The Central Bank of Nigeria (CBN) has developed and issued guidelines for contactless payment in Nigeria to ensure appropriate risk management processes, following its growing adoption in the country.
A report by Juniper Research revealed that transaction volumes for mobile payments will grow from 26 billion in 2021 to 49 billion in 2023; representing a growth of 92%. Growth in mobile contactless transaction volumes will significantly exceed contactless card volumes by 2023, as mobile contactless transactions grow twice as fast as contactless card transactions.
Jupiter Research speculates that Nigeria's contactless payment market will reach $10 trillion in transaction value in the next five years to 2027. The report identified the enhanced security and increasing cross-channel payment capabilities of mobile contactless payments as key drivers of growth.
In September 2022, Interswitch in partnership with ProvidusBank, Mastercard and Thales Group announced the introduction of a new Tap-to-Pay service in Nigeria. The service allows cardholders to make fast, secure, and convenient in-store payments by tapping their Near Field Communication (NFC)-enabled smart device at any contactless-enabled payment terminal.
Prior to this partnership, NowNow, a Nigerian fintech secured a $13 million seed to introduce a Tap and Pay feature to the list of its platform functionalities in June 2022. Another Nigerian fintech, Tap and Pay is also working in the same market.
CBN's provision for contactless payment
According to the draft, the stakeholders involved in Nigeria's contactless payment industry includes:
- Merchant: this is the store owner, seller or service provider that has requested for payment through a contactless payment method. Merchants will be responsible for fraudulent contactless payments caused by their carelessness or complicity.
- Customer: the individual who is to paying the Merchant using via a contactless payment method. Customers will have the choice to opt-in to contactless payments by applying for and accepting the products' and services terms and conditions.
- Acquirer: the financial institution of the Merchant.
- Issuers: the financial institution of the Customer
Other stakeholders are payment and card schemes, switching companies, payment terminal service providers, payment terminal service aggregators and terminal owners.
The draft also stated that banks will determine the transaction limits. Also, payment below undisclosed stipulated limits will not require customer authorisation, but high value transitions will require authorisation.
Musa Jimoh, CBN's Director of Payments System Management Department said that "the draft Guidelines are hereby exposed to all banks, other financial institutions, payments service providers and the general public for comments. The comments should reach the Director, Payments System Management Department, CBN not later than November 5, 2022."