Business
Cashless policy: Nigerians dump POS transactions
– Now carry cash to avoid N50 stamp duty surcharge
By Yusuf Mohammed
As the economic distress in the country continues to worsen, Nigerians are responding according to the changing circumstances. Recently, government introduced N50 surcharge on Point of Sale, PoS, transaction. PoS transaction have been gaining popularity with many Nigerians as the Central Bank of Nigeria, CBN, continues to pursue its cashless policy which is aimed at discouraging people from carrying cash with them.
But from emerging indications, the stamp duty on PoS transactions of N1,000 and above is a setback for the cashless policy of the Central Bank of Nigeria (CBN) as many Nigerians have decided to move around with cash in order to avoid being debited N50. The new PoS surcharge is part of government desperate bid to shore up its revenue given the acute underfunding of the budget in recent years which has had to been augmented with massive borrowing.
CBN in September, 2019, released new guidelines for the cashless policy in the country. Under the new guidelines, bank customers are to pay cash handling charges for daily cash deposit and withdrawal in excess of N500,000 for individuals and N3 million for corporates.
To this end, the CBN issued a circular to banks and other stakeholders titled, ‘Review of Process for Merchants Collections on Electronic Transactions.’ Accordingly, the Nigeria Interbank Settlement System issued a circular titled, ‘Returns on Stamp Duty Collection for Merchant Transactions.’ Both bodies are working closely in setting remittance and money transfer processes that necessitate the collection of stamp duty charge for PoS.
The new policy covers every transaction that occurs on PoS platform. For every PoS transaction of a N1, 000 or more, a stamp duty of N50 will be collected. The world has gone digital and the banking industry is not left behind. Several years ago, everyone irrespective of societal status had to walk into the banking hall for any kind of transaction.
Cash deposit, cash withdrawal, transfers and the rest had to be done manually. Today, the case is different with technological advancement. With a mobile phone, Nigerians can do almost all financial transactions as long as they have any of the banking apps.
This new system is not without its hitches as there have been many complaints of trapped funds due to network problems on online transactions. The problem does not just end at the money being trapped; getting a refund from the banks is the major headache for customers.
Even those who pay for electricity sometimes use the PoS. Sometimes these transactions fail without debiting the customer. What is worse is that, at times, the transaction fails and debits the customer without the service provider receiving it. Stamp duty on PoS has compounded the problem of electronic banking and making the cashless policy difficult to actualise.
On banks not returning trapped funds early; the problem is very common with PoS, one of the cashless policy instruments. Credit card or ATM card is used to make transactions not only in the banking hall but also in supermarkets, boutiques, restaurants, pharmacies and bars.
BusinessHallmark gathered that many supermarkets and filling stations are already adding the new fee to the customer’s purchases. Hotels are not also left out.
In order to avoid dispute with its customers, filling stations have pasted notices on their pumps.
In a notice to its customers, a filling station official said: “N50 Stamp Duty Charge on PoS Transactions. Following the CBN directive of September 17, 2019 to charge applicable taxes and duties on individual electronic transactions, all Hayden Retail Stations shall henceforth charge N50 extra on all PoS transactions from N1, 000.”
The downside of this directive is that many Nigerians see this stamp duty on PoS as an increase in the pump prices of fuel or any other goods and services. If a customer purchases 10 litres of petrol at the current price of N145, the total cost is N1, 450.
But with this new policy, if the customer pays the N1, 450 using PoS, he or she will be incurring an additional cost of N50, taking the total cost to N1,500. Therefore, there is an urgent need to educate consumers and make it clear that this is a government instruction enforced by the CBN.
Some people are not aware that people can pay in cash and avoid the PoS stamp duty surcharge. Those who are aware have decided not to make use of the PoS anymore. Many Nigerians are complaining that this new policy is nothing but extortion.
Daniel Afolabi, a chartered accountant, said, “How can they want people to move around with less cash and now be charging money on PoS transactions? Since I found out that there will be bank charge of N50 on any transaction that is N1, 000 or above, I have stopped making use of PoS.”
He further said, “So, if I go to a supermarket to buy goods worth N1,000, I have to pay N50 for Stamp Duty, pay N4 for SMS Alert and still pay N52 for inter-bank transactions charges. It is crazy.”
A social commentator, Mr. Nnamdi Ukaigwe took to his Twitter page to say that, “The government has not implemented minimum wage. VAT has increased and the cost of rice and other food crops have sky-rocketed. And now stamp duty on PoS has been introduced. Borders are still closed; other ECOWAS countries are now planning on waging economic war on Nigeria. No good roads, no water, no light, no security, no jobs. It is a sad story.
“They are advocating for a cashless society yet they are charging cashless transaction in this poverty stricken country. And you expect us to lose N50 per transaction? It does not make sense,” he said.
Many financial experts are of the view of that the implementation of these charges in Nigeria is capable of weakening the financial inclusion drive and financial development goal as a whole especially within the environmental sphere of business activities which point to enormous size of informal market.
Adura Onifade, a financial analyst, told BusinessHallmark that “the stamp duty charge is an anti-financial inclusion policy which may discourage small businesses and the very poor from coming into the banking space.” She is suggesting that the PoS should be exempted from the stamp duty charges.
“These charges are expected to be deposited into the already opened stamp duty collections account at the various DMBs and should form part of the weekly Stamp Duty rendition by the DMBs to NIBSS.”
The Nigeria Interbank Settlement System (NIBSS) data showed the total volumes of PoS transactions for 2017 stood at 146.3 million which was worth N1.4 trillion; 285.9 million transactions in 2018 worth N2.3 trillion and 187.7 million for six months- January to June 2019 worth N1.4 trillion.
The Director, CBN Corporate Communications, Isaac Okoroafor, in a phone chat with Business Hallmark said the “Stamp duty is not CBN process. Please call NIPOST.”
Efforts to reach NIPOST proved abortive at the time of filing this report.
