EXPLAINER: How 7.5% VAT on Bank Transfers, USSD Transactions Starting January 19 Affects You

By Emmanuel Kwada

Starting Monday, January 19, 2026, if you send money through your mobile banking app, use USSD codes like *737# or *919#, or rely on fintech platforms such as OPay, Kuda, Moniepoint, or Palmpay for daily transfers, bill payments, or small business transactions, you will start seeing extra charge on the service fees your bank or app already collects.

This comes from a new directive by the Nigeria Revenue Service (NRS) forcing banks and fintechs to add and remit 7.5% Value Added Tax (VAT) on those specific electronic banking service fees.

Smart phone showing USSD code for demonstration purposes.

This policy is embedded in the Nigeria Tax Act 2025 (NTA 2025), signed into law on June 26, 2025, and effective from January 1, 2026.

The Act keeps the standard VAT rate at 7.5% and insists that all taxable services—including digital banking fees provided by commercial banks, microfinance banks, and electronic money transfer operators—must now be consistently taxed.

The government says this is about creating uniformity in how VAT is applied across the booming digital economy, so services like bank charges are treated the same way as buying a bottle of Coke or recharging data.

This VAT does NOT touch the actual money you are sending.

This VAT does NOT touch the actual money you are sending. It is applied only to the service fee the bank or fintech charges you for making the transfer possible.

So if you send ₦100,000 to your family or pay school fees, the government isn’t taking 7.5% of your ₦100,000 (which would be a painful ₦7,500). That fear is completely wrong.

Instead, let’s look at how it really affects your pocket in real life.

Photo Credit: Daily Trust online.

Take a typical mobile transfer of ₦100,000. Many apps and banks charge around ₦50 as their service fee for that amount. The new 7.5% VAT on that ₦50 fee comes to just **₦3.75.

On top of that, you still pay the flat ₦50 Stamp Duty (the old Electronic Money Transfer Levy, reclassified under the NTA 2025 for any transfer of ₦10,000 and above). So your total extra cost becomes about ₦53.75 above the ₦100,000 you send.

You pay ₦100,053.75 in total, and the person receiving gets the full ₦100,000. The new VAT adds only ₦3.75—small, yes, but it’s still another deduction when money is already tight.

These charges will show up clearly on your receipts, app notifications, and statements.

Now think about USSD, which millions of people in rural areas and those without steady data still depend on heavily.

A session fee of ₦20 (common for many banks) gets hit with ₦1.50 VAT, making the total ₦21.50 per transaction.

For someone doing five or ten small transfers a day—sending ₦5,000 here, ₦10,000 there to buy food, pay transport, or support family—that kobo-level increase piles up over time.

It may seem tiny per transaction, but for low-income earners, petty traders, Okada riders, market women, and students who live from hand to mouth, every extra kobo counts.

These charges will show up clearly on your receipts, app notifications, and statements, so at least you can track them.

Interest on your savings or fixed deposits is still exempt, according to the reforms, so that part of your money remains untouched.

The government and NRS explain that January 19, 2026, is the deadline for everyone to comply, so banks and fintechs have no choice but to collect this VAT on fees for mobile transfers, USSD sessions, card issuance, and similar digital services.

They insist this isn’t them hiking fees—it’s them obeying the law under the NTA 2025 to pass the tax to the government.

For the average Nigerian struggling with inflation, rising fuel prices, high cost of food, and stagnant wages, even a small extra charge on something as essential as sending money feels like another way the system squeezes the masses while the big players keep finding ways to grow their revenue.

January 19, 2026, is the deadline for everyone to comply.

Digital banking was one of the few things that made life a bit easier and cheaper than queuing at branches or paying agents huge commissions.

Now, this additional layer, however small adds up and reminds many people that the cost of “convenience” keeps creeping higher.

Banks say they’re just following orders, and the government says it’s for national development and non-oil revenue.

Yet for the everyday person trying to survive, it’s one more thing to budget for in an already tough economy.

Read Also: Nigeria’s New Tax Reality: What You Need to Know