On a recent Monday, operators of Point-of-Sale (POS) terminals increased their service charges as a result of the Federal Inland Revenue Service’s (FIRS) newly implemented Electronic Money Transfer Levy (EMTL) of N50. This charge applies to any electronic inflow of N10,000 or more, prompting various fintech platforms to inform their customers of the new levy. Moniepoint, for instance, communicated to users that the N50 charge for inflows of N10,000 or above is a requirement under the Federal Government’s Stamp Duty Act. Importantly, they clarified that this charge does not benefit them in any way as the fees collected would directly be remitted to the FIRS. Moniepoint’s notice specified that the levy does not apply to transfers between accounts owned by the same user.
Similarly, PalmPay and OPay followed suit by notifying their users about the implementation of the EMTL, which was mandated by legislation established in 2022. PalmPay emphasized its commitment to providing affordable services by continuing to offer free transfers, noting that the EMTL fees would be directly funneled to the federal government. In essence, the EMTL charges reflect an expanded scope introduced by the Finance Act of 2020, which revised the Stamp Duties Act to include electronic transactions. The act stipulates a one-time charge of N50 on electronic receipts or transfers contributing to the broadening of the government’s revenue base through digital means.
The reaction from POS operators regarding the levy has been mixed. Many, like Kazeem Adewale from Ogun State, voiced frustrations over dealing with unhappy customers who perceive the increased fees as an unjustified burden. These reactions highlight the sensitive nature of financial services in Nigeria, where many small business operators are already grappling with cash scarcity and other economic pressures. Other operators mentioned adjusting their fees not only because of the new levy but also due to the rising costs of procuring cash. It’s common for POS operators to purchase physical cash from market vendors, and the reliance on these third-party transactions adds additional strain to their profit margins.
Customer reactions to the new charges have similarly been negative, with some claiming they have seen significant increases in transaction fees that exceed the stated N50 levy. On social media, users expressed outrage over what they described as exploitative practices from both the government and POS service providers. Phrases like “obnoxious tax” and “robbery in broad daylight” surfaced regularly in discussions, showing widespread discontent. Customers voiced their frustrations over the compounded fees they face, which paint an alarming picture regarding the financial strain placed on ordinary citizens using digital transaction methods.
The implementation of the EMTL has stirred significant concern among economists as well. Initial reactions to the levy suggested a potential negative impact on Nigeria’s fintech sector, with experts discussing the risks of discouraging users from electronic transactions altogether. Former Chief Economist at Zenith Bank, Marcel Okeke, argued that while the government’s move aims to bolster revenue, it may inadvertently lead to a demonetization of the economy. Aliyu, another economist, echoed similar sentiments, referring to the decision as a desperate attempt to increase finances without consideration of the prevailing economic conditions affecting consumers, especially during challenging times.
As of now, it remains unclear how both consumers and POS operators will adapt to the these financial changes, as the debate around the EMTL raises important questions about the balance between government revenue needs and the necessity for accessible, affordable financial services. The sentiments expressed by both operators and customers highlight a dissatisfaction with the imposed taxation framework, which conflicts significantly with aspirations for a thriving digital economy. The situation calls for dialogue and perhaps reconsideration of such levies to support the growth of financial technologies while ensuring that ordinary citizens are not placed under undue financial strain.
