Two major Nigerian commercial banks have announced the resumption of international transactions on their naira cards, marking a significant shift in the banking sector.
In separate messages to customers, United Bank for Africa (UBA) and Wema Bank said the service has recommenced, allowing cardholders to once again make payments on global platforms.
The development comes about three years after many banks suspended international transactions on naira debit cards due to foreign exchange (FX) constraints.
In a notice to customers, UBA said the move aligns with its commitment to providing clients with seamless and enhanced 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,” the bank stated.
“This means you can now use your Premium Naira Card for everyday payments, online shopping, POS, and ATM transactions across the world, with more 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.”
Similarly, Wema Bank informed customers that their naira cards can now be used to pay in dollars on international platforms.
“Your Wema Naira Mastercard just went global! Now you can pay in dollars on all your favourite international platforms; Amazon, eBay, AliExpress? Netflix, Spotify, YouTube,” the bank said in a statement.
Why Banks Are Making the Shift
According to Ayokunle Olubunmi, head of financial institutions ratings at Agusto & Co, improved liquidity in the FX market played a key role in the banks’ decision.
“The moderating premium on the parallel market transactions and the reduced arbitrage opportunities is also responsible for the decision,” he said.
Charles Sanni, CEO of Cowry Treasurers, also told TheCable that narrowing margins between official and parallel market rates may have influenced the move.
“The interest rate is very high in Nigeria, hence minimising borrowing money to speculate on foreign exchange.
“The naira has also continued to appreciate against the other major currencies of the world. More so, there has been increased diaspora remittances based on the new policy of the Central Bank of Nigeria (CBN) on opening of accounts for non-residents, particularly Nigerians in diaspora,” Sanni explained.
He added that renewed confidence in FX management by the federal government and the CBN has been a factor, along with the ease of transferring funds and capital repatriation.
“There has been an improved credit rating of Nigeria, clearance of the FX backlogs, new trading platform, increase in oil prices from geopolitical conflicts, and banks capitalisation,” he said.
Background
Between July 2022 and January 2023, several banks suspended international transactions on ATMs and POS channels, citing severe FX shortages that endangered key sectors of the economy.
In July 2022, Standard Chartered Bank suspended international transactions on its naira visa debit card. First Bank of Nigeria (FBN) followed on September 21, 2022, with its naira Mastercard. Guaranty Trust Bank (GTBank) stopped global payments on its naira Mastercard three months later, while Zenith Bank joined on January 9, 2023.
Fintech platforms such as Flutterwave, Eversend, and others also suspended virtual card services for international transactions at the time.
[TheCable]
