Nigerians now pay a ₦50-naira levy for fintech transactions above ₦10,000 naira

Nigeria has experienced a significant shift towards digital payments in recent years, with fintech companies and online banking driving this transformation. According to PwC, there are now over 200 active fintech companies in Nigeria, and the sector is expected to grow into a $700 million market by 2025.

Companies like Moniepoint, Paystack, and OPay have played a key role in expanding financial services access, positioning Nigeria as one of Africa’s top fintech hubs.

However, alongside this growth, the Nigerian government has introduced a ₦50-naira levy on digital transactions conducted through fintech platforms. The levy, which took effect on December 1st but was first introduced by the Federal Government under the Finance Act 2020, was first proposed earlier this year and faced significant pushback from both fintech companies and users. Initially delayed for unclear reasons, many hoped it would be scrapped, but the levy is now officially in place.

Critics argue that while ₦50 naira might seem like a small fee, it could add up for frequent users, potentially discouraging people from using fintech platforms. With over 100 million mobile money users in Nigeria, additional charges could slow down the adoption of digital payments.

When the levy was first proposed, many stakeholders, including fintech companies, customers, and groups like the National Association of Nigerian Students (NANS), expressed concerns that it could hinder Nigeria’s push towards a cashless economy. Despite these objections, the government has pressed ahead with the levy, though its long-term impact remains uncertain.

Projections suggest that such fees could stunt the growth of Nigeria’s fintech sector, particularly in light of the fragile economy. For instance, Nigeria's inflation rate surged to 33.88% in October 2024, up from 32.70% in September, according to the National Bureau of Statistics. This makes the ₦50-naira fee feel more burdensome for users.

A similar effect was seen in countries like India, where transaction fees temporarily reduced digital payment usage before growth resumed. With fintech companies handling a significant portion of Nigeria’s transactions, this new levy could similarly discourage digital payments, at least in the short term.

In the coming months, it will be interesting to see whether this levy will slow Nigeria's embrace of fintech solutions or if the industry will adapt to this new challenge. The government must balance its revenue-generating objectives with the need to encourage innovation and sustain growth in the fintech sector.