Nigerian Banks Resume International Transactions on Naira Cards After Years of Suspension
Two Nigerian commercial banks have announced the resumption of overseas transactions using their naira cards.
In separate announcements to customers, United Bank of Africa (UBA) and Wema Bank announced that naira card service has resumed.
The development comes three years after many banks halted overseas transactions using naira debit cards.
In a recent notification to customers, the UBA stated that the resumption is consistent with its ongoing commitment to providing clients with seamless and better banking experiences.
“In line with our continued commitment to providing you with seamless and enhanced banking experiences, we are pleased to inform you that all UBA Premium Naira Cards, including Gold, Platinum, and World variants are now enabled for international transactions,” a press release said.
“This means you can now use your Premium Naira Card for everyday payments, online shopping, POS, and ATM transactions all over the world with greater ease and flexibility.”
“If you haven’t used your card recently, now’s a great time to rediscover the convenience and prestige that comes with being a UBA premium cardholder.”
Wema Bank also announced the breakthrough in a recent statement, saying users can now “pay in dollars” using their naira card.
“Your Wema Naira Mastercard has gone global!” Now you may pay in dollars on all of your favourite international marketplaces, including Amazon, eBay, and AliExpress. “Netflix, Spotify, and YouTube,” the bank stated.
Why are banks making the shift?
According to Ayokunle Olubunmi, head of financial institutions ratings at Agusto & Co, greater liquidity in the foreign exchange (FX) market aided banks’ decision to reactivate their naira crads for international transactions.
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“The moderating premium on the parallel market transactions and the reduced arbitrage opportunities is also responsible for the decision,” he told me.
Also speaking with Charles Sanni, CEO of Cowry Treasurers, stated that the narrowing spread or margin between official and parallel market rates may have affected the banks’ choice.
He stated that Nigeria’s interest rates are quite high, thus borrowing money to speculate on foreign exchange is discouraged.
“The naira has also continued to rise versus other major currencies throughout the world. Furthermore, there has been a rise in diaspora remittances as a result of the Central Bank of Nigeria’s (CBN) new policy on opening accounts for non-residents, particularly Nigerians in the diaspora,” he stated.
Sanni also credited the federal government and the CBN’s regained confidence in FX management as a result of the ease of cash transfers and capital repatriation.
The CEO stated that Nigeria’s credit rating has improved, FX backlogs have been cleared, a new trading platform has been established, oil prices have risen due to geopolitical tensions, and banks have been capitalised.
Between July 2022 and January 2023, several additional banks temporarily halted international transactions via ATMs and POS systems.
The move was caused by persistent foreign exchange scarcity, which jeopardized the existence of important economic sectors.
In July, Standard Chartered Bank banned overseas transactions on its naira visa debit card.
On September 21, 2022, First Bank of Nigeria (FBN) announced that it would cease foreign transactions on their naira Mastercard.
Three months later, Guaranty Trust Bank (GTBank) discontinued worldwide payments on its naira Mastercard, and Zenith Bank joined the fray on January 9, 2023.
Flutterwave, Eversend, and other financial technology firms took similar decisions, halting virtual card services for overseas transactions.
