Banks and fintechs to begin VAT collection on mobile and USSD transaction fees from January 19

Nigeria’s banks and financial technology firms will begin charging Value Added Tax on selected electronic banking fees from January 19, 2026, following a directive from tax authorities that standardises VAT collection across the financial sector.

Under the new regime, VAT will apply only to service charges linked to transactions carried out via mobile banking platforms and Unstructured Supplementary Service Data channels.

The tax will not be charged on the principal sums transferred by customers. Nigeria’s VAT rate currently stands at 7.5 per cent.

The change affects commercial banks, microfinance banks and electronic money transfer operators, including leading fintech players such as Opay, Moniepoint, PalmPay and Kuda. Millions of Nigerians who rely on mobile and USSD banking for daily payments, transfers and bill settlements are expected to feel the impact.

What is changing and when

Customers first became aware of the policy through notices issued by some financial institutions. On Wednesday afternoon, Moniepoint informed users that it would begin collecting VAT on certain electronic banking charges from January 19, 2026.

According to the notice, the move follows a directive from tax authorities requiring financial institutions to collect and remit VAT on transaction-related fees. Moniepoint said it would act as a collection agent on behalf of the Nigerian Revenue Service, previously known as the Federal Inland Revenue Service.

“We would like to inform you of an upcoming government-endorsed regulatory change regarding Value Added Tax,” the company stated. It added that from January 19, it is required to collect a 7.5 per cent VAT to be remitted to the Nigerian Revenue Service.

An industry source told reporters that other fintech firms are expected to issue similar notices to customers from Thursday onward, stressing that the policy applies across the sector and is not unique to any single provider. According to the source, Moniepoint simply chose to communicate with customers earlier than its peers.

Services affected and exemptions

The VAT will apply to what Moniepoint described as “certain banking services.” These include electronic banking charges such as mobile transfer fees, USSD transaction fees and card issuance fees.

However, the company clarified that not all banking-related services fall under the VAT net. Services exempt from VAT include interest earned on deposits and savings, which remain outside the scope of the new deductions.

To address concerns about transparency, Moniepoint said VAT deductions would be clearly itemised. Customers will see the VAT charged separately on transaction reports and account statements, rather than bundled into a single fee.

The Nigerian Revenue Service has also communicated a firm deadline for compliance. According to Moniepoint, all financial institutions are expected to begin collecting and remitting VAT by January 19, 2026.

Background to the policy

VAT on financial services has long been a sensitive issue in Nigeria, particularly as digital banking expands and more low income earners depend on USSD and mobile platforms.

While VAT has historically applied to many goods and services, the treatment of electronic banking charges has often been uneven, with varying interpretations across institutions.

In recent years, tax authorities have sought to close gaps in VAT collection as part of broader efforts to boost non oil revenue. Digital financial services, which process billions of naira in small value transactions daily, have become an increasingly important focus.

According to policy analysts, the new directive is less about introducing a fresh tax and more about enforcing existing VAT laws consistently across banks and fintech firms. The emphasis that VAT applies only to service fees and not to transferred amounts reflects an attempt to limit public backlash.

Why it matters now

The timing of the enforcement is significant. Mobile banking and USSD services have become essential infrastructure for households and small businesses, especially amid cash shortages, rising living costs and periodic disruptions to physical banking.

For many Nigerians, USSD remains the most reliable channel for transfers due to inconsistent internet access. Even small increases in transaction costs can therefore have outsized effects on daily financial behaviour.

Industry observers note that while the VAT itself is not new, its clearer and stricter enforcement could raise the effective cost of banking for frequent users. For customers making multiple transfers each day, the cumulative impact may be noticeable.

Reactions from the sector

So far, fintech operators have framed the change as a regulatory obligation rather than a commercial decision. An industry insider described it as an across-the-board policy that every fintech and bank must implement.

Consumer advocates, however, have urged regulators and service providers to improve public education. They argue that many users may initially misunderstand the deductions as new bank charges rather than a government tax.

Financial analysts also point out that transparency will be critical. Clear itemisation of VAT charges could help maintain trust at a time when confidence in the financial system is closely linked to perceptions of fairness and affordability.

What to watch next

In the coming days, customers should expect similar notices from other banks and fintech firms outlining how the VAT will be applied on their platforms. Differences may emerge in how institutions communicate the change, even though the underlying policy remains the same.

There may also be renewed debate around the cost of digital financial services, particularly for low income users who depend heavily on USSD. Advocacy groups could push for targeted reliefs or exemptions in the future, especially if transaction volumes decline.

For now, the key takeaway for customers is that VAT will apply only to service fees and will be charged at the point of transaction, with clear disclosure. Understanding which services attract VAT and which do not will be essential for managing costs.

Visual and data ideas

To complement this story, editors may consider a simple chart showing a typical mobile or USSD transfer fee before and after VAT. An infographic explaining which banking services attract VAT and which are exempt could also help readers quickly grasp the changes.

From January 19, 2026, Nigeria’s banks and fintech firms will begin enforcing VAT collection on selected electronic banking charges, marking a significant step in standardising tax compliance across the digital finance ecosystem. While the tax does not apply to transferred amounts or interest on savings, it will add to the cost of everyday transactions for millions of users. As institutions roll out the policy, transparency and clear communication will play a crucial role in shaping public response.