Nigeria’s digital payments sector has seen rapid growth over the years, yet contactless payments remain largely untapped. However, PalmPay, a leading fintech in Nigeria, is now taking a bold step to change that landscape.
In collaboration with CashAfrica, a provider of contactless payment infrastructure, PalmPay is introducing tap-to-pay functionality on its point-of-sale (POS) terminals. The initiative will begin with a pilot rollout of 1,000 devices, with a nationwide expansion planned for March. This move could be a game-changer in Nigeria’s payment ecosystem, where transactions are still heavily reliant on cash, bank transfers, and card-based payments that require PIN verification.
PalmPay’s POS terminals will now support Near Field Communication (NFC)-based transactions, allowing customers to make payments using debit and credit cards, mobile wallets, and wearable devices. The technology, powered by CashAfrica, will charge PalmPay on a per-API-call basis, meaning the fintech attracts a cost each time a contactless transaction is processed.
If the pilot phase proves successful, PalmPay intends to scale the service across its 300,000 POS terminals nationwide, preparing for a future where tap-to-pay transactions become the norm.
Nigeria’s payments industry has evolved significantly in recent years, thanks to fintech players such as OPay, Moniepoint, Paga, and FirstMonie. These companies invested heavily in customer education and infrastructure to drive digital transactions, initially through agent banking, mobile apps, and card payments.
However, while digital transactions have grown, traditional card payments remain costly due to high processing fees charged by international card networks. Additionally, “pay with bank” solutions, though gaining interest, still involves friction in the user experience.
Many industry experts believe that contactless payments which is faster, more seamless, and potentially cost-effective could be the next breakthrough in Nigeria’s fintech evolution.
Ajibade Laolu-Adewale, Chairman of the Committee of E-Business Industry Heads (CeBIH), emphasized the importance of contactless payments during a stakeholder meeting last year.
“The role of contactless payments cannot be overemphasized, especially as Nigeria faces increasing financial fraud risks, just like other economies worldwide. Beyond security, this innovation will enable merchants to facilitate faster and more convenient transactions.”
Despite the potential benefits, contactless payment adoption in Nigeria remains low. The Nigeria Quick Response (NQR) Code, introduced by NIBSS, has seen limited adoption, with only First Bank and Providus Bank actively supporting it.
PalmPay and CashAfrica aim to fill this gap, but merchant adoption remains a key challenge. To accelerate uptake, CashAfrica is currently in discussions with Sterling Bank, UBA, and Zenith Bank to integrate contactless payment technology into their mobile apps and POS terminals.
PalmPay has not disclosed specific plans for merchant training and incentives, but industry observers believe that education and financial incentives will play a critical role in driving adoption.
As with any new payment method, security remains a top priority. To prevent unauthorized transactions, CashAfrica’s system requires explicit authorization for every tap, eliminating the risk of accidental or fraudulent payments.
At the API level, PalmPay and CashAfrica will implement tokenization, encryption, and session expiration mechanisms to secure all transactions, ensuring a safe and seamless user experience.
For years, fintechs have worked to shift Nigerians away from cash, promoting bank transfers, mobile apps, and QR code payments. But just as these methods gain widespread adoption, a new frontier emerges – making digital transactions even faster and more seamless.
If PalmPay and CashAfrica succeed, the biggest challenge for digital payments in Nigeria may no longer be getting users to adopt them but rather, remembering the last time they had to enter a PIN.
