Nigeria in as global contactless payment transactions hit $10trn

Nigeria’s active young population that is increasingly technology savvy is setting it up to rapidly play in the deep end of the contactless payment revolution now seen to be racing to $10 trillion in transaction value in the next five years to 2027.

According to a new study, contactless payments, the system which uses near-field communication (NFC) for making secure payments, will reach some $10 trillion globally in the next five years to 2027, up from $4.6 trillion this 2022, Juniper Research found for the study.

The research predicted that investment in the underlying contactless payments ecosystem, such as contactless‑enabled Point-of-Sale (POS) terminals and device-level support will be the key driver of contactless transactions value growth over the next five years.

Contactless payments which doubtlessly assumed record crescendo during the pandemic era, sustaining the trend in post-pandemic, are credit cards and debit cards, key fobs, smart cards, or other devices, including smartphones and other mobile devices that use radio-frequency identification or near-field communication (NFC) for making secure payments.

By far, the transition to cashless societies across the globe is driving and will continue to push growth in contactless payments, as countries look to decrease their reliance upon cash. Mobile and wearable contactless payments are anticipated to grow by 221 percent between 2022 and 2027. This growth owes to the convenience that mobile and wearable payments offer consumers, eliminating the need to carry and produce a contactless card; easing the burden of transitioning away from cash.

In comparison, contactless card payments are expected to grow by only 119 percent during the same period, the new research said.

Nigeria, and Africa could come as one of the primary regions where mobile-based payments take the key aspect for e-commerce, according to earlier data by Nikulipe. With world’s youngest populations, Nigeria and Africa show potentials for larger digital audience, as the continent’s e-commerce users are expected to hit 520 million by 2025, from 334 million in 2021—supporting the idea that mobile payments had become a prevailing payments trend for 2022, Frank Breuss, Nikulipe’s chief executive officer had said earlier.

He explained that Africa has one of the youngest and second-largest populations in the world — that is why there’s a broad potential for an even larger digital audience.

“In recent years, internet penetration has also been rising because of the vast expansion of mobile devices, especially smartphones, which led to mobile e-commerce domination of the online shopping scene in African countries specifically,” Breuss said.

Furthermore, the Juniper Research report identified that the high growth of POS terminals capable of accepting contactless payments is also fuelling the growth.

Accordingly, the research urged POS vendors to prioritise convenience when designing NFC solutions for the market, which can cater to the growing number of devices that offer NFC payment capabilities.

This is quite valid for Nigeria, with perhaps one of Africa’s largest POS terminals. According to the NIBSS (Nigeria Inter-Bank Settlement Systems), POS banking agents increased to 8.04 million by August 2022, with registration rising to 11.8 million deployed from January to June, against 4.4 million POS banking agents and 6.8 million registered over the same period in 2021.

POS transactions rose to N6.43 trillion in Nigeria as of September 2022, according to data posted by NIBSS.

Also, Juniper Research said contactless ticketing spend is set for strong growth by over 440 percent between 2022 and 2027. NFC (near-field communication) ticketing has recovered strongly following the easing of pandemic-related restrictions, and is forecast to continue rising rapidly over the next five years.

This growth will be further accelerated by the rapid deployment of NFC ticketing solutions across public transport networks, with the aim of reducing payment friction for customers. In turn, the report urged vendors to foster adoption of their NFC ticketing solutions, targeting the public transport sector in developed regions that are increasingly seeking out ways to improve ticketing efficiencies.

Juniper Research provides research and analytical services to the global hi-tech communications sector; providing consultancy, analyst reports, and industry commentary.