• A new NGN 50 e-levy on digital transfers sparks outrage among Nigerian fintech users.
• Companies like OPay and Moniepoint face user dissatisfaction amid rising operational costs.
• The levy raises concerns about financial inclusion and fintech growth in Nigeria.

Taxing Transfers and Tensions

In Nigeria, a new NGN 50 (USD .03) electronic money transfer tax (e-levy) has sent shockwaves through the country’s fintech ecosystem. Companies like OPay, PalmPay, and Moniepoint, known for revolutionizing payments and Point-of-Sale (PoS) systems, are at the heart of this disruption.

The e-levy, introduced by the government, applies to transfers above NGN 10,000 and has been incorporated into PoS transaction fees by operators. OPay, a leading digital wallet provider, and Moniepoint, Nigeria’s top fintech processor, have both had to adjust.

“Please be informed that starting September 9, 2024, a one-time 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. It is important to note that Opay does not benefit from this charge in any way as it is directed entirely by the federal government.”

OPay Statement

Operators are passing costs to consumers, citing operational challenges and government mandates. The backlash was swift. Many users spoke out, slamming the levy as another hurdle in already strained financial transactions.

“It’s not that I don’t want to pay my tax, but my concern lies on how the collected taxes are being utilized. In this country, we are the ones providing most of our basic needs, including water, electricity, healthcare, education, and security.”

@gwaniforlife, X user

A Taxing Trend or a Necessary Evil?

This development comes at a critical juncture for Nigeria’s fintech industry. In 2022, Moniepoint processed over 200 million transactions monthly, according to company data. 

Similarly, OPay claimed a massive user base of 30 million, thanks to its cost-effective and efficient platform. PalmPay, another contender, has also seen rapid adoption due to its user-friendly payment ecosystem.

The NGN 50 e-levy could deter everyday users who rely on PoS systems for cash and convenience. However, the government argues it’s essential for boosting non-oil revenue. Financial inclusion, a stated priority in Nigeria’s Vision 2030, may take a hit if low-income users are discouraged from transacting digitally.

“The Federal Government’s move to impose a N50 levy on fintech transactions is driven by a desire to boost revenue. However, this approach may have unforeseen consequences. By targeting digital transactions, the government may inadvertently discourage people from using these services, leading to a demonetisation of the economy.”

Marcel Okeke, Former Chief Economist at Zenith Bank

Yet, fintechs are adept at navigating tough terrain. By providing affordable alternatives, they’ve shown resilience in the face of economic pressure and policy shifts.

E-levy: Innovation vs. Taxation

While the e-transfer levy complicates things, it’s unlikely to halt Nigeria’s fintech momentum. Companies like Moniepoint have invested heavily in infrastructure to support small businesses with PoS devices and digital banking services.

OPay’s expansion into ride-hailing and food delivery also signals diversification that cushions revenue streams. Innovation may be the answer. Solutions like PalmPay’s cashback incentives or OPay’s super app could help offset costs for consumers, keeping them engaged.

However, fintechs must tread carefully. Alienating price-sensitive customers could reverse years of progress in financial inclusion. This NGN 50 e-levy might sting today, but Nigeria’s fintech industry has shown it can turn challenges into opportunities.