Currency dealers circumvent restrictions on trades via mastercard

The value of the naira dipped at an alarming pace over the past few months, dragged down by the falling oil prices as the economy is highly dependent on oil proceeds. In estimation, about 70% of the country’s GDP is coming from oil. Aside, deliberate efforts from the central bank has also put further pressure on the currency.

In an effort to maintain a solidified grip on the currency, the Central Bank of Nigeria had to halt twice the week sale of Foreign currencies via the retail Dutch Auction System (rDAS), and wholesale Dutch Auction System (wDAS), therefore consequently devaluing the Nigerian naira.

In a bid to circumvent the system, measures has been taken by the Bureau de change dealers, who have devised an approach in attempt to beat the system. By utilising merchant services and payment processing companies, many of such dealers now have adopted to the usage of electronic payment cards such as MasterCard and Visa card to run transactions in Foreign exchange.

The advantages of such cards permit travellers to spend from their naira domiciled accounts in foreign currencies anywhere in the world. Additionally, the method restricts a maximum daily limit of $150,000 per year on each card. Now such cards have been obtained on different accounts, so is the limitation up to the maximum of $150,000 secured. Since currency dealers circumvent restrictions on trades via mastercard.

The Central Bank of Nigeria Director of Corporate Communications, Mr. Ibrahim Mu’azu commented as follow; “But we are not doing anything about it for now because of the challenge of tracing individuals with multiple bank accounts in the industry. But I can assure you this is one of the problems that would be addressed with the Biometric Verification Number (BVN). Once we complete the project and every bank customer has a BVN, it would be easy to trace those who have multiple accounts and also monitor what they are using the accounts to do”.

According to information from our source, investigations reveal that the banks has actually encouraged this procedure. Since it provides vast benefits for the banks, pulling more profit in terms of transaction costs accruing on these cards.