On December 1, 2024, operators of Point-of-Sale (POS) terminals in Nigeria started imposing a charge of N50 on electronic transactions involving inflows of N10,000 or more. This new fee is a direct result of the government’s implementation of the Electronic Money Transfer Levy (EMTL), introduced as part of the Finance Act of 2020. The Federal Inland Revenue Service (FIRS) mandated the collection of this levy to improve revenue from electronic transactions in line with the Stamp Duty Act. Several fintech companies, including Moniepoint, PalmPay, and OPay, communicated this change to their customers, clarifying that they would not benefit from the charges, as the fees would be directly remitted to the Federal Government. Notably, the levy does not apply to transfers between accounts held by the same user within the same provider.
Various POS operators expressed their dissatisfaction with the implementation of this charge. For instance, Kazeem Adewale, a POS operator in Ogun State, shared his struggles in explaining the new fee to his customers, who often perceived it as an attempt to cheat them. He noted an increase in charge prices as a direct consequence of the new levy, indicating that he and his colleagues had to raise prices to compensate. Similarly, Helen Faniran from Ondo State revealed that the cash crunch in the market forced her and other operators to seek alternative means of sourcing cash, resulting in higher service charges to cover their expenses. These operators lamented the rising operational costs, which they must pass on to consumers.
Customer reactions to the new charges displayed a mixture of frustration and confusion, with many feeling they were disproportionately affected. One customer mentioned an inflated transaction cost of N600 for a N20,000 withdrawal, reflecting a significant increase from previous rates, while others complained about the added pressure from POS operators to raise their transaction fees. Social media platforms saw a surge in complaints against the Electronic Money Transfer Levy, with users voicing concerns over what they considered an unfair tax on digital transactions. Many branded the levy as a form of state-sanctioned theft, expressing their discontent with the repeated imposition of taxes without corresponding accountability from the government regarding the management of public funds.
The Electronic Money Transfer Levy had previously faced backlash when it was first proposed in September, which led to a suspension of its implementation. Economists and analysts had warned that such a tax would negatively impact the rapidly growing fintech sector and ultimately hinder digitization efforts in the Nigerian economy. The apprehension surrounding the levy was founded on the idea that taxing digital transactions would discourage people from utilizing these convenient financial services, leading to increased reliance on cash and potentially harming the overall economy. Former Chief Economist at Zenith Bank, Marcel Okeke, argued that the government’s strategy might backfire by decreasing the adoption of digital financial tools among the population, which are essential for modern financial practices.
Some economists considered the EMTL a reactionary measure by the government, stemming from financial desperation in light of ongoing economic challenges. They argued that, given the current economic climate marked by inflation and shrinking disposable incomes, introducing a new tax would only exacerbate hardships for citizens who are already struggling. Alias Aliyu, another economist, illustrated this sentiment by emphasizing that economic conditions do not support the imposition of such levies. He posited that the government should pursue more strategic and sustainable revenue-generation methods rather than imposing additional burdens on the populace.
In conclusion, while the imposition of the Electronic Money Transfer Levy aims to increase revenue through electronic transactions, the practical implications reflect a growing discontent among consumers and POS operators alike. The sense of injustice among the public toward the levy highlights broader issues of governance and accountability regarding financial policies in Nigeria. The reactions from both consumers and analysts emphasize the potential adverse effects such taxation may have on the fintech sector and the digital economy at large, posing a challenging dilemma for the government as it seeks to balance revenue generation with fostering an innovative financial environment. The upcoming months will likely see continued scrutiny of the levy and its consequences on both operators and consumers in the ever-evolving digital finance landscape of Nigeria.
