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.