News reports say the Federal Government has reviewed the N50 stamp duty charge on electronic payments in the country following public outcry and a reported drop in the number of Point of Sale (POS) transactions. According to reports, the new Financial Bill now states that the N50 charge would be imposed on transactions above N10,000 compared with N1,000 that had previously taken effect across the country in September.
In a circular released by the Central Bank in September, the apex bank authorised banks to unbundle merchant settlement amounts and charge applicable taxes and duties on individual transactions as stipulated by regulators.
This translates to stamp duty payment on individual transactions that occur on POS, rather than on aggregate transactions previously. The merchant service charge was also reviewed downward from 0.75% capped at N1,200 (US$3.33) to 0.5% capped at N1,000.
Many merchants across the country have swiftly introduced a N50 charge on POS payments and this has elicited backlash from users with many now angrily deciding to pay for their goods in cash. A few merchants interviewed noted that the number of POS transactions have dropped significantly since the introduction of the stamp duty which we believe informed the decision by the CBN to review the charge.
Asking consumers to pay an extra N50 if they use the POS machine as a means of settlement appears counter-effective to CBN’s cashless policy agenda in our view. In September, the CBN in a circular stated that daily withdrawals and deposits by individuals that exceed N500, 000 attract a 2% charge on the excess deposits and 3% charge on the excess withdrawals while daily withdrawals and deposits by corporates exceeding N3 million attract a 3% charge on the excess deposits and a 5% charge on excess withdrawals.
This, according to the CBN noted was aimed at reducing the amount of physical cash in circulation and encouraging more electronic-based transactions. Discouraging cash-based transactions, and at the same time imposing multiple charges on electronic-based transactions appears counterproductive.
While we see the positive of increased government revenue from the introduction of the stamp duty charge, we believe it could be a drag on CBN’s financial inclusion drive. Nigerians, especially bank customers complain that they are made to face several charges by the financial institutions.