So you just saw a push notification or an email about a ₦50 charge on transfers above ₦10,000, and you’re wondering, what’s going on? Don’t worry, we’ve got you covered. 

The Electronic Money Transfer Levy (EMTL) is a government-mandated fee for electronic transfers in Nigeria. We understand that this might be confusing, and we’re here to explain. In this article, we’ll make sense of the levy, why it’s necessary, and how Moniepoint is ensuring a smooth transition while keeping your transactions secure and reliable. 

What is the Electronic Money Transfer Levy (EMTL)?

The Electronic Money Transfer Levy (EMTL) is a ₦50 charge applied to electronic transfers of ₦10,000 and above in Nigeria. It was first introduced through the Finance Act 2019, which expanded the scope of dutiable instruments under the Stamp Duties Act (SDA) to include electronic transactions. The levy officially took effect in 2020, following its formal introduction through the Finance Act 2020, which renamed the charge as EMTL. The EMTL Regulations of 2022 solidified the regulation to streamline its administration and collection.

Key Changes in EMTL History:

• 2019: The Finance Act introduced amendments to the SDA, setting the groundwork for the EMTL.

• 2020: The Finance Act established the levy as a one-off ₦50 charge on qualifying electronic transactions.

• 2021: Further amendments gave the Minister of Finance oversight of the levy’s administration.

• 2023: The latest amendment revised the revenue-sharing formula, allocating 15% to the Federal Government, 50% to State Governments, and 35% to Local Governments.

How the Money Flows:

1. Transaction Initiated: When a transfer of ₦10,000 or more is made, the receiving bank deducts ₦50.

2. Levy Remittance: The bank remits the levy to the Federal Inland Revenue Service (FIRS) by the next working day.

3. Government Distribution: Collected levies are distributed according to the Finance Act’s latest formula.

Why does the government need the EMTL?

Taxes keep the lights on in many countries. They fund the things we all rely on daily: public hospitals, schools, roads, and services that form the backbone of society. Without taxes, none of these would exist. In Nigeria, where more and more people are moving towards digital transactions, the way the government collects revenue also has to adapt. That’s where the Electronic Money Transfer Levy (EMTL) comes in.

With the digital economy booming, traditional tax methods like stamp duties on paper-based transactions no longer cut it. The EMTL ensures the government can still collect the funds it needs, even in this new digital age. This levy taps into the millions of daily electronic transactions, ensuring the government doesn’t miss out on revenue as the economy goes digital. The government uses this money to fund critical services and infrastructure required to run the nation, like schools, hospitals, roads, and public transport. 

It’s not just a Nigerian thing.

So, you might be thinking, “Is this just a Nigeria thing?” Actually, no. Globally, countries seek ways to capture value from digital financial transactions. Take Kenya, for instance—if you’ve heard of M-Pesa, you know everyone and their uncle uses it to pay for everything. Over there, people pay a tax on mobile money transactions. Same thing in Uganda, where there’s a levy on mobile money withdrawals.

India? They’ve rolled out fees on certain digital payments, too, and even countries like Australia and parts of the European Union are considering digital transaction taxes to ensure that online businesses and platforms contribute their fair share.

As more of us go cashless, their tax systems must follow suit. It’s about fairness. 

Why fintechs must comply - and why fintechs complying benefits you.

Let’s be real—if you’re a fintech like Moniepoint, compliance with regulations is a no-brainer. The government has set out clear rules: if you handle electronic transactions, you must apply the levy. Complying with this helps establish trust and credibility; failure to do so comes with serious consequences. 

Fintechs that don’t comply risk fines and penalties, including a 150% penalty of the levy not collected, plus interest. Simply put, for every ₦50 a fintech doesn’t collect, it would be fined ₦125. Worse still, failure to remit the levy to the Federal Inland Revenue Service (FIRS) could lead to further penalties that could even affect a company’s operational licence.

But this goes beyond avoiding fines. Compliance is about trust. Customers need to know that their fintech provider operates within the law, ensuring their transactions are secure and above board.

When fintechs like Moniepoint adhere to these standards, they reinforce their commitment to transparency and trustworthiness, which directly benefits you.

Enhanced Security: Compliance requires fintechs to maintain rigorous security standards, safeguarding your data and transactions from fraud. You can rest assured that your money transfers are fast and protected by industry-leading security measures.

Trust and Reliability: Knowing that your fintech provider complies with national regulations helps build trust. Moniepoint’s adherence to the EMTL means you’re banking with a provider that respects the law and ensures your transactions are valid, secure, and recognised by regulatory bodies.

Stable Financial Services: By fulfilling its obligations to the government, Moniepoint can focus on delivering innovative services without the risk of fines or operational disruptions. This stability means uninterrupted service for you, with the promise of continuous improvements and new features that can enhance your experience.

If you’re interested in building regulation-compliant financial products for millions of Africans, join us! We've got a spot for you.