Zenith Bank has become the latest financial institution in Nigeria to suspend naira debit card transactions on international POS and web due to the nation’s forex crisis.
In an email to customers this week, the tier-1 bank said the Visa or Mastercard-powered naira-based operation will be suspended henceforth, joining a growing number of other banks that have made the same decision.
“Please be informed that you will be unable to use your Zenith Bank Naira cards for International Automated Teller Machine (ATM) cash withdrawals, POS transactions and web transactions,” the bank said.
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Zenith bank said the suspension will take effect from January 9th, 2023.
“If you have international spend requirements, simply visit any of our branches and request for a foreign currency debit or prepaid card, which are available in US Dollar, Pounds and Euro variants,” the bank added.
Other financial institutions have made similar moves as the situation tightens. Last week, Guaranty Trust Bank announced the same decision in an email sent to customers, compounding the concerning development that began last year.
In early February and March 2022, Zenith Bank and the United Bank for Africa reduced their international spending limit on their naira cards from $100 to $20 a month, a decision understood to be born of the stringent policies by the Central Bank of Nigeria, aimed at protecting the naira.
The CBN governor, Godwin Emefiele, had last year, revealed that the apex would not continue to supply banks with foreign currencies. He said banks need to engage in export to generate forex.
With limited supply of foreign currencies, the banks apparently do not have enough forex liquidity to sustain thousands of POS, ATM and web-based international transactions powered by debit cards. The situation has eventually created the suspension of debit card international transactions, which every Nigerian bank is expected to effect very soon.
In July last year, Standard Chartered Bank announced it’s suspending international transactions on its naira visa debit. The announcement was followed by other financial service operators like Flutterwave, Eversend and other fintech platforms, announcing they have stopped virtual card services for international transactions.
In September 2021, First Bank announced that it’s suspending international transactions on its naira Mastercard, after an earlier decision to reduce the international spending limit on naira cards from $100 to $20.
The banks have always advised customers to get foreign currency debit or prepaid cards, which are going to be funded outside the Investor and Exporter official exchange rates. This means that individuals and businesses in Nigeria depending on bank-issued cards to carry out international transactions will still have to buy their respective foreign currencies at parallel market rates.
At the unavailable I&E window rates, dollar sells for N461.50/$1 while at the parallel market, it exchanges at about N731/$1, as of Friday.