N50 stamp duty on N1,000 online transactions threatens cashless policy

The N50 stamp duty being charged customers for monies received into their accounts by electronic transfers, cash and cheques, will defeat the purpose of government’s cashless policy, analysts say.

The Central Bank of Nigeria (CBN), last week imposed stamp duties on all Deposit Money Bank and other Financial Institutions customers for any credit transaction over N1, 000 on their accounts.

This has caused a lot of uproar amongst customers   on social and news media, who are of the view that online transactions should be exempted from such charges in order to encourage the cashless policy.

The cashless policy implemented nationwide on July, 1, 2014 aimed at reducing the amount of physical cash circulating in the economy and encouraging more electronic based transactions (payment for goods, services, transfers (e.t.c).

One of the reasons for the implementation of this policy was to reduce the cost of banking services as there would be fewer bank branches and less staff needed, resulting in lower overheads.

Nigerians had hitherto gradually embraced the cashless policy, as most people found it easier and more convenient to make financial transactions from home, the office, or on the go by doing it online, thereby avoiding long queues and paper form filling at bank branches.

However, with this new directive, customers say that there is no difference or advantage in going cashless as the same duties paid on cash and cheque deposits will be applied to online transactions.

“It was already a hassle getting people to transfer money online, especially if you are transferring to a different bank from that of the sender, because there is usually a N105 charge added to the initial amount taken from the sender.

“Now, the receiver will also be charged N50 on any amount above N1, 000 credited into his or her account. It seems quite small but when you receive credit alerts almost every day and calculate how much is deducted in a week and then in a month, it all sums up,” Emara Abah, an accountant at SIAO told BusinessDay in a telephone interview.

Most banks had begun the implementation of the directive with immediate effect and savings accounts and deposits made by account holders into their own accounts, either intra or inter have been exempted from paying the stamp duty charge.

Analysts suggest that government should engage in sensitisation and education of citizens on the importance of stamp duties for government revenue boost, the purpose for implementation, collection and remittance of duties and what the monies collected will be used for.

According to a circular issued by the CBN, every deposit money bank shall open an account into which all charges collected shall be paid. The balances in such accounts shall be transferred monthly by the DMBs to CBN NIPOST stamp duty collection account and other financial institutions shall remit their stamp duty collections to any DMB of their choice.

Tunde Akinbami, a financial expert, told BusinessDay that the government is trying to gather revenue from every possible channel except oil, and so Nigerians must embrace the stamp directives in order to help government.

“The implemented stamp duties charge on all eligible financial transactions is a tax that goes to the government and not money for private individuals or the banks. Everybody must pay tax, there is no rich or poor. Moreover, the poorer Nigerians use savings accounts which have been exempted,” he said.

Data from the Inter Bank Settlement System (NIBSS) which facilitates all electronic transactions in the country had for the first time since its history, recorded over 10 million e-payment transactions on its platform during the month of July 2014.

According to their website, “this trend is not only indicative of  the potential for electronic payments in Nigeria but also the need for greater attention and investments towards enhancing the infrastructure required to create greater efficiency in the e-payment space.”

NIBSS suggested that e-payments would become a significant contributor to Nigeria’s GDP by year 2020. However, with the introduction of online charges and recently, the stamp duty charges which are scaring people away from transacting electronically, many wonder if this will be possible.

Jumoke Akiyode