You’ve likely heard about the new cash withdrawal limits imposed by the Central Bank of Nigeria (CBN), here are some problems it could create for small businesses and opportunities for fintech startups.
To refresh your memory, the new limits set for over-the-counter cash withdrawal by individuals and organisations is now N100,000 and N500,000, respectively, per week. Also, POS vendors and ATMs can only pay individuals N20,000 daily and N100,000 weekly, respectively.
To be clear, it is not as if withdrawals above this limit are banned, only that it will now have processing fees of five per cent and 10 per cent, respectively, for individuals and corporate entities.
The limits don’t stop there as third-party cheques above N50,000 would not be eligible for over-the-counter payment anymore. And, ATMs would now dispense only NGN200 and lower denominations.
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New CBN Cash Withdrawal Limits Problems For Small Business Owners
One of the major problems we foresee for small business owners who deal mainly in cash is that they would struggle with moving to electronic payments for transactions above the limit. The fact that many businesses, especially market traders distrust electronic transactions could become an issue.
Another problem is that electronic transactions could be easily monitored and authorities can see businesses or individuals that deal in large sums but fail to pay the required tax obligations, whether knowingly or otherwise.
Opportunities Open For Fintech Startups
Fintech startups could seize the opportunities created by the new CBN cash withdrawal limits like providing a quicker means to verify electronic transactions instead of waiting for traditional bank alert SMS which take long in some instances.
There is also the opportunity for a new crop of fintech startups that deal with tax compliance for business owners to avoid running afoul of the law.
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