Nigerian banks block usage of Naira cards for foreign transactions

Nabanker


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Posted by on Thursday October 20, 2016 at 16:59:10:

For many Nigerian bank customers who want to make payments in foreign currencies, they can no longer do so with their Naira cards even if they are branded with Mastercard or Visa as Nigerian banks have practically blocked their usage for such transactions.

The Visa or MasterCard Naira cards are still accepted locally for transactions in the Nigerian Naira but they have been mostly stopped by many banks who are facing problems in securing foreign currency transactions.

I had the experience about 2 weeks ago when I tried making a payment on a foreign website that lists their goods in US dollars and my transaction was declined which was not usual. I tried it with about 3 bank cards which were used to working and all were declined. I later received a notification from one of them(GTbank) that I can still do foreign currency payments with my card but it had a monthly limit. I guess that's one way to find out if a bank is really financially strong in Nigeria as at today and that's by checking if their cards are still active for foreign transactions.

I mostly use my card for online shopping on Amazon and Aliexpress and for now it appears that most Nigerian banks are not willing to approve of foreign currency transactions.

Well, I guessed this was going to be a problem in the past that was why I initially got a USD Dollar Mastercard. Nigerian banks now issue Dollar Cards which can be linked to a domiciliary account which you have to fund yourself with foreign currency. Nigerian banks prefer those type of cards because it doesn't expose them to the harsh exchange rate that has not been favourable to the Nigerian Naira for this period.

So, if you still have a Naira Card, you can still make use of it for making payments sellers that accept payments in Naira but if you are going to make payments in foreign currencies, then it's best to get a foreign currency card.

With a foreign currency card, you can make payments globally without worrying about the constantly changing exchange rate. You can fund the card locally by buying currency from the market or through foreign currency transfers to your domiciliary account.

The CBN had directed banks in the past to place limits on Naira cards with a view to protecting the Naira and now it appears that it's no longer profitable for Nigerian banks to continue allowing it.

Things have changed in Nigeria and I believe this ban will help the Naira a bit but it won't be a long term solution. The real solution will be for the government to diversify the economy by investing on other sectors where products can be exported for foreign currency rather than relying solely on crude oil exports.






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