The goal?

To reduce operational costs for banks and improve ATM access nationwide.

This announcement has sparked conversations among consumers, financial institutions, and industry experts.

While the CBN policy is positioned as a solution to Nigeria’s ATM challenges, a deeper issue remains unaddressed—transaction inefficiencies.

For years, Nigerian banking customers have struggled with ATM-related frustrations, from failed withdrawals to slow dispute resolutions and system downtimes.

Will adjusting fees make ATMs more accessible? Possibly. But will it make transactions faster, more reliable, and hassle-free? That’s a different question.

The Real Issue: Inefficiency Over Cost

Interestingly, NIBSS reported that active bank accounts reached 311.65 million as at December 2024. However, Nigeria has less than 22,000 ATMs, serving a population of over 200 million people and access to cash remains difficult due to frequent cash shortages, connectivity failures, and reconciliation delays.

For many Nigerians, ATM challenges extend far beyond withdrawal fees. In this 2024 report, nearly 30% of ATM transactions failed due to network issues, cash shortages, or other operational failures.

The current system faces persistent challenges, including frequent transaction failures where customers are debited without receiving cash, leading to frustration and financial inconvenience. Dispute resolution is also slow, with refunds for failed withdrawals often taking days or even weeks to process.

Additionally, the limited availability of ATMs—due to high operational costs—prevents banks from expanding their networks, resulting in long queues and restricted access to cash for many customers.

These issues indicate that while fee adjustments may increase ATM installations, they won’t necessarily make transactions more efficient or customer friendly.

Why Fees Alone Won’t Solve the Problem

The new policy is expected to help banks offset the rising cost of ATM maintenance and cash handling, potentially leading to an increase in ATM installations across the country.

However, simply increasing the number of ATMs or the cash within them without improving their reliability will not solve the core issue.

Expanding the number of ATMs won’t be effective if transaction failures remain frequent. Lower fees will have little impact if customers still spend hours trying to withdraw cash. Even with improved infrastructure, adoption will be limited if trust in ATM reliability remains low.

For CBN’s initiative to truly succeed, banks need to go beyond just cost recovery and expansion—they must focus on efficiency, security, and automation in ATM transactions.

Technology as the Missing Link

One of the biggest gaps in Nigeria’s financial system is the lack of real-time, automated transaction processing for ATM withdrawals.

This is where technology can play a transformational role. Several innovative financial solution technologies have the potential to revolutionize ATM efficiency.

However, advancements like AI-driven fraud detection can enhance security by preventing unauthorized withdrawals, while real-time settlement solutions can eliminate delays in refunding failed transactions, improving overall customer experience and trust in the system.

Some Nigerian banks have already adopted blockchain-powered solutions for ATM transactions. These systems enable instant reconciliation and faster refunds when failures occur. Zone Payment Network, among others, has demonstrated how blockchain can streamline payment processing, reducing disputes and enhancing customer experience.

By integrating blockchain and real-time payment infrastructure, financial institutions can increase efficiency, eliminate delays, and restore consumer trust in ATM transactions.

A Holistic Approach is Needed

CBN’s new policy is a step in the right direction, but for meaningful, long-term improvements, Nigeria’s banking sector must go beyond fee adjustments.

A combination of regulatory policies and technological innovation is essential to create a system where ATM transactions are not just affordable—but also seamless, fast, and reliable.

To achieve this, key stakeholders must prioritize real-time reconciliation to ensure transaction failures are resolved instantly. Investing in decentralized financial infrastructure can help reduce transaction bottlenecks, while leveraging AI and automation will optimize ATM uptime and minimize failures, ultimately improving efficiency and customer experience.

The Bigger Question

As CBN works to improve ATM accessibility through fee restructuring, financial institutions must consider the bigger picture—does Nigeria’s ATM system need more machines, or does it need better technology to ensure smooth transactions?

If we truly want to enhance financial services, the conversation must shift from fees to efficiency.

Would better technology adoption make a bigger difference than fee restructuring?

Godwin Emefiele, Governor of the Central Bank of Nigeria (CBN), announced the plan to redesign the N200, N500, and N1,000 notes in October 2022.

Since the notes’ release, Nigerians in various parts of the country have been unable to obtain them from banks and ATMs in time for the recently concluded election.

At the height of the crisis, the CBN had advised Nigerians to turn to alternatives such as eNaira and digital channels. Many transactions have failed or been delayed as a result of using these channels.

Consequently, a crisis between some Governors and President Muhammadu Buhari ensued, leading to a filing at the court. The Supreme court had restrained the Federal Government from going ahead with the implementation of the policy.

But the President, in a nationwide broadcast, ignored the apex court order by extending the validity of the old N200 notes while insisting that the old N500 and N1,000 remained illegal.

Buhari further stated that the old N200 note would be legal tender till April 10, 2023, while urging Nigerians to deposit their old N500 and 1000 notes with the central bank.

However, before the presidential election on the 25th of February, analysts believed that the CBN’s new Naira redesign policy was targeted at some politicians who were contesting for public office.

However, the election is over while the quagmire persists.

Temitope Alabi, a POS operator told TechEconomy on Friday that access to the new Naira notes remains a big issue, as there are limited notes available.

