THIS DAWN — From January 19, 2026, Nigerians will begin paying more for everyday banking services as a 7.5% Value Added Tax (VAT) is officially applied to mobile banking fees.
The directive, issued by the Nigeria Revenue Service (NRS) under the newly enacted Nigeria Tax Act 2025, extends VAT to charges on mobile transfers, USSD sessions, Point of Sale (POS) transactions, card issuance, and loan processing fees.
This development has sparked mixed reactions across the country, with fintech companies, small businesses, and ordinary citizens weighing in on the implications for financial inclusion and the rising cost of living.
What the New VAT Means for Customers
According to fintech operators such as Moniepoint, the VAT will not affect the actual transfer amounts but will be added to the service fees charged per transaction.
For example, a ₦50 transfer fee will now cost ₦53.75 after VAT is applied.
This means that while the tax may appear small on individual transactions, the cumulative effect could be significant for users who rely heavily on mobile banking for daily payments.
With Nigeria’s financial ecosystem increasingly dependent on digital channels, the new levy will touch millions of transactions each day.
Fintechs and banks have already begun notifying customers of the changes.
Moniepoint, one of Nigeria’s leading payment platforms, explained in its customer advisory that the VAT is mandated by law and applies only to service fees.
Other operators are expected to follow suit with similar communications to ensure transparency and compliance.
Industry insiders note that the move could also affect the competitiveness of fintechs, as customers may begin comparing platforms based on how they structure fees and absorb or pass on VAT charges.
Public Reaction: Minor Pennies or Major Burden?
Reactions among Nigerians have been divided.
Some users dismiss the increase as negligible, arguing that a few extra naira per transaction is not worth the outrage.
For them, the convenience of mobile banking outweighs the marginal cost.
However, many others have voiced frustration, particularly small business owners and low‑income earners who rely on mobile transfers and POS payments for daily operations.
For these groups, the VAT represents yet another layer of financial pressure in an economy already strained by inflation, subsidy removal, and rising food and transport costs.
“Every Naira counts these days. When you add VAT on top of bank charges, it piles up quickly.
“It may look small, but for those of us making dozens of transactions daily, it’s a heavy burden,” lamented a trader in Lagos.
Economic Context
The introduction of VAT on mobile banking fees comes at a time when Nigerians are grappling with double‑digit inflation and declining purchasing power.
Analysts argue that while the government is seeking to boost revenue through taxation, the policy risks undermining financial inclusion by discouraging digital transactions.
Nigeria has made significant progress in expanding access to financial services through mobile banking and fintech innovations.
Yet, critics warn that additional charges could push some users back toward cash‑based transactions, slowing the country’s digital finance momentum.
The Nigeria Revenue Service has defended the policy.
It stated that the VAT is part of broader efforts to modernize the tax system and ensure fairness across sectors.
Officials argue that financial services, like other industries, must contribute to national revenue.
The Nigeria Tax Act 2025 was designed to widen the tax base and reduce reliance on oil revenues.
By extending VAT to mobile banking fees, the government hopes to capture revenue from the booming fintech sector while aligning with international tax practices.
Industry Concerns
Despite government assurances, fintech operators and consumer advocates remain cautious.
They warn that the VAT could erode trust in digital banking and slow adoption rates, particularly among rural and low‑income populations.
Some FinTechs are exploring ways to cushion customers, such as offering promotional fee waivers or loyalty discounts.
Others are lobbying for clearer guidelines to ensure that the tax is applied uniformly across platforms, preventing unfair competition.
As the January 19 implementation date approaches, Nigerians are bracing for the impact of the new VAT.
While the immediate financial burden may appear modest, the broader implications for financial inclusion, small business operations, and consumer confidence are significant.
The debate underscores a larger tension in Nigeria’s economic policy: balancing the urgent need for revenue generation with the equally pressing need to protect citizens from rising costs.
For now, the 7.5% VAT on mobile banking fees stands as a reminder of the government’s fiscal priorities—and of the everyday challenges faced by Nigerians navigating an economy in transition.
