CBN: 48-hour refund for failed ATM transactions to ensure consumer safety, prevent frauds

*The Central Bank of Nigeria explains the overarching objective of its recent draft guidelines on operations of Automated Teller Machines in the financial ecosystem is to ‘strengthen the reliability and safety’ of the West African country’s payment systems

Gbenga Kayode | ConsumerConnect

The Central Bank of Nigeria (CBN) has said the Bank’s decision to formulate and release draft guidelines on the operations of Automated Teller Machines (ATMs) in the financial ecosystem is to strengthen the reliability and safety of the country’s payment systems.

ConsumerConnect reports the CBN issued the directive contained in a circular titled, “Exposure of the Draft Guidelines on the Operations of Automated Teller Machines (ATMs) in Nigeria”, sent to Deposit Money Banks (DMBs), Other Financial Institutions (OFIs), and payment service providers on the draft guidelines on the operations of ATMs.

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The Bank mandated that commercial banks, OFIs, and other service providers must refund customers for failed ATM transactions within a stipulated 48-hour timeframe.

Musa Jimoh, Director of the Payments System Policy Department, in the circular, said the CBN’s move was part of CBN’s efforts at strengthening the reliability and safety of the country’s payment systems.

The country’s banking sector regulator also stated that customers must be refunded for failed interbank (not-on-us) ATM transactions within 48 hours, whereas refunds for failed transactions on the same bank’s ATM (on-us) should be reversed instantly.

However, the Bank said in case an instant reversal is not possible due to technical glitches, a manual reversal must be completed within 24 hours.

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According to the Bank, the draft regulatory guidelines are for public consultation and stakeholder feedback, in line with the CBN’s mandate to promote a sound financial system and an efficient payments infrastructure in Nigeria.

The circular further disclosed the stakeholders are expected to review and submit feedback within four weeks from the date of its release.

Other key objectives of draft guidelines

The CBN said the other key objectives of the draft guidelines include establishing minimum standards for ATM deployment, operations, and maintenance; enhancing consumer protection; improving access to ATM services in both urban and rural areas; and aligning ATM operations with global best practices and regulatory expectations.

The guidelines apply to a wide range of stakeholders, including Deposit Money Banks, Independent ATM Deployers, Card Schemes, Payment Service Providers, and the general banking public.

Frameworks to enhance consumer protection, says regulator

The banking sector regulator noted the draft guidelines lay out detailed operational requirements for ATM deployers, focusing heavily on consumer safety, transparency, fraud prevention, and service availability.

ATM deployers are required to ensure that every ATM is equipped with surveillance cameras that capture and record all activities around the machine.

These cameras must capture events, such as card insertion, transaction selection, and cash withdrawal, while strictly avoiding the recording of customers’ keystrokes for privacy reasons.

Where such cameras are installed, they must be concealed to prevent tampering or removal.

ATMs must be located in areas that guarantee user safety and transaction confidentiality. Those placed outside buildings must be securely bolted and surrounded by protective structures to prevent unauthorised removal.

Additionally, ATMs must be equipped with anti-skimming devices to combat fraudulent activities, and network connections used in ATM transactions must ensure data confidentiality and integrity.

On operational standards and availability

To ensure continuous service delivery, ATM deployers are required to minimise ATM downtime.

The Bank said any technical faults must be resolved within 72 consecutive hours, and if not, customers must be adequately informed of the reason for the outage.

ATM terminals must also display functional helpdesk contact information, including at least one dedicated and constantly monitored telephone line for reporting faults.

Moreover, the guidelines emphasise the importance of transparency in customer charges.

The CBN stated that all fees and charges associated with ATM transactions must be fully disclosed, and receipts must be issued upon request for every transaction, excluding balance inquiries.

These receipts must clearly show transaction details such as the amount withdrawn or deposited, the terminal ID, and the time and date of the transaction. Screen displays and printed receipts must also be legible.

ATM machines must be regularly monitored and maintained to ensure proper functionality.

According to the banking regulator, this includes ensuring that cash is always available, unfit currency notes are not loaded into machines, and the ATM vault is replenished frequently to prevent cash-out situations.

The deployers must also maintain online monitoring systems to track cash levels in ATM vaults and to detect the causes of failed transactions, among others.

Security protocols and customer support

The CBN draft guidelines as well require that ATM keys be changed at least once a year, and the same keys must not be used across multiple machines.

The circular further noted ATM acquirers must also have mechanisms to automatically initiate refunds for failed or partial dispenses without requiring the affected customer or issuing bank to raise a complaint.

This measure aims to ensure that customers receive timely redress for service failures.

Furthermore, to prevent the unauthorised use of customer cards and data, ATMs must be configured to issue cash before returning the card.

This setup helps reduce the likelihood of customers forgetting their cash. Acquirers are also required to disable the cash-retract function and clearly display this change on the machine or screen.

Other regulatory requirements include the provision of paper disposal bins at ATM sites, the availability of backup power systems (inverters) to ensure uninterrupted service, and the inclusion of PIN change functionality at no cost to customers.

ATM deployers are also mandated to conduct frequent physical inspections of their machines, maintain detailed records of ATM maintenance, and ensure that both the ATMs and the cash they contain are insured.

Significantly, deployers must maintain a register of all their ATMs in the country, detailing each unit’s location, identification, and serial number, the CBN stated.

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