Who Pays More Under the New VAT: USSD Users or App Users?

Effective Monday, January 19, 2026, Nigerians will see an additional 7.5% VAT applied to certain electronic banking charges. The important detail is this: the VAT is applied to the service fee your bank or fintech charges for the transaction, not to the amount of money you are sending.

That change raises a practical question for everyday Nigerians: who bears the impact more—people who use USSD or those who use bank apps?

Why USSD Users Are Likely to Pay More

USSD is the backbone of banking for many Nigerians who use feature phones, live in areas with weak internet, or prefer simple “*737#” type transfers. It works without data, and it is often the only reliable option in rural communities.

Many banks apply fixed USSD charges per session or per transfer. When VAT is added to these charges, the total cost rises. For a person making frequent small transfers like buying fertiliser, sending transport money, topping up a POS agent, or paying school levies, these extra charges can accumulate fast.

USSD users are also more exposed because they usually have fewer alternatives. If you do not have stable internet, you cannot easily switch to a cheaper channel even when charges increase.

Why App Users May Pay Less

App users typically have more flexibility. Many banks price app transfers competitively, and some platforms offer low-cost or promotional transfers, depending on transaction type and account tier. Even when charges apply, app users can shop around more easily: they can switch between bank apps, wallets, and other digital channels.

Also, app users can avoid repeated “failed session” costs. With USSD, network issues can lead to multiple attempts, which can increase fees. Apps can also fail, but users often have clearer transaction history and quicker dispute options, reducing repeated tries.

That said, app users still pay VAT where charges exist. The difference is that many app users can reduce how often they pay these fees by choosing cheaper channels or bundling payments.

The Real Winner and Loser

In practical terms, USSD users are more likely to pay more under the new VAT, not because VAT targets them directly, but because USSD charges are more common for low-income, low-internet users who make frequent small transactions.

App users will still feel the change, but they usually have more options to manage it.

What Nigerians Can Do Now

Watch your transaction receipts and identify where charges are highest. If you can use an app reliably, consider moving frequent transfers to the lowest-cost channel available. If you depend on USSD, plan transfers carefully to reduce repeated sessions and avoid unnecessary retries.