The POS operator who charges N100 per thousand added that when there is cash, nobody takes more than N2,000.

“We don’t usually have cash but when we do, it’s usually a small amount and we don’t give more than N2,000. We had hoped that the situation was going to change after the election but it’s almost still the same.”

While the consequences of the policy continue to play out, Nigerians are making several calls on the apex bank to make cash available.

In a video seen by TechEconomy on Thursday, President Muhammadu Buhari apologized to Nigerians over the naira redesign policy, saying that it was not introduced to cause hardship.

“I apologize to you for the hardship caused by the change of the naira. It was done to boost the economy of the country, not to cause hardship to anybody,” the president said.

It has subsequently recovered N1.9 trillion in currency stored outside the banking system as a result of its Naira note redesign and cash swap strategy.

Godwin Emefiele, Governor of the Central Bank of Nigeria, announced this on Sunday, January 29, 2023, as part of his briefing following a meeting with President Buhari.

Emefiele stated that the recovery initiative had a 75% success rate out of the N2.7 trillion held outside the banking system. “Using the Agen Naira Trade program as well as the CBN Senior Staff nationwide sensitization team activity, Nigerians in rural regions, villages, and the elderly and vulnerable have had the opportunity to swap their old notes,” he said.

The top bank issued new naira notes in denominations of N200, N500, and N1,000 to combat counterfeiting, improve the impact of monetary policy instruments on inflation, and mop up surplus liquidity.

Emefiele said: “Available data at the Central Bank of Nigeria has shown that in 2015, currency in circulation was only N1.4 trillion.”

“As of October 2022, currency in circulation had risen to N3.23 trillion; out of which only N500 billion was within the banking industry and N2.7 trillion was held permanently in people’s homes.”

“Ordinarily, when the CBN releases currency into circulation, it is meant to be used and after effluxion of time, it returns to the CBN thereby keeping the volume of currency in circulation under the firm control of the CBN.”

“So far and since the commencement of this program, we have collected about N1.9 trillion; leaving us with about N900 billion (N500 billion + N1.9 billion),” he said.

The CBN Governor issued a statement on Wednesday during a special press briefing in Abuja.

He advised Nigerians to take old notes to banks to enable them to withdraw the new banknotes once circulation begins.

Part of the statement reads: “We have called this gathering to inform relevant stakeholders and the general public of persisting concerns we are facing with the management of our current series of banknotes and currency in circulation, particularly those outside the banking system in Nigeria.

“As you all may be aware, currency management is a key function of the Central Bank of Nigeria, as enshrined in Section 2 (b) of the CBN Act 2007.

“Indeed, the integrity of a local legal tender, the efficiency of its supply, as well as its efficacy in the conduct of monetary policy are some of the hallmarks of a great Central Bank.

“In recent times, however, currency management has faced several daunting challenges that have continued to grow in scale and sophistication, with attendant and unintended consequences for the integrity of both the CBN and the country.

“These challenges primarily include significant hoarding of banknotes by members of the public, with statistics showing that over 80 percent of currency in circulation is outside the CBN; the growing scarcity of clean and fit banknotes, resulting in a negative perception of the CBN and an increased risk to financial stability; the increasing ease and risk of counterfeiting, evidenced by several security reports.

“Indeed, recent developments in photographic technology and advancements in printing devices have made counterfeiting relatively easier. In recent years, the CBN has recorded significantly higher rates of counterfeiting, especially in the higher denominations of N500 and N1,000 banknotes.

“Although the global best practice is for central banks to redesign, produce, and circulate new local legal tender every 5–8 years, the Naira has not been redesigned in the last 20 years.

“On the basis of these trends, problems, and facts, and in line with Sections 19, Subsections a and b of the CBN Act 2007, the Management of the CBN sought and obtained the approval of President Muhammadu Buhari to redesign, produce, and circulate a new series of banknotes at the N100, N200, N500, and N1,000 levels.

“In line with this approval, we have finalized arrangements for the new currency to begin circulation on December 15, 2022. The new and existing currencies shall remain legal tender and circulate together until January 31, 2023, when the existing currencies shall cease to be legal tender.

“Accordingly, all deposit money banks currently holding the existing denominations of the currency may begin returning these notes back to the CBN effective immediately. The newly designed currency will be released to the banks on a first-come-first-serve basis.

“Customers of banks are enjoined to begin paying into their bank accounts with the existing currency to enable them to withdraw the new banknotes once circulation begins in mid-December 2022.

“All banks are therefore expected to keep open their currency processing centers from Monday to Saturday so as to accommodate all cash that will be returned by their customers. For the purpose of this transition from existing to new notes, bank charges for cash deposits are hereby suspended with immediate effect.

“Therefore, DMBs are to note that no bank customer shall bear any charges for cash returned/paid into their accounts. Members of the public are to please note that the present notes remain legal tender and should not be rejected as a means of exchange for the purchase of goods and services.

“We would like to use this opportunity to reassure the general public that the CBN will continue to monitor both the financial system in particular and the economy in general and always act in good faith for the achievement of the bank’s objectives and the betterment of the country.”