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Will new ATM policy tackle cash crunch?
Apparently worried about the persistent scarcity or paucity of funds in most banks ATM, a new policy brief by the Central Bank of Nigeria hopes to address this cash crunch, reports Ibrahim Apekhade Yusuf
In its quest to attack the hydra-monster of cash crunch in the system the apex regulatory bank of the money deposit banks-Central Bank of Nigeria, had almost a fortnight ago announced plans to introduce a new regulatory policy aimed at sanitising debit card issuance and ATM operations across Nigerian banks, in a bid to address persistent cash access challenges.
The announcement was made by CBN Governor Yemi Cardoso through his Special Adviser, Fatai Karim, at the 2026 Committee of Heads of Bank Operations Conference.
According to the apex bank, the policy will ensure that the number of cards issued by banks corresponds with their deployed ATM infrastructure, helping to reduce congestion, downtime, and uneven cash availability nationwide.
The CBN noted that recurring ATM failures and cash shortages continue to undermine public confidence in electronic payment channels, even as digital transactions grow rapidly across the banking sector.
“Very soon, the Central Bank will be coming up with another policy to sanitise and improve the situation, particularly around how many cards banks issue relative to the number of ATMs they support. When cash access fails, whether due to prolonged ATM outages or uneven distribution, the credibility of the entire payment system is weakened,” the bank said.
Karim added that the CBN is engaging industry stakeholders and expects the policy to take effect within months, possibly before the end of the second quarter of 2026.
The apex bank said banks will no longer be allowed to issue massive volumes of cards without corresponding investment in ATM and cash withdrawal infrastructure.
“Very soon, the Central Bank will be coming up with another policy to sanitise and improve the situation, particularly around how many cards banks issue relative to the number of ATMs they support.
“Certainly the next few months; once the engagement is concluded with other stakeholders, CBN will make an announcement. When cash access fails—whether due to prolonged ATM outages or uneven distribution—the credibility of the entire payment system is weakened,” the CBN stated.
Nigeria’s banks have aggressively issued debit cards over the years to support financial inclusion and digital payments, but ATM deployment has not kept pace.
Card issuance expanded faster than ATM networks and cash logistics investments.
Customers frequently experience long queues, empty machines, and failed transactions. Informal cash channels, such as POS operators, have filled gaps at higher costs.
These structural gaps have persisted despite regulatory efforts to modernise payments and improve cash circulation nationwide.
The proposed policy is expected to reshape banks’ card issuance strategies and accelerate investment in ATM infrastructure, uptime, and cash management.
Banks will face tighter scrutiny over card issuance volumes and ATM deployment. Customers are expected to benefit from improved ATM availability and reduced transaction friction.
Stronger infrastructure could reduce reliance on informal cash channels. The CBN said restoring credibility in cash access and electronic payments is critical to financial system stability and public trust.
The CBN says cash remains relevant despite digital growth, particularly in informal markets and rural communities.
Cash demand rises sharply when electronic channels fail. Reliable digital channels help reduce pressure on physical cash.
The apex bank insists its objective is not to eliminate cash but to strike a balance between cash and digital payments, ensuring Nigerians can always access cash while building confidence in electronic channels across the country during everyday transactions and emergencies nationwide
The move is expected to enhance ATM reliability, improve cash distribution, and restore confidence in Nigeria’s electronic payment system, benefiting both banks and customers nationwide.
The announcement comes as Nigeria closed 2025 with a record N5.4 trillion in currency held outside the banking system, indicating a strong preference for cash among households and businesses.
Data from the CBN shows that only a fraction of Nigeria’s physical cash remains in deposit money banks, with total currency in circulation reaching N5.7 trillion by December 2025.
The rise in cash outside banks has coincided with broader money supply growth, which reached approximately N124.4 trillion by year-end. CBN to tackle recurring ATM failures and uneven cash availability.
Currency outside banks, representing cash held by households, traders, and businesses beyond regulated institutions, surpassed the previous record of N5.125 trillion set in December 2024.
Analysts say the surge underscores the widening gap between formal financial channels and Nigeria’s cash economy, even as regulators push for mobile banking, financial inclusion, and electronic payment adoption.
