PoS Fees on the Rise: How Fintech Charges Impact Cash Transactions

2024-12-15

The way Nigerians use cash is changing, and so are the fees associated with it. Point-of-Sale (PoS) operators are adjusting their withdrawal and deposit charges due to a new N50 Electronic Money Transfer Levy (EMTL) implemented by fintech companies.

This levy, essentially a tax on digital transactions, applies to deposits exceeding N10,000 made through fintech platforms like Opay and Moniepoint. Previously, only traditional banks charged this fee.

Fintech Growth Drives Government Action

The Nigerian government’s move aims to tap into the booming fintech sector, which processed a staggering N46.91 trillion in transactions in 2023. With such a large and growing market, it’s no surprise the government seeks a share of the digital financial pie.

POS Operators Feel the Pinch

POS operators, who act as intermediaries between customers and these fintech platforms, are feeling the pressure of the new levy. They typically charge fees for their services, with rates varying based on transaction size. For instance, some operators charge N100 for transactions below N5,000 and N200 for those exceeding N10,000.

The N50 EMTL levy cuts into their profit margins. In response, some operators are raising their fees. For example, one operator increased their charge on deposits made through transfers to N150, while another tacked on an additional N50 specifically to cover the levy for transfers below N10,000.

What Undercode Says:

This situation highlights a couple of key points:

The Rise of Fintech: The N50 EMTL levy itself is a testament to the growing importance of fintech in Nigeria. The government wouldn’t target this sector if it wasn’t a significant source of financial activity.
Shifting Costs: The burden of the levy is ultimately falling on consumers. While fintech companies are mandated to collect it, POS operators are passing the cost on through increased fees. This could potentially discourage cashless transactions and slow down the adoption of fintech services, particularly for smaller transactions.
Regulation vs. Innovation: Striking a balance between generating revenue and fostering innovation is crucial. The government needs to ensure regulations don’t stifle the growth of the fintech sector, which can be a major driver of financial inclusion and economic development in Nigeria.

Looking Ahead

The impact of the N50 EMTL levy on POS fees and consumer behavior remains to be seen. It’s possible that POS operators will adjust their pricing models in the long term, or that the government might revisit the levy structure as the fintech landscape evolves. One thing is certain – the way Nigerians access and use cash is undergoing a significant transformation, and these changes will have a ripple effect across the financial ecosystem.