Banks slash dollar limit on naira debit cards to $100

Banks slash dollar limit on naira debit cards to $100

Nigerian banks are sending notices to customers about a reduction in the spending limits for their naira denominated debit cards used for paying for transactions abroad. Most of the messages relate to debit cards powered by Master Card. 

One of such notices seen reads: “Dear Customer effective 16 August 2020, your Naira Mastercard International will be reduced from $500 to $300 monthly.” 

Note that some banks, equally important, have reduced their monthly spending limits to as low as $100. 

Nigerians also rely on their debit cards to pay for online transactions that are billed in US dollars. The banks, hence, debit their naira account with the prevailing exchange rate.  

Nigeria is experiencing currency shortages as official forex sales to the BDC segment remain suspended.

Forex transactions in the I&E Window has plummeted to under $1 billion monthly. The parallel market has been the go-to market for price guidance as well as transaction for companies; looking to sell at a price higher than the official market rate.  

Limits to debit cards have been synonymous with forex scarcity; with the 2016 being most recent. The lower the forex available to banks, the more difficult it is for them to meet their dollar commitments; particularly for debit card usage.  

Forex liquidity within the banking sector has been largely impacted; by reduction in foreign remittances from Nigerians in diaspora; due to the COVID-19 lockdown. Persistent dollar scarcity could lead to further reduction in spending limits; except the CBN intervenes.

About The Author

Kingsley Alaribe is a Digital Marketer with 1stNews, and writes the weekly column, Strangers and Lovers. He is also a Data Scientist. Email: [email protected]

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