Banks issue update on card maintenance fee Earlier, Legit.ng reported that Nigerian banks have begun deducting a 7.5% Value Added Tax (VAT) on card maintenance fees and other selected electronic banking charges, which kicked off officially on January 19, 2026.
Under the new arrangement, a N50 card maintenance fee now attracts an additional N3.75 as VAT. Wema Bank customer showed both N50 and N3.75 were removed separately for the same transaction, even though the account balance initially appeared unchanged after the first debit.
Cash outside banks
The announcement comes as Nigeria closed 2025 with a record N5.4 trillion in currency held outside the banking system, indicating a strong preference for cash among households and businesses. Data from the CBN shows that only a fraction of Nigeria’s physical cash remains in deposit money banks, with total currency in circulation reaching N5.7 trillion by December 2025.
The rise in cash outside banks has coincided with broader money supply growth, which reached approximately N124.4 trillion by year-end.
Currency outside banks, representing cash held by households, traders, and businesses beyond regulated institutions, surpassed the previous record of N5.125 trillion set in December 2024. Analysts say the surge underscores the widening gap between formal financial channels and Nigeria’s cash economy, even as regulators push for mobile banking, financial inclusion, and electronic payment adoption, the Sun reports. Banks issue update on card maintenance fee Wema Bank customer showed both N50 and N3.75 were removed separately for the same transaction, even though the account balance initially appeared unchanged after the first debit.
Despite high, record-level cash circulation, citizens face long ATM queues and reliance on expensive Point of Sale (POS) agents, thus the crisis continues to adversely impact daily commerce and fueling economic hardship.
Despite the Central Bank of Nigeria (CBN) reporting high cash volumes, citizens continue to experience severe scarcity, causing long lines at ATMs and banking halls.
The paradox is that even with about ₦5.4 trillion in circulation, cash remains scarce in banks, indicating hoarding or systemic inefficiency and the implication is that the shortage has driven up transaction costs, with many relying on POS operators who charge high fees, just as the crisis continue to have rippled negative effects on small businesses and daily transactions, adding to high inflation and general economic hardship.
The Central Bank of Nigeria (CBN) has established New Minimum Standards for ATM Deployment, Operations, Maintenance, and Security.
The apex bank said the new ratio contained in its circular titled, “Exposure of the Draft Guidelines on the Operations of Automated Teller Machines (ATMs) in Nigeria,” released weekend, supersedes previous ATM regulations.
According to the new regulation, all card issuers must deploy at least one ATM per 5,000 payment cards issued.
This, the apex bank directed, must be fully achieved within three years (100% by 2028), starting with 30% in the first year (2026).
It added that ATMs must be located in a way that guarantees safety and security of users and confidentiality of transactions. They should not be placed outside buildings unless bolted to the floor.
CBN further directed: “ATM deployment, redeployment, and decommissioning require prior written approval from the CBN.
“Independent ATM Deployers (IADs) must obtain prior written approval from CBN and satisfy licensing/registration requirements, including evidence of partnership with a bank for cash provisioning.”
On failed transactions and refunds it directed that On-us ATM Transactions (using a bank’s own ATM), reversal of a failed transaction must be instant. If instant reversal fails due to technical issues, the timeline for manual reversal shall not exceed 24 hours.
Not-on-us ATM Transactions (using another bank’s ATM): refunds shall not exceed 48 hours”.
Other regulations included: Other provisions of the new directive are, “Automatic Refunds: Acquirers must adopt appropriate mechanisms to immediately initiate refunds for non-dispense errors without the prompting of the issuing bank or the customer.
“Security: All ATMs must have cameras that record all persons and activities (card insertion, cash withdrawal, etc.), but should not record customers’ keystrokes. Networks used must be tested and proven for data confidentiality.
“Anti-Skimming: ATMs shall be installed with anti-skimming devices to mitigate fraud.
“PIN/Keys: ATM keys must be changed regularly (every year), and the same keys are not to be used for multiple ATMs. Customers can change their PIN free of charge.
