Thursday, March 25, 2010

Automatic Teller Machines: A Revolution and its Pains

On March 15, 2010, Consumer Protection Council (CPC) held a Consumer Interactive Forum in Abuja. At the forum, Mr. Chris Chukwu, the Deputy Director, Financial Policy and Regulation Department of the Central Bank of Nigeria who stood in for the CBN Governor said Automatic Teller Machine fraud is among the leading complaints coming to the apex bank. The Director-General, CPC, Mrs. Ify Umenyi also observed that complaints received in CPC on financial services for 2008 and 2009 put ATM complaints second behind non-issuance of share certificate. Really, the soaring incidences of ATM fraud should worry any bank customer. This piece looks at the pros and cons of the ATM revolution in Nigeria.
According to an internet source, “the very first ATM in Nigeria was installed by National Cash Registers (NCR) for the defunct Societe Generale Bank Nigeria (SGBN) in 1989”. ATMs are operated via debit and credit cards. There are three variants of these in Nigeria. They are the Standard Card, Verve Card and Master Card. Though ATM might have been introduced more than 2 decades ago in Nigeria, it was not until the post-consolidation era in 2005 that the machines became popular. The innovation was first piloted in Lagos before being deployed nationwide. Advantages of ATM are legion. It saves time and helps to decongest banking halls as more people prefer to use their Debit Cards to make withdrawals. It makes withdrawal possible beyond traditional banking hours. Most banks in Nigeria operate between 8am – 4pm. However, ATM is available every hour of the day including weekends and national holidays which are off-days for banks. ATMs are also available beyond bank premises. They are deployed to Hotels, Restaurants, Hospitals, Shopping Malls, Schools and just about anywhere there might be need for it. ATM fosters banks cooperation and unity as it is possible to use a bank’s Debit Card on another bank’s ATM. It indirectly encourages savings as many people now keep their money in banks rather than under pillow and mattress knowing full well that they can withdraw it any time of the day. With ATM, it is possible to know one’s account balance as more often than not, a text message is sent to the account owner when any withdrawal is made. This SMS contains how much is withdrawn and how much balance is left. This notification is helpful to prevent and trace fraudulent withdrawals as the location of the ATM is stated in the text message. In the event of loss of debit card, it is possible to block it and as such render it useless to any unwarranted user. ATM does not need signature hence; the issue of irregular signature does not arise. The machine helps to reduce needless spending and loss of money to armed robbers and fire.
On the flip side however, Automatic Teller Machine brought with it severe pains, tears and sorrow. The greatest threat to ATM is the emergence of syndicates who specialise in cloning unwary bank customers debit card. The customers debit card details are cloned in such a way as to enable the scammers make successful withdrawals from the customer’s account. The method in use varies. Some of the syndicates send scam electronic mails to thousands of people purportedly from Interswitch (debit card manufacturer) or the bank itself asking customers to update their records which are inclusive of their account numbers and debit card details. Once the customer supplies these details, they use it to clone cards and make withdrawal. Others go to crowded ATM pretending to want to withdraw and using the opportunity to steal peoples debit cards or memorise the details and later go back to clone the cards. Many have been arrested by the police and officials of the Economic and Financial Crimes Commission (EFCC) for this sharp-practise. It is common to hear of ATMs debiting customers for undispensed cash. There are also incidences of ATM machines swallowing bank customer’s debit cards during transaction.
It is becoming increasingly difficult to get new debit cards once it expired or got stolen. Negatively impacting on ATMs is the epileptic power supply. The machines are powered by electricity either publicly supplied by Power Holding Company of Nigeria (PHCN), Generators or Inverters. None of these three is totally reliable. The other shortcoming is constant breakdown of the internet backbone that networks one bank to the other or one bank’s branch to the other. When these happen, customers are frustrated as they find it difficult to make withdrawal. There have also been instances where bank staffs in charge of ATMs also engage in fraudulent activities, helping themselves with some of the monies meant for the machines. The introduction of ATM and computerisation of bank services have also led to job loss as banks now need fewer staffs for their operations.
ATM is desirable and has helped to revolutionise the banking industry. However, banks need to unite in finding lasting solutions to the aforementioned challenges faced by their teeming customers. As affirmed by the Consumer Protection Council Director General, if banks could not tie loose ends that encourage card frauds, then they should be more responsive in accepting liabilities as it is done elsewhere in the world. Bank customers also anxiously await the promised CBN’s definitive directive to guide financial institutions that provide ATM services to consumers.