Banks Limit Debit Card Spending Abroad

Banks will from on Monday slash the amount customers can spend abroad, using their debit cards.

This is due to dollar shortage resulting from the sharp fall in crude oil prices.

Crude oil is the main source of the country’s foreign exchange earnings.

The lenders, which two years ago, raised their card spending limits on Point of Sale (PoS) and online card transactions abroad, are currently placing limits on amounts customers can withdraw with their debit cards in offshore transactions.

Two commercial banks, which confirmed the new development, said the move was to limit foreign currency settlement risk, according to a report by Reuters.

Stanbic IBTC Bank, the local unit of South Africa’s Standard Bank, said it will halve the spending limit for offshore card transactions to $500 per month from today and will limit cash withdrawals to $100.

Another Tier-1 lender, Zenith Bank said it will temporarily suspend the use of debit cards abroad for cash withdrawals and cut the monthly spending limit abroad by more than half to $200.

“This review is in response to today’s economic realities,” Zenith said in a notice, advising clients to request prepaid dollar cards.

Other lenders – Ecobank and Fidelity Bank – have also lowered withdrawal limits for individuals while abroad.

The Central Bank of Nigeria (CBN) had previously advised banks to review foreign currency card transactions, but it was not clear if the regulator was behind the latest action.

The CBN is battling to conserve dollar reserves that are down 19 per cent from a year ago. Last week, it depreciated the currency on the official market prompting the naira to weaken on the black and over-the-counter spot markets.

Bankers told Reuters that it now takes more than six months to settle foreign lines of credit.

Nigeria is yet to resume forex sales to retail currency traders after it banned international travel as part of a lockdown measure to slow the spread of the coronavirus that has killed 778 people and infected more than 36,000.

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