CBN Issues New Guidelines for Instant Refunds on Failed ATM Transactions

The Central Bank of Nigeria (CBN) has released a new set of draft guidelines requiring commercial banks and financial institutions to issue instant refunds for failed Automated Teller Machine (ATM) transactions.

The policy, issued on October 9, 2025, is part of the apex bank’s broader efforts to strengthen consumer protection, enhance financial transparency, and build trust in Nigeria’s digital payment ecosystem.

9The new directive, signed by Musa I. Jimoh, Director of the Payments System Policy Department, was distributed to banks, payment service providers, card issuers, and independent ATM operators across the country. Stakeholders have until October 31, 2025, to submit feedback before the policy is finalized.

CBN Enforces Stricter Timelines for Failed Transaction Reversals

Under the new refund framework, the CBN has introduced strict timelines for reversing failed ATM transactions.

For on-us transactions — where customers use their own bank’s ATM — the refund must be processed instantly. If an instant reversal is not possible due to technical issues, the bank is required to manually correct the transaction within 24 hours.

In the case of not-on-us transactions, where customers withdraw cash from another bank’s ATM, the CBN has mandated a maximum refund window of 48 hours.

Additionally, ATM acquirers must deploy automated systems that trigger refund processes immediately after a failed transaction, even before a customer lodges a complaint.

“This initiative is aimed at improving consumer confidence in the Nigerian financial system and eliminating the frustration associated with delayed reversals,”
the circular stated.

Banks and independent ATM deployers are also required to reconcile all outstanding funds from partial or failed cash disbursements and ensure that customers receive complete refunds without delay.

Part of a Broader Reform in ATM Regulation

The refund directive is only one aspect of the CBN’s ongoing overhaul of Nigeria’s ATM regulatory framework, which replaces parts of the 2020 Electronic Payment Guidelines.

According to the CBN, the update became necessary due to the rapid growth of electronic payments, the increasing threat of cyberattacks, and the push to expand financial inclusion across the country.

The new guidelines introduce fresh operational requirements that will change how banks, card issuers, and ATM operators manage cash dispensing and customer support services.

New ATM Deployment Rules for Banks

To ensure broader access to cash and financial services, the CBN has directed all banks and card issuers to deploy at least one ATM for every 5,000 issued cards.

This deployment target will be implemented gradually:

• 30% compliance by 2026
• 60% compliance by 2027
• Full compliance by 2028

Furthermore, any installation, relocation, or decommissioning of ATMs will now require prior approval from the Central Bank.

The guidelines also mandate that all ATMs must meet Payment Card Industry Data Security Standards (PCI-DSS), maintain detailed audit logs for dispute resolution, and include clear card orientation symbols for users.

Accessibility and Security Requirements

In a move to promote inclusivity, the CBN now requires that at least 2% of all ATMs deployed by each bank must include tactile symbols and accessibility features for visually impaired customers.

Other mandatory safety and convenience features include:

• Installation of anti-skimming devices and surveillance cameras that protect user privacy
• Proper lighting and secure ATM locations
• Availability of backup power to prevent service interruptions
• Clear on-screen instructions and more time allowances for completing transactions

Additionally, ATMs must dispense cash before releasing the customer’s card, to reduce the risk of abandoned funds, and must issue receipts upon request.

The CBN also requires banks to maintain helpdesk lines, enable free PIN changes, and ensure that only clean and fit banknotes are dispensed from cash machines.

CBN to Enforce Compliance Through Regular Audits

The Central Bank has made it clear that it will monitor compliance through routine audits, on-site inspections, and mandatory monthly reports from all ATM operators.

These reports must detail new deployments, machine conditions, and transaction data to help identify and resolve recurring system failures.

Institutions found violating any of the provisions risk facing regulatory sanctions and monetary penalties. Although the circular did not disclose the specific fines, industry experts expect that non-compliance could attract steep penalties to discourage negligence.

Consumer Protection and Trust Building

The CBN’s new guidelines are designed to address one of the most common complaints among bank customers — failed transactions without timely refunds.

The reform aims to:

• Strengthen consumer protection mechanisms
• Boost public trust in digital banking systems
• Promote accountability among banks and ATM operators
• Support Nigeria’s transition toward a cashless, technology-driven financial system

By ensuring that refunds are made instantly or within strict time limits, the apex bank hopes to reduce customer grievances and increase confidence in the reliability of electronic banking channels.

Alignment with Global Banking Standards

According to analysts, these reforms position Nigeria’s financial system closer to global best practices in digital banking and transaction dispute management.

Instant refund systems are already standard in advanced markets like the United Kingdom, Singapore, and the United States, where customer protection is central to payment regulation.

The CBN’s new rules could help local banks strengthen their technological infrastructure, minimize fraud risks, and foster healthier competition in the Nigerian financial services sector.

Background: ATM Fee Revisions and Cashless Policy

This latest reform follows the review of ATM transaction fees announced earlier in 2025, which removed the three free monthly withdrawals previously granted to customers using other banks’ ATMs.

The policy forms part of the CBN’s larger strategy to streamline Nigeria’s cashless economy, promote digital payment adoption, and enhance service delivery across electronic banking platforms.