ATM fees divide banks, scale emerging as key factor

DAR ES SALAAM: ATM withdrawal fees in the country reveal a growing divide between banks, with larger institutions able to charge far less than smaller lenders.

The latest Bank of Tanzania dataset shows that tierone banks such as CRDB and NMB maintain some of the lowest charges for customers using their own ATMs, while smaller and foreign-owned banks levy significantly higher fees, particularly for offnetwork withdrawals According to the BoT data, CRDB Bank and NMB Bank continue to offer some of the most affordable ATM withdrawal charges, typically around 1,000/- per transaction at their own ATMs.

CRDB’s maximum charge stands at 3,390/-, while NMB caps at 1,800/-. The exception is Equity Bank charges the lowest minimum fee for own ATMs at 400/- while its maximum is 1,600/-, though it levies a flat rate of 4,500/- for other banks’ ATMs.

Analysts said the banks’ extensive nationwide networks, with hundreds of ATMs across both urban and rural areas, enable them to keep fees low and competitive. Economist-cum-investment banker Dr Hildebrand Shayo said larger banks benefit from economies of scale, which allow them to spread fixed costs such as technology, ATM maintenance, and regulatory compliance across millions of transactions. He said this efficiency enables them to charge lower fees while still remaining profitable.

“Tier-one banks like CRDB, NMB, and NBC operate hundreds of ATMs countrywide, which reduces their reliance on interbank networks such as UmojaSwitch or TIPS,” Dr Shayo said.

“They avoid incurring additional switching or access costs, allowing them to pass these savings on to customers through lower withdrawal fees.” United Bank for Africa (UBA) Tanzania charges as low as 1,000/- per withdrawal from its own ATM but goes up to 8,000/- plus 1.0 per cent for off-us transactions—the highest in the market followed by Ecobank Tanzania minimum at 1,000/- own ATMs others up to 6,000/-.

The most reasonable bank is I&M Bank, which charges a flat rate of 1,500/- for both own and other ATM withdrawals. It is followed by KCB Bank, with a flat rate of 1,000/- for own and 2,500/- for off-us. Selcom Microfinance charges a flat rate of 2,500/- for any withdrawal.

Vertex International Securities Research and Analytics Manager, Frank Abel, said the larger ATM footprint of tier-one banks is a key reason for their lower withdrawal fees.

“Their scale enables them to spread operational costs across a higher number of transactions, effectively lowering the unit cost per withdrawal,” he said.

In contrast, smaller and foreign-owned banks — with fewer ATMs and smaller customer bases — continue to post higher withdrawal charges. Their limited infrastructure and lower transaction volumes mean they face higher per-transaction costs, often passed on to customers.

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“Smaller banks rely heavily on transaction fees as a source of income,” Dr Shayo said.

“Their customers often use other banks’ ATMs, attracting switching fees that raise overall withdrawal costs.” Other tier-one players such as NBC and Stanbic Bank also keep their ownATM fees relatively low, between 1,400/- and 1,500/-, though charges for customers using other banks’ ATMs range from 3,000/- to 5,000/-.

Leonard Joseph, a Dar es Salaam-based economist, said ATM withdrawal fees have become a competitive differentiator in Tanzania’s banking landscape.

“Larger banks leverage their scale to maintain low fees, while smaller banks, unable to justify the investment in wide ATM networks, pass the costs to customers,” he said.

The BoT’s disclosure on bank charges has increased transparency, enabling consumers to compare withdrawal fees and make more informed choices.

Analysts said that for larger banks like CRDB and NMB, low ATM fees reinforce customer loyalty and competitive strength, while for smaller lenders, rising charges may risk alienating clients who could switch to bigger players offering cheaper access.