“Standards: All ATM deployers/acquirers must comply with Payment Card Industry Data Security Standards (PCI DSS).
“ATM Operations and Maintenance Downtime: The technical downtime for an ATM shall not exceed 72 consecutive hours. Customers must be informed if this is not practicable.
“Cash Provisioning: Cash shall be made available at all ATMs at all times. The bank that entered into an agreement with a non-bank institution for deployment is solely responsible for cash provisioning.
Information: Helpdesk contacts, charges, and fees must be adequately displayed to customers.
“Receipts: ATMs must issue receipts for all requested transactions, except for balance enquiry.
“Monitoring: CBN will conduct periodic audits and onsite checks to ensure compliance with the guidelines and availability of cash and service.
“Reporting: All institutions must render a monthly return to CBN, including new deployments, no later than the 5th of the following month.
“Penalties: Appropriate penalties shall be imposed on institutions that fail to comply.”
Deployment Targets: Banks must deploy at least 1 ATM per 5,000 cards, reaching 30% compliance in 2026, 60% in 2027, and 100% by 2028.
Security Upgrades: ATMs must have cameras (excluding keyboard areas), anti-skimming devices, and compliant security standards (PCI DSS).
Operational Requirements: Maximum 72-hour downtime, with mandatory, constant cash availability.
Transaction Fees & Limits: Daily ATM withdrawals are capped at ₦100,000, with a weekly limit of ₦500,000.
Refund Policy: Instant reversal for failed “on-us” transactions, and maximum 48 hours for “not-on-us” transactions.
Location: ATMs must be placed in safe, accessible locations for both urban and rural areas.
These guidelines, effective in 2026, also mandate that all ATM deployments, redeployments, and decommissioning receive prior written approval from the CBN.
Speaking at the 2026 Chief Human Resources Officers Conference in Lagos on Friday, January 23, Ngover Nwankwo, Executive Director for Business and Products at NIBSS, said the next phase of payment innovation in Nigeria must be inclusive by design. The Nigerian government plans offline payments for Nigerians.
“Our focus is balancing innovation with inclusion, ensuring no Nigerian is left behind as digital payment adoption grows,” Nwankwo said.
She explained that while digital payments are expanding rapidly, a significant segment of the population still struggles with poor connectivity, limited data access, and low digital literacy. Offline payments, she said, would help bridge that gap.
Nwankwo stressed that despite the growth of electronic transactions, cash remains central to Nigeria’s economy and daily life. She dismissed the idea that cash could be eliminated in the near future, insisting that both cash and digital channels must coexist.
“Cash and digital platforms must work together, protecting those who rely on cash while offering secure and efficient services to digital users,” she said. She praised Nigerian banks for recent operational improvements, noting that cash availability during the busy December 2025 period was largely smooth, with minimal public complaints.
According to her, this reflected better planning and coordination across the banking system. Biometrics and simpler access Beyond offline payments, NIBSS is also advancing biometric solutions to simplify access to financial services. Nwankwo highlighted biometric authentication that allows customers to request and verify payment cards using fingerprints, reducing paperwork and documentation barriers.
Cash growth and policy concerns
Presenting a paper at the conference, Lloyd Onaghinon, managing director of Bankers Warehouse Plc, said cash continues to play a critical role globally, even as electronic payments expand. “Globally, cash usage continues to grow, driven by culture, demographics, trust, and financial inclusion,” Onaghinon said.
However, he warned that excessive cash held outside the banking system weakens financial intermediation and limits the effectiveness of monetary policy. He called for closer collaboration among regulators, banks, and other stakeholders to strike a sustainable balance between cash, electronic payments, and emerging digital currencies. CBN pushes to formalise idle cash In a goodwill message, the Central Bank of Nigeria urged financial institutions to partner more closely with fintech companies and microfinance institutions to bring idle cash into the formal system.
CBN Director for Other Financial Institutions Supervision, Solaja Olayemi, said about 90 per cent of Nigeria’s cash remains outside the banking system. He noted that fintechs and technology-driven microfinance institutions have wider agent networks, particularly in underserved areas.
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