Examination of the electronic transfer levy has shown that microtransactions drive Nigeria’s e-payment boom, underscorin the growing use of digital channels in daily life.
Microtransactions are typically transactions valued at less than N10,000.
BusinessDay reported that the recent, failed attempt at a cashless policy by then CBN governor Godwin Emefiele brought attention to these microtransactions.
Several people switched to digital channels when physical naira became scarce by January 2023. At this time, cashless transactions amounted to N39.58 trillion, up 45.41% year over year, according to data from the Nigeria Inter-Bank Settlement System (NIBSS).
Cashless transactions rose by 44.84 percent to N126.73tn at the end of the first quarter of 2023 (before the cash shortage subsided), from N87.49tn during the same period in 2022.
Similarly, transactions involving no physical cash increased from N395.38 trillion in 2022 to over N600 trillion by the end of 2023 as more Nigerians used digital payment methods.
This trend persisted, with transactions rising by 88.09% to N237 trillion in the first quarter (Q1) of 2024.
Experts contend that the surge in microtransactions bolsters the government’s objectives for digital inclusion and the economy, even though it may not result in higher taxes for the government.
Despite the notable growth in e-payment activities, the government did not receive much money through the Electronic Money Transfer Levy (EMTL) contribution.
The amount the government made from EMTL between January and April of 2024 in Q1, 2024 was N66.35 billion, which is the same as what it made in the same period in 2023.
This is mostly because the majority of transactions were under N10,000 and were exempted from taxes.
Adedeji Olowe, founder of Lendsqr said,
According to him, this shows that the payment industry is developing and that real-time transfers are becoming a more widely accepted method of payment in a market that aims to use less physical currency.
According to ACI Worldwide, a pioneer in real-time payments, Africa had the largest real-time share of electronic payments in 2023—40 percent—with Nigeria leading the continent.
Paystack disclosed in its 2023 spotlight report that transfers accounted for 58% of all transactions made from Nigeria on the site.
The majority of transactions in the nation are for less than N10,000, according to experts in the payment industry.
An industry source commented, “The range below N6,000 makes up about 45 percent of transfer transactions. Some in the range of N10,000 is around 25 percent”
Nosa Oyegun, VP of product and innovation at Kuda Bank said,
According to Oyegun, this has resulted in a surge in the number of new fintech companies, including Moniepoint, Opay, and PalmPay.
