ATMs: Job Losses, Scam Slow Patronage

Transactions on Automated Teller Machines (ATMs) shrank at its fastest pace in three months March to May this year highlighting the severe toll of the worsening economic situation in the country, Nigeria CommunicationsWeek can now reveal.
Record from Interswitch Nigeria Limited, a major switching platform showed transactions at just 84 million down from 87 million in April.
The figure in April was also lower compared to March when Nigerians executed 98 million transactions on the ATMs.
There are currently 10,121 ATMs which are computerized telecommunications devices that provide the clients of financial institutions with access to financial transactions in a public space without the need for cashiers.
Nigeria CommunicationsWeek gathered that the poor state of the economy characterized by job losses and credit crisis was responsible for the steady decline in the volume of transactions.
Mr. Mitchel Elegbe, managing director, InterSwitch said that the drop in transaction is a reflection of slow pace of business activities in the country which has affected people’s disposal income.
InterSwitch Limited is a major electronic transaction switching and payment processing company with a business footprint that covers the provision of shared, integrated message broker solutions for financial transactions, e-commerce, telecoms value-added services and e-billing in the Nigerian environment.
According to Elegbe, most people who have lost their jobs as a result of general economic downturn no longer have money in their bank accounts from where transactions could be carried out on the ATMs.
Nodding in agreement, Mr. Peter Iwegbu, general manager, Technology, Access Bank, also said that security and scam related issues have contributed to the downward movement of transactions.
Iwegbu cited the case of his relation that lost some money to ATM scam which made her to also lose confidence on the super machine.
He added that the decommissioning of offsite ATMs in line with the Central Bank of Nigeria (CBN) directive on the issue also has a role to play.
Like Elegbe, he said that the situation is not peculiar to transactions on the ATM but has also affected other sectors of the economy.
Other factors according to them is the migration process in the card usage as most  banks have shut out magnetic stripe cardholders from using the cards on their machines.
It would be recalled that Central Bank of Nigeria directed banks to migrate from the traditional magnetic stripe cards to EMV standard chip and Pin cards.
The regulatory body had fixed December last year as terminal date for completion of the migration, since then banks no longer issue the old technology cards but still process such cards till they expire.
But, recently some banks’ ATMs have stopped accepting magnetic stripe cards while accepting only Europay MasterCard and Visa (EMV) standard chip and pin cards.
As they spoke however, an official of a major ATM Consortium that spoke to Nigeria CommunicationsWeek said that the business has been good and that his company is yet to witness reduction in the volume of transaction on its network.
ATMs were introduced to decongest the banking halls and offer customers cash at every nook and corner of the country.
For instance, a customer can withdraw money for his or her purchase from the ATM.
This also means you can travel anywhere without cash. If the location has an ATM and you have your ATM card, you can access your money instantly.
The first ATM was invented and patented in 1939 by Luther Simjian but it was an unsuccessful prototype that led the way to the first modern ATM, created by James Goodfellow in 1966.
Because the ability to connect to the bank via computer was not yet available, access to these machines was only given to few bank customers. The first ATM to use a card with a magnetic strip was patented in 1977. Even though the machines existed this early, it was not until the end of the 1980s that ATMs became common place in modern banking.