Using your UBA Card Abroad or Online? Read This!

International payment cards like
MasterCard and Visa are now commonly issued in Nigeria and most Nigerians are
beginning to use them to buy things online, pay at PoS terminals or withdraw
money from ATMs when they travel outside the country.



When international payment cards are
however used to buy items in dollars or pounds or in other international
currencies, it results in a need for an exchange rate to be determined for
converting the foreign currency to Naira. This exchange rate plus any
additional charges will now determine how much will be deducted or debited from
the customer’s account with the bank that issued the card for his or her


The exchange rate eventually applied
by a bank to deduct the Naira equivalent from a customer’s account has become a
source of great controversy as usually the customer is taken aback when he or
she sees that the rate applied to deduct or debit money from his account is
different from a rate applied by another bank or from a rate that is available
publicly or on the Central Bank of Nigeria (CBN) website.
So how do banks arrive at the rate
to apply when you use your MasterCard or Visa card to buy items online or pay
through PoS or withdraw from a foreign ATM in Dollars or Pounds or in other
internationally recognized currencies?
First note that the exchange rate is
set at the transaction point by MasterCard or Visa, not by the bank.
Also note that the bank that issued
the cards will have to settle the bank that owns the ATM or PoS or web channels
where the transaction took place in Dollars.
The settlement usually happens a day
after the transaction.
Because, the settlement takes place
a day after the transaction, the final transaction amount is subject to
fluctuations in currency. This means that the exchange rate on the day of the
transaction will not necessarily be the exchange rate on the day of settlement.  
The Naira may depreciate or
appreciate between the day (Today) when customer used the card to execute his
or her transaction and when the issuing bank in Nigeria settles in USD the
second day (tomorrow).

Please do not forget that that
interbank rate is higher than the CBN rate. Interbank dollars are dollars
acquired by banks from sources other than the CBN which they now trade with
each other for profit.


In effect, the exchange rate when
you use an international debit card is closer to the rate obtainable from
“black” market. However, using your card is safer and more secured.  


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