FG to Rake in N1.5Bn Monthly from Stamp Duty on PoS

Federal Government is to realise at least N1.5 billion monthly from the implementation of N50 stamp duty charges on transactions carried out via Point of Sales (PoS)) terminals.

This is based on data released so far by the Nigeria Interbank Settlement System (NIBSS), which showed that monthly average volume of PoS transactions in the country stood at 31 million, according to New Telegraph.

Already, filling stations, supermarkets and other merchants using PoS machines have started adding the fees to their customers’ bills after purchases. Before now, fees were paid by merchants on the aggregate PoS transactions carried out on a particular period, which was never passed to customers.

However, a CBN directive issued on September 17, 2019, compelled banks to charge N50 stamp duty on individual transactions, rather than merchants’ accounts.

With the cashless policy gaining traction, Nigerians have embraced PoS for payment, hence, it has been recording the highest value and volume of transactions, compared to other e-payment platforms. If the monthly volume of transactions on PoS is sustained despite the charges, the N50 charge will amount to over N1.5 billion monthly revenue for government.

NIBSS data for the half year 2019 showed that Nigerians spent N1.38 trillion over PoS, which was 36 per cent increase over the value recorded in the same period last year, which stood at N1.01 trillion.

According to NIBSS, the growth in value was a reflection of the increase in volume of transactions over the channel. The number of transactions within the six months period rose by 55 per cent to 187.6 million, compared with N120.7 million of last year.

A breakdown of the volume of transaction showed that 28.1 million was recorded in January, 25.7 million in February, 29.8 in March and in April, 33.3 million transactions were recorded. In May, the transaction figure rose to 35.4 million, while 35 million was recorded in June.

However, stakeholders are worried that the introduction of stamp duties to be paid by the customers may reverse the gains recorded over the years, even as they fear that government’s cashless policy would be negatively affected.

According to an Executive Director at Inlaks, an integrated payment system company, Mr Tope Dare, the policy will discourage many from using PoS and, in effect, slowing down the cashless policy of CBN.

“Some small merchants who know the impact such charges may have on their sales are also considering dropping the machines to collect cash. While the big merchants like filling stations and superstores may not toe that line, the customers would not want to be paying extra charges and may go for cash payment instead of using their cards,” he said.

While noting that CBN may have good intention in introducing the charges, he said impacts of the policy must be evaluated by the regulator to see how it has fared.

“Whenever regulators issue policy, they should go out to test impact. They must be able to know whether it is working or not

or whether it is having different effect from what was intended. When we just issue policies and sit down in our offices, we may have problems,” he said.

Also speaking, Mr Festus Akwaja, a financial analyst, said the implementation of PoS charges was capable of weakening the financial inclusion drive and financial development goal as a whole.

He added that the stamp duty charge was an anti-financial inclusion policy as it is capable of discouraging small businesses and the very poor from coming into the banking space.

“We suggest that CIBN should make presentation to the authorities for certain set of businesses, accounts and payment platforms such as PoS to be exempted from the stamp duty charges,” he said.

Meanwhile, in a report titled: “Returns on Stamp Duty Collection for Merchant Transactions,” NIBSS said the new stamp duty payment 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 communication on the subject, collection and Remittance of Statutory Charges on receipts to Nigeria Postal Service under the Stamp Duties Act dated 15th January 2016.