Why does the Central Bank of Nigeria want POS operators to register, and what’s the 0.5% cybersecurity levy for?

Banks in Nigeria will begin charging a 0.5 percent cybersecurity levy on every electronic transfer made by individuals. These charges will commence in two weeks.

The Central Bank of Nigeria, the country’s highest banking authority, issued this directive on Monday.

The CBN made the announcement in a circular signed by the Director of Payments System Management, Chibuzor Efobi, and the Director of Financial Policy and Regulation, Haruna Mustafa.

In the circular addressed to all banks and payment services, the CBN stated that “the deduction and collection of the cybersecurity levy is in line with the 2024 Cybercrime (Prohibition, Prevention, etc) Amendment Act.”

The CBN explained that under the provision of Section 44 (2)(a) of the Act, “a levy of 0.5% (0.005), which is equal to half a percent of all electronic transaction values by the businesses specified in the second schedule of the Act, will go into the National Cybersecurity Fund (NCF), which the Office of the National Security Adviser (ONSA) will administer.”

The Central Bank of Nigeria explains that the directive isn’t just a mere appearance, but a follow-up to a letter they wrote on June 25, 2018, and October 5, 2018, regarding compliance with the Cybercrimes (Prohibition, Prevention, Etc.) Act 2015.

How much is 0.5 percent and who does it affect?

0.5 percent is less than one percent of the money you transfer to anybody or any business.

It means that whenever you transfer N1,000, N5 will be deducted.

If you transfer N10,000, N50 will be deducted.

If you transfer N100,000, you will pay N500.

And if you send N1,000,000, you will be charged N5,000 as a cybersecurity levy.

If you transfer N10,000,000, you will pay N50,000.

Although this levy affects everyone who conducts electronic transfers, there are some transfers that are exempt from this levy.

The transfers exempt from this levy include:

Loan disbursements and repayments – If a bank wants to give you a loan or if you want to repay a bank loan, this levy will not be deducted.

Salary payments – They will not deduct this money when people receive or pay salaries.

Intra-account transfers – If you are transferring money from the same bank or between different banks to the same customer, it will not affect you.

Intra-bank transfers – If you are transferring to customers of the same bank, it will not affect you either.

Inter-branch transfers – This is a transfer within the same bank but different branches.

Cheque clearing and settlements – People who want to clear checks and other settlements are exempt from this charge.

Letters of Credits and funds related to any Bank recapitalization funding.

Bulk funds movement from collection accounts, savings, and deposits, including transactions involving long-term investments, are not affected by this levy.

Education fees – Such as university fees or any educational funds are not included.

Government Social welfare like pensions are exempt from the levy. Non-profit and charitable transactions are also exempted.

Deposit fees are back?

The Central Bank of Nigeria has also reintroduced Deposit fees as they have ordered all financial institutions to begin collecting 2% charges (processing fees) for large deposits over the counter.

This deposit fee has already started from May 1, 2024, and banks and financial institutions have informed their customers through emails.

The apex bank in Nigeria reintroduced the charges after the temporary suspension expired on April 30, 2024.

The CBN suspended the charges to encourage people to bring out their money and put it in the bank so that they can control how money moves in the economy.

How much will you pay for the deposit fee?

As it stands, if you want to pay above N500,000 cash in the bank, they will charge you N10,000 as an individual.

If you pay above 3,000,000 as a corporate organization, the bank will charge you 90,000.

In 2019, the CBN directed all banks to start collecting charges from customers who deposit and withdraw large sums of money.

What does the government want to do with the money?
According to the CBN, all financial institutions and banks will pay the money they collect from the levies in bulk to the National Cybersecurity Fund (NCF) account held by the CBN.

Mostly on Fridays, which is the 5th business day of every subsequent month, they will pay these levies to the NCF account.

“Finally, all institutions under CBN regulations are directed to note and comply with the provisions of the Act and this circular.”

The CBN says that any business that fails to remit this levy has committed an offense liable on conviction to a fine of not less than 2 percent of their turnover every year.

Reactions to the Cybersecurity levy

People and organizations are reacting to the 0.5 percent cybersecurity levy introduced by the Central Bank of Nigeria.

The Economic Rights group, SERAP, and some Nigerians do not agree with the levy on all electronic transfers as many describe it as unjust.

The social media space, including X (formerly Twitter), is buzzing as some people are angry because of the long list of bank charges and levies that authorities are imposing on people forcefully.

This new cybersecurity levy adds to the many levies the central bank imposes on people. Other charges that already exist are:

ATM card maintenance fee

Stamp duty

Account maintenance levy.

Value Added Tax on transfers.

Interbank transfer commission.

Electronic money transfer levy, etc.

Tilewa Adebajo, CEO of CFG Advisory, an economic consulting firm, said that banks should bear the cost of the cybersecurity structure as part of their operating costs.

“I believe they were not well advised, and unfortunately for Nigerians, we do not monitor these Acts that they pass into the national assembly until they implement them before we realize the impact,” Adebajo told the BBC.

“This is another burden on the customer that is unnecessary,” he added.

The Bola Tinubu administration is trying to widen the tax net so that they can generate more revenue for the government, but many believe that this could further deplete the savings of the population.

Since last April, the West African nation has fallen to fourth place among the biggest economies in Africa.

South Africa, Egypt, and Algeria are leading.

The Nigerian economy is suffering from inflation, which has risen to 33.2% plus the high cost of living.

The removal of fuel subsidies and the fluctuation of the Naira are making things more difficult for Nigerians.

CBN sets July 7 as deadline for PoS operators

Meanwhile, the Central Bank of Nigeria has given Point of Sales (PoS) operators a deadline of July 7 to complete their registration with the Corporate Affairs Corporation (CAC).

The CBN announced the deadline at an event that took place in Abuja, Nigeria’s capital, on Tuesday with Financial Technology (Fintech).

According to local media Channels TV, CAC boss Hussaini Magaji (SAN) said that the two-month timeline to register their agents, merchants, and individuals with the commission is “in line with legal requirements and the directives of the Central Bank of Nigeria.”

CAC explained in a statement that “The measure is to safeguard the businesses of Fintech customers and to make the economy strong.”

He added that the action is backed by Section 863, Subsection 1 of the Companies and Allied Matters Act, CAMA 2020, and the 2013 CBN guidelines on agent banking.