Two Nigerian commercial banks have announced the resumption of international transactions on naira cards.
United Bank of Africa (UBA) and Wema Bank announced separately to customers that service on their naira cards has resumed.
This development comes roughly three years after many banks halted overseas transactions using naira debit cards.
In a recent notification to customers, the UBA stated that the resumption is consistent with its ongoing commitment to providing clients with seamless and improved 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 press release states.
“This means you may now use your Premium Naira Card for everyday payments, online shopping, POS, and ATM transactions anywhere in the world with greater simplicity 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.”
Wema Bank also announced the move in a recent statement, saying users can now “pay in dollars” with their naira card.
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“Your Wema Naira Mastercard has just gone global!” You may now pay in dollars on all of your favorite foreign platforms, including Amazon, eBay, and AliExpress. “Netflix, Spotify, and YouTube,” the bank claimed.
Why Banks are Making the Shift
According to Ayokunle Olubunmi, head of financial institution ratings at Agusto & Co, greater liquidity in the foreign exchange (FX) market aided banks’ decision to revive their naira crads for worldwide transactions.
“The moderating premium on the parallel market transactions and the reduced arbitrage opportunities is also responsible for the decision,” he claimed.
Speaking with Charles Sanni, the CEO of Cowry Treasurers, stated that the narrowing spread or margin between official and parallel market rates may have affected the banks’ decision.
He stated that interest rates in Nigeria are quite high, thus borrowing money to speculate on foreign exchange is discouraged.
“The naira has also continued to appreciate versus the rest of the world’s main currencies. Furthermore, there has been a rise in diaspora remittances as a result of the Central Bank of Nigeria’s (CBN) new policy on the opening of accounts for non-residents, particularly Nigerians in diaspora,” he stated.
Sanni also mentioned the federal government’s and the CBN’s renewed trust in FX management as a result of the ease of fund transfers and capital repatriations.
According to the CEO, Nigeria’s credit rating has improved, FX backlogs have been cleared, a new trading platform has been established, oil prices have risen due to geopolitical tensions, and banks have been capitalised.
Between July 2022 and January 2023, several additional banks temporarily halted international transactions via ATMs and POS.
The move was caused by persistent foreign exchange scarcity, which jeopardized the existence of major sectors of the economy.
Standard Chartered Bank stopped accepting foreign transactions with their naira visa debit card in July.
On September 21, 2022, the First Bank of Nigeria (FBN) announced that it would cease foreign transactions on their naira Mastercard.
Three months later, Guaranty Trust Bank (GTBank) suspended worldwide payments on its naira Mastercard, and Zenith Bank joined the fray on January 9, 2023.
Flutterwave, Eversend, and other financial technology providers took similar steps, halting their virtual card services for overseas payments.
