Nigerians Shun Pos Transactions Over Charges
The volume of electronic payment transactions through Point of Sale (PoS) terminals dropped by 4.83 billion in one month. It dipped from 46.13 billion deals in December 2019 to 41.3 billion in January, according to the Nigerian Interbank Settlement System (NIBSS) report.
The PoS transaction drop in cash value is N60 billion. Merchants- retail outlets in the e-payment value chain- continue to collect N50 Stamp Duty charge per transaction from PoS users. The transaction value for PoS fell from N373 billion to N313 billion in December 2019 and January 2020 respectively.
It was learned that collection of the illegal charge by merchants – petrol stations, supermarkets and other business owners that deploy PoS machines for payment – has continued against the Central Bank of Nigeria’s (CBN’s) order that payment by customers should be stopped.
Although the CBN directed that the charge should be borne by merchants, not PoS users, there has not been any enforcement of the order.
The NIBSS data also showed that the decline in PoS usage occurred despite an increase in the number of registered PoS terminals by the banks from 446,453 to 449,998 in December.
According to the report, the banks deployed 303,162 PoS terminals in December 2019 and 306,409 PoS terminals in January. This showed that, despite the deployment of more terminals to merchants, customers' demand for the service is dropping.
The Nation investigation in the country’s commercial capital Lagos showed that filling station operators in the downstream oil sector, the supermarkets among others, have continued to collect the illegal fee on Pos transactions by customers.
Filing stations and supermarkets add the fee to customer’s purchases.
To avoid a dispute with its customers, some filling stations post the notice of payment on their pumps, while others simply add the cost to the customer’s bill without informing them.
The President of the Bank Customers Association of Nigeria, Uju Ogubunka, condemned the continuous collection, in spite of the CBN’s directive that it should stop.
He urged the Nigeria National Petroleum Corporation (NNPC) to ensure compliance with the directive by marketers.
Ogubunka said the apex bank should also ensure full compliance across retail shops.
Ogubunka said: “I expect the CBN to move beyond its directive that bank customers reject the fee and fight for customers. Another option is for the customers to carry cash and avoid the fee where the risks are minimal.”
The CBN Director, Payment System Management Department, Musa Jimoh, urged customers to reject the N50 PoS fee.
He said the stamp duty is a fee regulated by an Act, adding that the stamp duty as it is today has been misinterpreted.
Jimoh said: “Our circular that talks about merchants paying stamp duty according to the law does not say that the stamp duty should be paid by the consumer. That’s actually a misrepresentation of the CBN’s directive.
“What our directive says is that merchants should pay all necessary charges as regulated by the government agency, including stamp duty.
“When there is an electronic transaction to an account other than a savings account and the transaction amount is more than N1,000, you have to pay stamp duty.”
The CBN and the Nigeria Interbank Settlement System (NIBSS), in a circular to banks and merchants, said they were working for the application of remittance processes to ensure a seamless collection of stamp duty charges for PoS.
The PoS fee is being paid by merchants on the aggregate PoS transactions carried out on a particular period, which was never passed to customers.
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 the process for merchants’ collections on electronic transactions”.
The policy stipulates that stamp duty payments on individual transactions that occur on PoS, rather than previous plans where charges occurred on aggregate transactions.
Signed by CBN Director, Payments System Management Department, Sam Okojere, the circular authorizes banks to unbundle merchant settlement amounts and charge applicable taxes and duties on individual transactions as stipulated by regulators.
Merchant Service Charge was also reviewed downward from 0.75 percent (capped at N1, 200) to 0.50 percent (capped at N1, 000).
In a NIBSS report titled: “Returns on Stamp Duty Collection for merchant transactions”, the payment agency said the new stamp duty payment plan is in line with the provision of the Stamp Duties Act and Federal Government Financial Regulation 2009.
The policy, it added, was aimed at ensuring strict adherence to the CBN guideline communication on the subject, collection and Remittance of Statutory Charges on receipts to Nigeria Postal Service under the Stamp Duties Act dated 15th January 2016.
The procedural processing guide for stamp duty Charges for PoS, web merchant and all deposit money banks (DMBs) should download daily PoS/Web settlement reports from their respective processor's settlement file transfer portal.
Also, the PoS and web settlement processing officer shall ensure that stamp duty is correctly processed daily by downloading daily PoS/web transactions valued at N1, 000 and above, noting the count of these transactions; multiply the count of these transactions by N50 and pass the corresponding debit/charge to the respective merchant accounts.
The apex bank guideline said: “The debit should be passed to the merchant accounts at the point of PoS/Web merchant Credit/Settlement to mitigate against the inability of the Deposit Money Banks (DMBs) to successfully secure these daily stamp duties charges and remit as expected.
“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.”