Understanding the N50 Electronic Money Transfer Levy on transactions above N10,000

In a digital age where technology has transformed the way we interact and conduct business, the introduction of the 50 Naira Electronic Money Transfer Levy has sparked widespread discussion in the media. This significant development will have far-reaching implications for individuals and businesses alike. As a merchant, it’s crucial to understand how this new regulation will affect your business and take steps to mitigate any potential negative consequences.

Understanding the Regulation

The Federal Inland Revenue Service (FIRS) has implemented a N50 levy on electronic transfers of N10,000 or more. Introduced in the Finance Act 2020, this levy is a one-time charge applied to electronic receipts or transfers of money deposited in any deposit bank or financial institution. It is applicable to both personal and business accounts.

How Does It Work?

The levy is imposed as a one-time fee on the recipient of the transfer. For example, if you receive N15,000 from a friend, you’ll be charged N50. The levy is collected by the receiving bank, which then remits it to the FIRS.

Who is Affected?

This new regulation impacts a wide range of individuals and businesses involved in electronic transactions. From personal transfers between friends and family to business payments and salaries, the levy applies to almost all electronic money transfers.

How Does This Affect Merchants?

At Transactworld Digital, our primary focus is on providing payment solutions for merchants. The new levy has implications for our merchants in several ways:

• Zero added cost from us: Money paid to you as a merchant through our Transactpay gateway is not subject to this levy as it doesn’t qualify as an electronic bank transfer. However, when we settle funds into a merchant’s bank account, the bank will now charge a N50 levy for any settlement amount exceeding N10,000. This means that merchants will only pay the levy on settlement to their account.
• Impact on Payment Methods: For merchants using our “Pay with bank transfer” payment method, where customers transfer funds directly to a service provider’s virtual collection pool account, the levy will not apply. This is because we don’t hold the money; the transfer is made directly to the service provider’s collections pool account for subsequent settlement to the merchants. However, settlement to the merchants’ bank accounts of N10,000 and above will still attract the N50 levy.

These are the ways the Electronic Money Transfer Levy affects our merchants at the moment. If anything changes, we will communicate just like this. Our commitment is to you and your success.

Other things to note:

• Foreign Currency Transfers: For transfers in foreign currencies, the levy will be charged based on the exchange rate determined by the Central Bank of Nigeria.
• Levy on Reversed Transactions: If a transaction is reversed, the levy will be deducted from the next day’s collections and returned to the affected customer.
• Record-Keeping Requirements: Banks are required to maintain records of all electronic transfers subject to the levy for a minimum of seven years.
• Penalties for Non-Compliance: Failure to collect or remit the levy can result in significant penalties for banks.

Conclusion

The introduction of the 50 Naira Electronic Money Transfer Levy is a significant development that will have far-reaching implications for the Nigerian financial landscape. As a leading provider of payment solutions, Transactworld Digital is committed to helping our merchants navigate this new regulatory environment.

For more information, please visit our website or contact our support team.