A few weeks ago, several African fintechs shutdown their virtual dollar card services after their API provider, Union54, experienced recurring chargeback fraud issues.

Many Nigerian businesses and individuals were affected as most can’t use their naira cards to pay for international services like Netflix or Amazon Web Service (AWS). It appears more will be affected in coming weeks. 

What’s happening?

Last weekend, Standard Chartered Bank, a British multinational bank, announced that it would be shutting down international spend on its naira cards. From August 1, all its customers will no longer be able to use their cards to pay for foreign subscriptions. 

Image source: Osarumen Osamuyi (@skweird, Twitter)

This time, the culprit isn’t chargeback fraud but Nigeria’s deteriorating forex situation. 

Over the past few months, several commercial banks in Nigeria have instituted a $20 international spending limit on their naira cards. Banks like Zenith and UBA also suspended the use of naira cards for international ATM cash withdrawals and POS transactions. 

This is all because the Central Bank of Nigeria (CBN), Nigeria’s apex bank, has reduced how much forex it makes available to commercial banks following a massive 2-year drop in its forex earnings. While the CBN continues to sell dollars at an official rate of ₦415/dollar, the prices of forex on parallel markets have soared to ₦630/dollar. 

Zoom out: It’s not clear if other banks will follow suit, but if we learnt anything from Q1 when most banks instituted the $20 spending limit, it’s that bad news comes in quick succession.