The fintech revolution in Nigeria has long promised customers a seamless, low-cost banking experience. From quick money transfers to free deposits, these platforms—Moniepoint, OPay, PalmPay, and others—have enjoyed widespread popularity. But come September 9, 2024, things will change for users of these services.
It’s a regular Saturday morning, and Moniepoint’s customers receive a notification on their phones. The message is clear: starting September 9, any inflow of N10,000 and above will attract a mandatory N50 charge. The deduction isn’t coming from Moniepoint or OPay. Instead, it’s part of a Federal Inland Revenue Service (FIRS) directive to implement the Electronic Money Transfer Levy (EMTL), a tax that now extends to fintech services.
The End of Free Transfers
For years, fintech platforms provided an appealing alternative to traditional banks. Customers enjoyed free transfers and the ease of sending money without the usual bank charges. But this era of zero-cost banking is drawing to a close.
Moniepoint, OPay, PalmPay, and others are notifying their customers that the new N50 fee is not for the benefit of the platforms themselves. The deduction goes directly to the federal government, as OPay explained in its communication to users:
“Please be informed that starting September 9th, 2024, a one-time fee of N50 will be applied to electronic transfers of N10,000 and above, paid into your personal or business account, in compliance with the Federal Inland Revenue Service (FIRS) regulations.”
This message, while abrupt for some, is all part of a broader government strategy to shore up revenues through taxes and levies, as the country grapples with economic challenges.
A Broader Government Move
The Electronic Money Transfer Levy was first introduced in the Finance Act 2020, applying only to transactions conducted through traditional banks. But as fintech platforms grew in popularity, becoming the go-to for millions of Nigerians, it was only a matter of time before the government turned its sights on these digital financial services.
Fintechs, with their massive user base and increasingly significant role in Nigeria’s financial system, have now been brought under the same umbrella. The charge applies to all electronic money transfers of N10,000 or more, but there are exceptions—transfers below N10,000 or money moved between accounts of the same owner within the same bank are exempt.
The EMTL’s Purpose
Though met with mixed feelings from users, the N50 charge, which may seem small, adds up significantly. But where does all this money go?
The revenue from the EMTL is shared among the three tiers of government: the federal government takes 15%, the state governments receive 50%, and local governments claim 35%. The levy is intended to promote the growth of electronic transfers while providing much-needed revenue for government operations.
In a time when public services and infrastructure funding are critical, the government views the EMTL as a vital source of income.
For fintech customers, the coming weeks will bring adjustments as these new charges roll in. It’s a sign of how quickly Nigeria’s financial landscape is evolving. Once seen as disruptors to the traditional banking industry, fintechs now find themselves subject to the same financial regulations as their more established competitors.
As the N50 EMTL charge takes effect on September 9, users may be frustrated, but for Moniepoint, OPay, and the others, it’s simply a matter of compliance with government directives. And for Nigeria, it represents another step toward expanding its tax base and ensuring that the digital economy contributes to the nation’s coffers.
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