E-Financial
Stamp Duty Charge on PoS Transactions As A Disincentive to Increased Penetration
The burden of handling cash by banks and merchants was becoming enormous that central bank of Nigeria conceived and began promoting electronic payment channels to ease the risk.
There are several electronic channels of payment including point of sale terminals (PoS), ATM, instant transfer among others.
The use of PoS for payment at merchant location in Nigeria witnessed acceptance issues by both merchants and customers due to socio-cultural belief until CBN cashless initiative and other policies aimed at driving its penetration.
Today, even as the channel has received some acceptance especially in urban and semi-urban areas, but very many Nigerians and merchants are yet to embrace PoS as a veritable means of payment.
Recently, customers and merchants have expressed reservation in the use of PoS because of the issue of chargeback – a situation where customer account is debited and merchant account not credited. Customers are finding it difficult to get refund in such case; often time merchants are faced with quarry over demand by customers to go with purchased goods.
More so, the desired penetration level in the use of PoS as a means of payment has not been achieved for transactions on the system to be subjected to tax.
As at the end of October this year there are 273,082 deployed PoS terminal for a population of over 100million and volume of 41.6 million.
This figures show level of penetration and use of the channel which by any perimeter cannot be said to have reached an acceptable level to warrant forcing customers to pay for its use.
Before now, the fee paid by merchants on the aggregate PoS transactions carried out on a particular period, was never passed to customers.
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).
A payment terminal service provider who does not want his name mentioned, decried the proposed tax on transactions through the channel, saying that such tax will adversely affect transactions through the channel.
He added that such tax if implemented will make people to go back to holding cash again which is retrogressive to the progress made in cashless initiative.
According to him, “PoS terminal is the most popular channel in the financial inclusion programme of CBN and the banks and any tax on transaction through that channel will amount to disincentive.”
Victor Olojo, president, Association of Mobile Money and Bank Agents in Nigeria (AMMBAN) is deeply concerned about the introduction of stamp duty on single count POS transactions above N1,000 by the CBN. This policy works against the Financial Inclusion agenda and will further make accessing financial services more expensive and burdensome for Nigerians.
The cost of accessing financial services, if high will negatively affect the financial inclusion drive. This policy will increase the cost of providing financial services to customers and in turn, make the effort of financial inclusion counter-productive for all stakeholders; which will end up having negative impact on agents’ capacity to effectively serve the last mile.
As last mile financial service providers, AMMBAN will like to use this medium to call upon relevant authorities to either reverse the policy or review the threshold amount imposed with stamp duty upward from N1,000 to N20,000.
The extra charge on customer’s transaction followed a CBN’s directive to banks to charge N50 Stamp Duty on individual transactions, rather than merchants’ accounts.
The directive on the Unbundling of Merchant Settlement Amounts was contained in the CBN circular to banks, processors and switches, titled: “Review of Process for Merchants Collections on Electronic Transactions”.
The policy stipulates Stamp Duties Payment on individual transactions that occur on PoS, rather than previous plans where charges occurred on aggregate transactions.
The circular signed by CBN Director, Payments System Management Department, Sam Okojere, authorised banks to unbundle merchant settlement amounts and charge applicable taxes and duties on individual transactions as stipulated by regulators.
Julius Arhebun, the Head of Agency Banking a Nigeria’s leading payment service bank, MoneyMaster, has disclosed that the promotion of financial inclusion is one of the core mandates of the service.
He said this recently as the bank introduced a new 100MB data offer for every transaction made in the offer, which is available for Glo customers using the bank’s USSD banking code, *995#. The initiative is meant to incentivize the unbanked and underbanked population to ease the creation of their own mobile wallet via its USSD banking platform.
According to him, the offer builds on the various financial education “we have been providing online and across our various customer touchpoints”.
He added that “with this new 100MB offer, we want to encourage Nigerians in the unbanked and underbanked pools to be financially included by having at least a mobile wallet. The account number of this mobile wallet is derived from their mobile number, and can be easily recalled”.
MoneyMaster PSB is a leading provider of innovative digital financial products and services that transform lives and contribute to sustainable living.
The PSB has the mission to deepen financial inclusion and has been instrumental in providing financial technology services to bridge the gap between the banked, underbanked and unbanked population.
The payment service bank recently unveiled a 10 percent data bonus for existing and new customers who are on the Glo network for recharges of N1000 or more. The offer has been adjudged one of the best in the country based on the volume of data on offer to customers. The data purchases have a 30-day validity while unused data can be rolled over upon next plan subscription.
As part of President Bola Ahmed Tinubu’s state visit to France, the Chairman of UBA Group, Tony Elumelu in the presence of President Tinubu and the President of France, Emmanuel Macron, signed a landmark business cooperation agreement with the French Finance Minister, Antoine Armand.
The agreement is a significant indication of support by the French Government for the development of UBA’s full banking operations in France.
Speaking at the signing ceremony, Tony Elumelu, the Chairman of UBA Group commented: ”This partnership reinforces our commitment to seamless international banking services for our customers, not just across the 11 Francophone African countries we serve, but Africa as a whole; and French and European customers transacting with Africa.
Expanding into France is a natural progression, with Paris serving as our European Union hub, as we continue to bring Africa and the world together, through innovative financial solutions. Paris will join London, New York and Dubai, as a critical component of our unique global network.”
United Bank for Africa is one of the largest employers in the financial sector on the African continent, with 25,000 employees group wide and serving over 45 million customers globally.
Operating in twenty African countries and the United Kingdom, the United States of America, France and the United Arab Emirates, UBA provides retail, commercial and institutional banking services, leading financial inclusion and implementing cutting edge technology.
The National Pension Commission (PenCom) and the Pension Operators Association of Nigeria (PenOp) are taking steps to integrate workers who are not currently contributing to the Contributory Pension Scheme (CPS) into the Micro Pension Plan (MPP).
The initiative targets workers without any form of pension coverage, including those who have left previous employers under the CPS but wish to join the MPP.
The MPP is designed to allow self-employed individuals and those working in companies with fewer than three employees to contribute towards a pension for their retirement or in cases of incapacitation. Additionally, pension operators are developing incentives to make the MPP more appealing to potential contributors.
At the micro pension plan industry stakeholders’ engagement forum held in Lagos recently, organized by PenCom and PenOp, the Acting Director-General of PenCom, Omolola Oloworaran, highlighted the critical role of the MPP.
She said the event’s theme: “Reimagining Micro Pension Plan: Balancing Service, Policy, and Health” accurately captures the essence of the MPP as a transformative tool for improving the lives of Nigerians.
To maximise the impact of the MPP, PenCom is embarking on several initiatives like market segmentation, rebranding, advanced technology, incentives and others.
Oloworaran pointed out that with over 77.5 million workers in Nigeria’s informal sector, even a small increase in MPP participation could unlock billions of naira in savings, positively impacting individuals and the wider economy.
In his presentation on the “Overview of the Micro Pension Plan,” Babatunde Alayande, head of the micro pensions department at PenCom, emphasised the importance of providing incentives to make the MPP more attractive and accessible to its target market.
Okhueleigbe John, head of the micro pension unit at Stanbic IBTC Pension, stressed the need for tailored policies to promote the growth of the MPP. He also advocated more financial literacy, public-private partnerships, and innovative funding strategies to drive incentives for the scheme. Additionally, he called for a review of the pricing structure of micro pensions to make them more appealing to investors.
Dr. Shem Ouma of Kenya APSA also provided valuable insights, recommending that operators incorporate built-in benefits, ensure flexible payment systems for contributors, and leverage technology to drive the MPP forward.
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