The Federal Government of Nigeria has stopped the additional N50 charge currently being imposed on transactions carried out through Point of Sales (POS) Terminal.
In a directive issued by the Federal Competition and Consumer Protection Commission (FCCPC) on Tuesday obtained by Nairametrics, the recent circular released on POS transactions’ charges by the Central Bank is to be borne by businesses. As such, passing it on consumers is counterproductive, burdensome and inconsistent with the underlying cashless policy of the Central Bank of Nigeria.
According to the circular signed by its Chief Executive Officer, Babatunde Itukera, the FCCPC stated that the circular released on September 17th, 2019 by the CBN was not meant to pass N50 POS fees to consumers. As such, it is illegal and inappropriate for businesses to pass a stamp duty cost of doing their business to consumers.
The Circular partly reads thus:
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“In recent times, there has been insignificant contention with respect to merchant imposed N50 stamp duty assessments on consumers for transactions. This imposed fee is supposedly a pass-through for onward transmission as a government-mandated surcharge.
“The FCCPC has robustly engaged the CBN on this issue, pursuant to 5.17 (b), (f), (g), (i) of the FCCPC Act, including meetings of the highest levels of leadership of both regulators. The FCCPC’s strongly held position was that an assessment imposed on merchants necessarily is a component of doing business, and may only be directly passed on to consumers in limited circumstances.
“For many reasons, including and particularly the CBN’s effort to promote a cashless economy, the merchants’ response of imposing this assessment on consumers was not only inconsistent with the underlying policy but also counterproductive and burdensome on consumers.
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“Businesses, by their nature, already capture the operating cost price of their goods and services. To impose an additional fee on consumers that is exclusive of price and discriminates based on the selected mode of payment essentially amounts to a penalty for the adopted mode of payment.
Effectively, and in furtherance of this clarification, merchants are now prohibited from penalising or otherwise assessing any duty, costs or assessment characterised as “stamp duty” on consumers who select point of sale options to conclude their purchases or transactions.”
The Back Story: In an earlier article, Nairametrics reported that since the introduction of N50 stamp duty on individual transactions above N1000, there has reportedly been a reduction in the number of electronic payments transactions processed by agent banking service providers on a daily basis.
As a result, customers affected by this policy have resorted to withdrawing money through the Automated Teller Machine (ATM) and across-the-counter.
According to reports, major stores in the country have already introduced N50 stamp duty charges on payment using PoS terminals.
CBN’s stance: Prior to the circular released by the Federal Competition and Consumer Protection Commission, the CBN has already called on merchants who operate POS machines for cashless transactions to stop the collection of N50 charges from their customers.
The CBN Director of Payment System Management, Musa Jimoh, made this known on Monday while speaking on Channels Television’s Business Morning programme. According to Mr. Jimoh, the directive contained in the circular issued by Central Bank was misinterpreted by merchants, thus making customers pay an additional fee for goods and services.
He said: “Stamp duty has been misinterpreted. Our circular that talks about merchants paying stamp duties according to the law does not say that the stamp duty should be paid by the consumer; that is a misrepresentation of CBN directive. What our directive says is that merchants should pay all necessary tax as regulated by government agencies including stamp duty.
“What we told the merchants is that we would like the banks to ensure that the merchants comply with this directive by ensuring that every single payment that customers make to them, the merchants pay the regulated stamp duty of N50.
“What has happened is that they have actually transferred this fee blatantly and openly to the consumers; this is very wrong. No single individual should pay N50 in addition to the cost of the goods.”
Nobody should pay extra on goods and services, the CBN official added, noting that the N50 stamp duty is a fee regulated by an act that directs merchants to pay all necessary taxes as regulated by government agencies.