Starting September 9, 2024, fintech companies like Moniepoint and OPay will begin deducting a N50 Electronic Money Transfer Levy (EMTL) from customer inflows of N10,000 and above. This decision comes in response to guidelines set by the Federal Inland Revenue Service (FIRS).
In communications sent to their customers, Moniepoint explained that the fee of N50 would be deducted from any inflow exceeding N10,000. They encouraged users to reach out to their business relationship manager for questions. OPay also clarified that this fee is mandated by the federal government and that it does not benefit the company; all proceeds will go directly to the government.
This new charge marks a significant shift, as it extends the EMTL to all fintech operations, which previously only applied to commercial banks. Other fintechs like Palmpay and Paga may also implement this levy in the coming weeks.
The EMTL is a one-time fee of N50 applied to electronic transfers within Nigerian financial institutions and is designed to encourage the growth of electronic monetary transactions. There are certain exceptions: transfers under N10,000, payments into one’s own account, and electronic transfers between accounts of the same owner within the same bank are not subject to this levy.
Initially introduced in the Finance Act 2020, the EMTL aims to enhance the growth of electronic funds transfers in Nigeria. The revenue generated from this levy is divided among the three levels of government, with 15% going to the Federal Government, 50% to state governments, and 35% to local councils.
The extension of this levy to fintech companies is part of the Nigerian government’s broader strategy to increase its tax revenue. In December of last year, the FIRS also mandated deposit banks to apply the EMTL to foreign currency transactions. Before this directive, the charge on transactions exceeding N10,000 was limited to local currency transfers.
The decision to implement the EMTL reflects ongoing efforts by the government to monitor and regulate the financial sector effectively while increasing their revenue streams. However, the introduction of this fee has sparked discussions among consumers about the implications for their banking activities and the overall cost of using these fintech services.
Fintech companies have positioned themselves as alternatives to traditional banks by offering free or low-cost services. However, the introduction of the EMTL represents a challenge to this narrative of free banking services. Customers may feel disillusioned by added fees, particularly in a financial environment where many are seeking to reduce costs.
To address user concerns, fintech companies like Moniepoint and OPay are expected to provide customer support to clarify the reasons behind this levy and how it will impact their services moving forward.
As the EMTL goes into effect, many customers will be watching closely to see if this payment will affect their usage of fintech services. The long-term impact of the EMTL on financial behavior and compliance within the fintech sector remains to be seen.
