By Alexander Chiejina.
Modern society is being revolutionised by the evolution of payments, which is influenced by technological development in the financial services industry. The payment environment in Africa has changed significantly over time, consistently adjusting to global payment patterns to increase financial inclusion. Progress in embracing digital solutions may be seen in the advent of credit and debit cards, smartphone apps, online banking, and blockchain technology.
As the infrastructure for digital payments grows, businesses and communities prosper. The once insurmountable obstacles to obtaining financial services are being removed, providing opportunities for both people and businesses.
Nigeria is currently experiencing a financial connectivity revolution in the digital age, driven by the astounding growth of digital payment systems. The popularity of digital payments is accelerating and changing how transactions are conducted. These days, digital payment options are permeating all aspects of daily life and transforming the global economy.
Nigeria is moving towards a cashless society as an increasing number of people adopt mobile wallets and contactless payments for their convenience. The most populous country in Africa has quickly transitioned from card payments to the newest digital innovations, contactless payments.
“Contactless payments are transactions made by tapping either a contactless card or payment-enabled mobile or wearable device over a contactless enabled payment terminal,” according to VISA .
The same contactless technology is used by cards, phones, watches, and other gadgets. Prepaid cards, debit and credit cards, key fobs, mobile electronic devices, wearable technology, and other items can all be used to make contactless payments.
Experts predict that this most recent technology development will revolutionise payments in Nigeria, the continent’s most populous country.
Speaking at the Digital Expo 2023 event, Emmanuel O jo, chief executive officer, RedTech, explained that contactless payment is a safe and practical way to conduct transactions between a point-of-sale terminal and a payment device, such as a card or smartphone, without making physical touch.
Ojo highlighted the many advantages of using contactless technology for payments, adding that it assures that the user’s card information is not directly shared with the merchant, lowering the chance of fraud or identity theft. “Since transactions can be executed rapidly, they offer a quicker and more efficient payment experience, shortening checkout times. By removing the need to carry cash or physically insert cards into machines, contactless payments improve convenience. Contactless payments are regarded as secure since they use many layers of encryption and tokenization to safeguard critical payment information,” said Ojo.
He stated that direct involvement is required in developing contactless technology in Nigeria in order to overcome the crucial trust issue. “This engagement should concentrate on certain markets and MSME (Micro, Small, and Medium Enterprises ) hubs, according to O jo.
Localised engagements have the power to effectively increase knowledge and trust in these areas by bridging linguistic and socioeconomic divides,” he further explained. Ojo, however, proposes identifying significant retailers who are paving the way and establishing trends inside the market centres in order to accomplish this. These businesses can be recruited as champions with aligned incentives, which incentivizes them to support and advance reliable payment options.
Consumers are the biggest winners thanks to contactless technology, which enables payments to be made by just passing the card over the payment terminal using short-range wireless technology, according to Andrew Uaboi, vice president & head, Visa West Africa. “Store owners can utilise this technology to assure quick, easy payments at the register and boost operational efficienc y by decreasing cash usage. This boosts sales and enhances the customer payment experience. Without this technology, there wouldn’t be an interoperable platform to support the expansion of mobile payments in Nigeria or the use of the increasingly well-liked new payment gadgets, Uaboi added.
The Central Bank of Nigeria (CBN) has revealed its intentions to put the finishing touches on regulations that will control and promote the secure and effective usage of contactless payment in Nigeria. This is a component of the apex bank’s initiatives to modernise and advance Nigeria’s cashless payment policy.
The CBN’s proposed guidelines for contactless payments in Nigeria are intended to promote the adoption and secure deployment of this payment method, according to Musa Jimoh, director of Payments System Management Department at the CBN, who spoke at the expo event. According to Musa Jimoh, the introduction of contactless payment will aid in minimising any inconveniences that might result from the transition to new notes. The technical and operational requirements for adopting contactless payment systems as well as the security precautions required to safeguard consumer information would be covered, he said.
Adopting digital payments improves financial inclusion while simultaneously promoting efficiency, transparency, and economic progress. Nigeria may advance in its digital payment journey and become a worldwide leader in digital financial services with coordinated efforts from stakeholders across sectors. In Nigeria, there are several contactless payment solutions, such as QR codes, mobile apps, smart watches, etc. The CBN Draft Guidelines state that acquirers, issuers, payment schemes, switching businesses, Payment Terminal Service Providers (PTSPs), Payment Terminal Service Aggregators (PTSAs), etc. are among the parties to contactless payments (which apply to financial institutions).
The Draft Guidelines mandate that financial institutions that process and store client information must ensure that their terminals, apps, and other systems are in compliance with the following basic standards: Payment Application Data Security Standard (PA DSS), Payment Card Industry Pin Entry Device (PCI PED), Payment Card Industry Data Security Standard (PCI DSS), Advanced Encryption Standard (AES), ISO 27001, and any additional standards that the CBN may from time to time specify.
Since the Guidelines are still in draft form, it is anticipated that any areas of uncertainty would be resolved in the final version, as this could affect how useful and widely accepted contactless payments are in Nigeria, and would be in the future!
