The Federal Government’s decision to impose a 7.5 per cent Value Added Tax (VAT) on electronic banking service fees has sparked widespread backlash from consumers, economists and financial inclusion advocates, who warn that the policy amounts to double or even multiple taxation on routine digital transactions.

The VAT, which took effect on January 19, 2026, applies to service fees charged by banks and fintechs’, including mobile and internet banking transfers, USSD transactions, ATM withdrawals beyond free limits, POS-related charges, and card issuance or maintenance fees.

While the tax does not apply to the principal sum transferred, it is paid entirely by customers. In practical terms, a customer charged N100 as a transfer fee now pays an additional N7.50 VAT, raising the total cost to N107.50. The controversy deepened following the enforcement of a N50 stamp duty on electronic transfers of N10,000 and above from January 1, 2026, with exemptions only for salary payments and intra-bank transfers.

The coexistence of both deductions on a single transaction has reignited concerns over Nigeria’s increasingly expensive digital banking environment. Customers Cry Out: “Too Many Charges for One Transfer.” Across the country, bank customers say the new VAT has worsened what was already an expensive banking system.

“I transferred N15,000 and before I knew it, I saw transfer fee, VAT on transfer fee, stamp duty and SMS alert,” said Aisha Mohammed, a petty trader in Abuja who relies heavily on USSD banking. “By the end of the month, these small charges add up to thousands of naira.”

For many low-income earners and small businesses that depend on frequent low-value transfers, the frustration is palpable. “This is not just VAT anymore; it is punishment for using banks,” said Chinedu Okafor, a Lagos-based ridehailing driver.

“Government is encouraging cashless payments with one hand and discouraging it with the other.” Social media platforms have been flooded with screenshots of transaction alerts showing multiple deductions on a single transfer, with many users questioning how a cashless economy can thrive when digital payments keep getting more expensive.

Everyday Banking Now Costs More. Services affected by the VAT include mobile banking transfers, USSD session charges—commonly about N6.98 per session before VAT—ATM withdrawal fees after free monthly limits, POS transaction charges, and card-related fees.

These come on top of charges Nigerian bank customers already pay, such as transfer fees, SMS alert charges, account maintenance fees, ATM and POS charges, and now statutory deductions including stamp duty and VAT. For millions of Nigerians who make frequent low value transfers particularly those reliant on USSD due to limited smartphone access—the cumulative cost is significant.

Some customers complain that even failed transactions sometimes attract USSD session charges, making the VAT feel like an additional penalty rather than a service-based tax. Double Taxation Concerns Resurface Consumer advocates argue that although VAT and stamp duty are imposed under different laws, both are triggered by the same electronic transfer and borne by the same customer, constituting economic double taxation.

The National Association of Telecoms Subscribers (NATCOMS) has publicly described the policy as multiple taxation, warning that it undermines the affordability of digital payments and threatens financial inclusion. The group has a track record of challenging USSD and transaction charges through regulatory and legal channels.

“Whether you call it VAT or stamp duty, the ordinary Nigerian only sees money leaving their account multiple times for one action,” a consumer rights advocate noted. “That is the reality people are reacting to.”

Experts warn of overtaxation The Centre for the Promotion of Private Enterprise (CPPE) has repeatedly cautioned against excessive transaction taxes. Its Chief Executive Officer, Dr. Muda Yusuf, has argued in policy commentaries that rising banking charges discourage savings, weaken digital adoption and push users back to cash.