FEATURE: Why Nigerian market men, women are rejecting digital payments

Ms Goodness sells Okrika (fairly used) clothes in Oshodi market in Lagos State. She used to accept bank transfers from her customers but recently she has been turning them down, except “at desperate times”. She complained that multiple and increasing bank charges are eating into her profit.

She lamented over multiple charges at different times when making digital payments, depositing, saving, and withdrawing.

“When you save in GTB, in one week, they will remove different money that you cannot explain. Today, N100, tomorrow N50. When you go to POS (Point of sales) to withdraw money, you’ll pay charges and the charges have increased; when you use ATM, they’ll still remove charges. How much are we gaining?”

She said the multiple charges are eating into her profits, noting, that if a customer is making a substantial purchase, she accepts the option of transfer if the customer insists but she pleads with them to add N100, which will cover for the multiple charges. “But some of them refuse.”

While Ms Goodness is frustrated over the multiple charges by financial institutions from digital transactions, market women who sell food items especially do not accept electronic transfers at all.

Mrs Adeoye, who sells pepper in Bodija market in Ibadan, Oyo State, said she does not have a bank account at all. She closed her account with First Bank due to frustration from what she called “unexplainable charges” in the Yoruba language. She had also fallen victim to cyber fraud before.

She said some of her customers have encouraged her to open an OPay account, but she has lost faith in the banking system. “If it’s not cash, I am not interested,” she said.

The multiple charges on digital transactions

In Nigeria, digital transactions are subject to various charges imposed by financial institutions and regulatory bodies. Some have been institutionalized years ago while some are new. They include:

Transfer Fees: Banks apply fees based on the transaction amount. For transactions below N5,000, a fee of N10 is charged. Transactions falling within the range of N5,001 to N50,000 incur a charge of N25. For transactions exceeding N50,000, a fee of N50 applies.

Stamp Duties: Stamp duties are applied to transactions within the range of N10,000 to N10,000,000, with a fee of N50 levied on each transaction falling within this range.

Short Messaging Service (SMS): For Short Messaging Service (SMS), a charge of N4 is applied to each electronic transfer notification. This fee is specifically for customers engaged in eligible electronic transactions. However, customers who opt for email notifications instead are not subject to this charge.

Value Added Tax: VAT is also levied on each transaction. For a N10 transfer fee, N0.75 is charged as VAT. Similarly, for a N25 transfer fee, the VAT amounts to N1.87. Finally, a N50 transfer fee incurs N3.75 in VAT charges.

ATM Withdrawal Charges: Earlier in February 2025, the Central Bank of Nigeria (CBN) reviewed ATM withdrawal charges increasing the minimum charge to ₦100 for ATM withdrawals from other banks, and ending the previous policy of three free withdrawals per month.

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Others are Account Maintenance Charges which is ₦50 monthly, and an Electronic Money Transfer Levy (EMTL) of ₦50 on electronic transfers of ₦10,000 and above.

Mobile money operators introduce charges

Mobile money services used to be free until last year when they too started charging N50 for transactions above N10,000, as an Electronic Money Transfer Levy (EMTL). This was in compliance with a CBN directive.

Opay, Moniepoint, Palmpay, and other mobile money operators informed their customers of this development in December.

Mrs Omashola who sells provisions in the Bodija market in Ibadan, Oyo State said she uses OPay and since the introduction of the EMT levy, she gives her customers the option of paying with cash or adding N50 to their money even if what they buy is not up to N10,000.

“Some of them protest to leave. So most times I tell them I don’t accept transfers and plead with them to go and withdraw from the POS and bring the cash.”

Abdullahi Tajud who sells onions in the same market says he stopped accepting transfers because “it is a huge challenge to withdraw this money from the bank when I want to restock. Most times, the ATMs are empty. When they’re not empty, they don’t dispense enough cash. If you go to POS to withdraw N50,000, you will pay up to N2,000 as charges for the withdrawal.”

Experts say these cumulative charges can significantly impact small business owners and daily earners, discouraging the adoption of digital payment methods, and receding the country’s gains on financial inclusion.

In a recent report, the Managing Director of Highcap Securities, Mr. David Adonri, expressed concern over the introduction of N100 charges on ATM withdrawals and the multiple charges associated with digital transactions, saying it may cause a setback to Nigeria’s cashless economy drive.

He asserted that traders and small business owners who deal primarily in cash might hesitate to deposit their earnings in banks, knowing that withdrawing funds later would incur significant fees.

He stressed that more money would remain in circulation outside the banking system, potentially undermining the CBN’s initiatives to encourage financial inclusion and digital transactions.

“This excessive fee imposed on customers for accessing their own money is a disincentive to keeping funds in banks,” Adonri stated.

He said the charges are counter productive as they would further reduce trust in the banking sector and reduce banking participation among low-income earners.

“It has broad implications, as some people may choose not to even open bank accounts anymore since they have to pay multiple charges to withdraw their deposits, leading to reduced banking participation and weakening trust in the financial system,” he was quoted to have said.

By Oluwatobi Odeyinka

This report is produced under the DPI Africa Journalism Fellowship Programme of the Media Foundation for West Africa and Co-Develop.

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