but simply from letting people access their own money.

And all this in an economy where inflation is running at over 30%, unemployment is skyrocketing, and the new ₦70,000 minimum wage barely covers rent and food.

If a worker withdraws ₦80,000 in a month from off-site ATMs, they could pay up to ₦2,000 in fees—nearly 3% of their salary. Meanwhile, banks continue to report record profits.

From Banking to Legalised Extortion

Globally, banks earn primarily from lending. But in Nigeria, financial institutions have found a more innovative model: charging customers for every financial move they make.

• In the first quarter of 2024, top-tier banks raked in over ₦125 billion from electronic banking charges.
• With just 16,714 ATMs for over 200 million Nigerians, long queues and machine downtime are already the norm. This policy will push more people towards expensive PoS withdrawals, where agents also charge their own fees.
• By contrast, in countries like Kenya, digital banking is encouraged through zero ATM withdrawal fees for many account types. Even in South Africa, withdrawal charges are significantly lower. So why are Nigerian banks making their customers pay so much for basic services?

The CBN claims these charges will prevent customers from breaking withdrawals into smaller amounts. But let’s be honest: This is just another revenue stream for banks, cleverly wrapped in the language of “financial policy.”

The Central Bank of Nigeria, rather than acting as a regulator in the interest of financial inclusion, seems to be tilting towards policies that favour banks at the expense of customers. 

The question is: why is there no cap on ATM charges? Why isn’t there a push for alternative, low-cost cash withdrawal solutions?

I mean! There is no upper limit or maximum limit on the charges for ATM transactions. The fees can vary and may increase based on different factors, such as the amount of money withdrawn or the location of the ATM. Essentially, there is no fixed maximum charge that customers can be guaranteed not to exceed. 

This means you might encounter different fees depending on which bank’s ATM you use or whether the ATM is located on-site (at a bank branch) or off-site (at a different location, like a shopping mall). 

Moving Towards Digital, or Just Financial Exclusion?

Supporters say that higher ATM fees will encourage electronic transactions—but here’s the problem:

• Digital Payments Are Not Universal: Many Nigerians, especially in rural areas, still rely on cash for daily transactions.
• Mobile Network Issues: Failed transfers and delayed alerts are common, making cash a safer option for many.
• Unbanked Population: With 26% of Nigerians still unbanked, these charges could further discourage financial inclusion.

So, what’s the alternative? Fintechs like Opay, PalmPay, and Kuda may benefit as Nigerians search for less exploitative banking options. But until digital banking becomes truly reliable, these ATM charges are nothing short of a tax on poverty.

So, Who Will Save Nigerians from Their Own Banks?

As it stands, the biggest threat to your finances isn’t inflation, unemployment, or even government policy—it’s your own bank.

At what point does banking stop being a service and start looking like state-approved extortion? Nigerians are being charged simply for existing within the banking system.

If the CBN does not cap these fees or introduce customer-friendly alternatives, we may soon see a mass exodus from traditional banking. The very institutions meant to safeguard our money seem more interested in finding new ways to take it—so as to “ease costs of operations.”

Until then, be prepared: In Nigeria, it now costs money to withdraw your own money.