Key Business Points
- The 0.05 percent levy on bank transfers is causing public backlash due to multiple daily deductions, which could undermine financial inclusion efforts in Malawi.
- Banks are implementing the levy retrospectively, leading to customer complaints and potential reductions in the use of formal banking services.
- The tax was expected to raise K935 million but may deter digital transactions and erode trust in Malawi’s financial system.
Public outcry over the 0.05 percent levy on bank transfers persists, with customers lamenting the daily deductions on their accounts as commercial banks move to collect the tax in arrears. The 0.05 percent levy on bank transactions came into effect December 31, 2025, and over the past weeks, banks have been deducting the levy in arrears. However, the move has triggered widespread complaints from customers who report multiple daily deductions. This comes as the country is advocating enhanced digital banking services uptake, which saw the value of digital payments growing to K187 trillion in 2024.
One customer complained the repeated charges drove them to shift funds to another bank: "At first, I noticed that the bank was deducting me multiple times in a day and this is an account where I had kept about K10 million. So, I went to the bank and deposited it into another bank account at a different bank. I have just now learned that it is the 0.05 percent bank levy. But still, I feel it is too much."
Executive Director John Kapito warned that the levy risks reversing financial inclusion gains, describing it as "double taxation" on inflows and outflows. He said cumulative deductions are difficult for consumers to track and risk discouraging the use of formal banking services. "Malawi has been grappling with issues of financial inclusion, trying to increase the number of banked people. But I think we will see later that the number of banked individuals is going to reduce."
Economist Marvin Banda said the problem lies not in the levy itself but in how it was introduced and communicated. Retrospective deduction created a perception of unfairness, exposed poor policy communication, and ultimately has had an erosive impact on trust in both the banking system and public institutions. He warned this could lead customers to revert to cash transactions and reduce use of formal banking services.
Banks Association of Malawi chief said the frequency of deductions is mainly due to arrears recovery and that going forward, deductions will be applied in real time. Legal Secretary John Madinga confirmed banks are required under the Consumer Protection Act to provide real-time disclosure of fees for digital transactions. He said banks are obliged to comply with the law.
Confirming on the arrears, Malawi Revenue Authority Head of Corporate Affairs said the levy is being implemented in line with the law, though concerns remain over public trust and usage of digital financial services in Malawi. Users are being asked to cut costs."
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