Nowadays, regular customers of organised restaurants, petrol filing stations and supermarkets, who wish to use their debit cards to pay their bills, are inundated with notifications that an extra N50 would be charged on every transaction.
In what appears to be a swift move by some merchants, notices are usually pasted boldly at payment points to draw the attention of customers and explain the new service charge.
The extra charge on customers’ transactions followed a directive by the Central Bank of Nigeria (CBN) to banks on September 17, 2019. In the directive, banks were empowered to charge a N50 stamp duty on individual transactions rather than merchants’ accounts.
The directive, on the Unbundling of Merchant Settlement Amounts, was contained in CBN’s circular to banks, processors and switches, titled: “Review of Process for Merchants Collections on Electronic Transactions.”
The policy stipulates payment of stamp duties on individual transactions that occur on the Point of Sale (PoS) machine, rather than previous plans where charges occurred on aggregate transactions.
The circular, signed by the director, Payment System Management Department of the CBN, Sam Okojere, authorised banks to unbundle merchant settlement amounts and charge applicable taxes and duties on individual transactions as stipulated by regulators.
Merchant service charge was also reviewed downward from 0.75 per cent (capped at N1, 200) to 0.50 per cent (capped at N1, 000).
In a Nigeria Inter-Bank Settlement System (NIBSS) report titled, Returns on Stamp Duty Collection for Merchant Transactions, the payment agency said the new stamp duty plan was in line with the provision of the Stamp Duties Act and Federal Government Financial Regulation 2009.
The policy, it added, was aimed at ensuring strict adherence to the CBN guideline on communication on the subject – collection and remittance of statutory charges on receipts to the Nigeria Postal Service under the Stamp Duties Act, dated January 15, 2016.
“These charges are expected to be deposited into the already opened stamp duty collections account at the various DMBs and should form part of the weekly stamp duty rendition by the Deposit Money Banks (DMBs) to NIBSS.”
The NIBSS data showed that the total volume of PoS transactions for 2017 stood at 146.3 million, which was worth N1.4 trillion; 285.9 million transactions in 2018 worth N2.3 trillion and 187.7 million for six months – January to June 2019 worth N1.4 trillion.
Speaking with Daily Trust on Sunday, the managing director of Cowrie Asset Management Ltd, Mr Johnson Chukwu said, “I agree with the CBN on the benefit of the cashless policy. The challenge, however, is that the policy is being implemented at the same time with penalties or taxes on alternative payment platforms.
He said everyone expected the government and the CBN to harmonise their policy purpose.
“What the citizens are going through is a double whammy. We do cash transactions and get penalised. We also do card transactions and get penalised.
“In the main time, this government should allow transactions on the alternative payment channels at no tax, otherwise the cashless policy of the CBN is plausible,” Chukwu said.
He said he would not exactly fault the use of sanctions or penalty to deter people from using cash, but it should not come at the same time when government is imposing taxes on alternative platforms.
In few places visited in Lagos, Daily Trust on Sunday observed that the development may have informed the reduction in the number of active terminals registered for transaction.
Statistics obtained from the NIBSS showed that the number of inactive PoS terminals in the country tripled in the last 10 months, reaching 131, 201 in October.
In January this year, NIBSS data showed that the number of inactive terminals was 43,320.
Out of a total of 404,283 terminals registered by Nigerian banks in October, only 273,082 had been deployed for cashless transactions. The data showed that a total of 150,153 new PoS terminals were registered by banks for cashless transactions across the country in the first 10 months of the year.
In January, 7,975 new terminals were registered by Nigerian banks, in February, 5,854 terminals were registered and 2,161 PoS terminals were registered in March.
In April, the number of new terminals obtained by merchants recorded a boost as 17,102 PoS terminals were registered by banks.
In May this year, 9,967 new terminals were registered by banks, while in June, the registered terminals reduced to 1,297.
A total of 11,234 new terminals were registered in July; and 7,844 PoS devices in August this year.
September saw new PoS registration peak with 69,248 new terminals while 20,065 terminals were registered in October.
The president, Association of Mobile Money and Bank Agents in Nigeria, Mr Victor Olojo, confirmed the dwindling PoS transactions, saying it was unprofitable for merchants to continue using the devices without charging customers.
He said, “We have filling stations and big merchants who have actually dumped the PoS because customers have declined using it, and in other cases, it is not profitable any more when they don’t charge customers; they have to bear the cost of the N50 stamp duty.
“To a large extent, the PoS is still a very important tool for agent banking, and in most cases, the agents try to push the N50 stamp duty charge to the end users.”
A supermarket owner at Ogba in Lagos who did not want his name mentioned said, “The government should have a rethink because this directive is discouraging cashless payments, even though N50 appears negligible.
“Sometimes they demand that I instruct one of my sales representatives to accompany them to Automatic Teller Machines to collect cash because they don’t want to use the PoS.”
Also, some residents of the Federal Capital Territory (FCT), Abuja have lamented the N50 charges on PoS usage, describing it as irrelevant.
Uche Anthony said government would not achieve anything good from the ‘imposition of charges’ on residents, saying the policy is making an already bad situation unbearable.
“With what we are going through, the government still directed the CBN to charge N50 for using PoS? This government is insensitive,” he said.
Anthony, who is a trader, said the charges also contradicted the plan of the CBN to run a cashless economy. He urged the government to reverse the move so as to make business environment conducive for traders and residents.
“When I got to a petrol station and the attendant said he would add N50 on the N3,000 fuel I wanted to buy, I was angry because I felt he wanted to cheat me. I refused and left the petrol station until I asked around and confirmed it was a CBN directive,” another resident, Mrs Agnes Adeleye said.
She now withdraws cash from the Automated Teller Machine (ATM) before driving into a patrol station to buy fuel.
“I now withdraw the money I would need from the ATM before leaving the office since my bank is close. How much do I have that I will be giving the government or whoever N50?” She asked.
But an entrepreneur in EFAB Estate, Lokogoma, who did not want his name mentioned, said the charges would not deter her customers. “Once I tell them, they agree because they already know about it and I proceed with the transaction,” she said.
Also, Joshua Johnson, a Gwarinpa resident said, “How do you correlate charges on the PoS with cashless banking? The government should, if possible, reward residents for using the PoS instead of imposing charges. This will encourage electronic transaction.”
In Kaduna State, the effect of the additional N50 stamp duty charges is minimal. While some residents claim not to have noticed any increase, others encourage their customers to use the transfer facility to reduce cost.
Abubakar Hassan, a businessman said, “I noticed a N50 increase on every PoS transaction from N1, 000 upwards, which the government calls VAT. And we cannot stop using our PoS because many customers come to the shop because they know we have the machine.
“VAT is not a new thing, and we see it in many developed countries; the difference is that while we see the effect on VAT in the economy of other countries, it is not applicable in Nigeria. The charge is quite large, especially if a customer is buying goods worth thousands and millions of naira.”
A business owner, Hajiya Aisha Abubakar said she had since reverted to transfer since her PoS machine failed when her customer’s account was debited and she did not get the money.
“I prefer cash transactions in my shop; then I can take the money to the bank myself even though I also use the transfer facility sometimes.
“I have not noticed an increase of N50 charge on my PoS, may be it depends on the usage and the volume of transactions a business does,’’ she said.
Abdullahi Mohammed, another shop owner, said he had to stop using the PoS machine in his shop due to the bank charges.
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