The Nigerian banking community woke up on Sunday, December 1, 2024, to a federal government directive instructing banks and fintech companies to immediately implement a ₦50 deduction on electronic transfers above ₦10,000. This directive is part of the Electronic Money Transfer Levy (EMTL), introduced under the Finance Act of 2020, but its scope has now been expanded to include mobile money operators like Moniepoint and PalmPay, with enforcement effective immediately.
The levy applies to all electronic transfers, with a few exceptions: transfers below ₦10,000, payments into one’s own account, and transfers between accounts held by the same owner within the same bank. According to reports, Moniepoint promptly notified its customers about this change, stating it was in compliance with the Federal Inland Revenue Service (FIRS) directive.
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While the EMTL has sparked heated discussions and fuelled widespread public outcry, it is merely the tip of the iceberg when it comes to the myriad of charges that Nigerian banking customers face daily. These fees, often embedded within routine transactions, have transformed what should be a seamless and affordable banking experience into a costly and frustrating ordeal. From SMS alerts and transfer fees to card maintenance charges and VAT on services, the list of deductions appears endless, leaving customers feeling burdened and exploited.
The reality is that many Nigerians, especially low-income earners and small business owners, now find themselves navigating a labyrinth of charges that erode their hard-earned money with every transaction. These fees collectively create a financial bottleneck, undermining the supposed convenience and affordability of digital banking. As customers grapple with over 19 distinct charges, the frustration continues to mount, with some questioning whether the push for a cashless economy is truly in their best interest or simply a means for financial institutions and the government to increase revenue at their expense.
A long list of charges
Here are the various charges that banking customers encounter:
Electronic Money Transfer Levy (EMTL): A ₦50 levy on all electronic transfers of ₦10,000 and above.
SMS Alert Fees: ₦4 per notification sent to customers for transaction alerts, whether debit or credit.
Stamp Duty: ₦50 charged for each transaction of ₦10,000 and above.
Transfer Fees: Fees vary depending on the bank, transaction amount, and transfer mode.
POS Transfer Fees: Charges for using Point of Sale (POS) machines for deposits or withdrawals. Roadside POS operators charge as much as ₦100 for every ₦5,000 transacted.
ATM Transfer Fees: Fees apply after the third monthly ATM withdrawal on another bank’s machine or for online bill payments made through ATMs.
Commission on Turnover (COT): Charged at 0.1 percent to 0.5 percent of transaction amounts.
Value Added Tax (VAT): VAT of 7.5 percent is applied to transfer fees.
Foreign Exchange Commission Fees: Applicable for currency conversions in international transfers.
Online Transfer Fees: Charged for international business transactions conducted online.
SWIFT Transfer Fees: Applied to international transfers via the SWIFT network.
Remita Retrieval Reference (RRR) Charges: Applied when processing school fees or other payments through Remita.
Interbank Transfer Fees: Charged for transfers between different banks.
Card Maintenance Fees: Monthly fees for maintaining debit or credit cards.
Card Issuance Fees: Charged for new or replacement cards.
VAT on SMS: Customers are charged VAT on SMS notifications.
Outflow/Inflow Charges: Fees applied for receiving or sending funds into accounts.
USSD Charges: ₦6.98 per transfer conducted through USSD codes, varying by bank.
Cheque Issuance Fees: Fees for issuing new cheque booklets.
Cybersecurity Levy: A proposed 0.5 percent levy on selected transactions, though temporarily suspended after public outcry.
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Implications for financial inclusion
The cumulative effect of these charges is burdensome for customers, particularly in a country where financial inclusion is a key policy goal. Many low-income earners, small and medium enterprises (SMEs), and vulnerable groups are disproportionately affected. High transaction costs could discourage people from using banking services, increasing the risks associated with storing cash outside the banking system, such as theft and armed robbery.
While these charges may boost revenue for financial institutions and government agencies, they are counterproductive to efforts aimed at promoting a cashless economy. Customers increasingly perceive the charges as exploitative, which undermines trust in the banking system.
Call for regulatory intervention
Regulators must urgently address the issue of multiple charges to protect customers, especially low-income earners and SMEs. A review of these charges is necessary to strike a balance between revenue generation for financial institutions and fairness to consumers. Transparent and streamlined fee structures will ensure banking remains accessible to all, fostering economic growth and financial inclusion.
Conclusion
The federal government and financial institutions must urgently reassess these policies to prevent the unintended consequence of alienating customers from the formal banking system. A banking system riddled with excessive charges risks driving individuals and small businesses back to a cash-based economy, undermining the very objectives of financial inclusion and digital transformation.
To foster trust and encourage participation, policies must prioritise affordability, transparency, and equity. Clear guidelines on charges should be established to ensure customers understand what they are paying for, while unnecessary fees should be eliminated to reduce the financial strain on already overstretched households and businesses. Additionally, financial institutions must adopt innovative solutions to balance revenue generation with customer satisfaction, such as offering tiered or reduced charges for low-income earners and small-scale transactions.
A thriving cashless economy depends on public confidence and convenience. Thus, creating an enabling environment where banking services are seen as a benefit rather than a burden is not just important—it is essential. This requires collaboration between regulators, financial institutions, and advocacy groups to ensure that policies reflect the realities of the average Nigerian while safeguarding the goals of economic modernisation and growth. Failure to act could result in a significant regression in financial inclusion and economic stability, undermining years of progress.
Kingsley Ndubueze Ayozie, KJW, MSc (Finance), MBA, ACSI (UK), FCTI, FCA, is a Public Affairs Analyst and Chartered Accountant, Lagos.
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