Nigerian consumers could soon complete more everyday transactions by simply tapping their smartphones or other compatible devices on payment terminals, as Interswitch and its banking partners intensify efforts to expand tokenised card payments across the country.
At a press briefing on tokenisation in Lagos at the weekend, the payment technology company and participating financial institutions outlined plans to promote device-based payments as a convenient alternative to conventional bank transfers and physical payment cards.
The initiative is designed to simplify the payment process, reduce the number of steps required to complete transactions and strengthen the security of digital payments by limiting the exposure of sensitive card information.
The Managing Director, Payment Processing and Switching, Interswitch Purepay, Akeem Lawal, described tokenisation as a potentially transformative development in Nigeria’s payments industry, predicting that contactless transactions would increasingly shape how consumers pay for goods and services.
“Where we are going is just tapping,” Lawal said, outlining a future in which customers could make payments by tapping compatible devices on point-of-sale terminals rather than navigating multiple screens on banking applications.
Tokenisation works by replacing sensitive card details with a unique substitute identifier, known as a token, which can be used to facilitate transactions without directly exposing the original card credentials. When supported by compatible devices, digital wallets and payment terminals, the technology allows customers to authenticate payments using security features such as fingerprints or facial recognition.
Explaining the convenience the technology could offer, Lawal said it would significantly reduce the friction associated with everyday transactions.
“You will have reduced the friction of transacting significantly,” he said, noting that biometric authentication could enable customers to complete payments in fewer steps.
The push towards tokenised payments builds on several developments that have reshaped Nigeria’s financial services industry over the years, including interbank automated teller machine switching, point-of-sale transactions and online payments.
According to Lawal, each phase of innovation has changed how Nigerians access and transfer money, while tokenisation could mark another important stage in the evolution of digital payments.
Under the conventional bank transfer process, customers typically have to open their banking applications, enter beneficiaries’ account details and authorise transactions through several steps. Tap-to-pay technology, by contrast, could enable users to authenticate themselves and complete payments by presenting a compatible device at a payment terminal.
However, widespread adoption will depend on the availability of compatible devices and terminals, as well as implementation across participating banks and merchants.
Banks Eye Wider Contactless Payment Applications
Beyond retail purchases, banking executives said tokenisation could open up opportunities for contactless payments across public transportation, travel and other everyday services.
The Executive Director of Wema Bank, Tunde Mabawonku, highlighted the growing importance of mobile devices in consumers’ daily lives, arguing that customers should be able to use their phones conveniently across different payment environments.
“This same phone, I should look to tap to make payments on the BRT bus. I should look to tap to make payments on the blue line, the red line,” Mabawonku said, referring to the potential application of contactless payments on Lagos’ bus rapid transit system and rail networks.
His remarks point to the possibility of extending the technology beyond conventional retail outlets to transport systems, where faster payment processing could improve convenience for commuters.
The same approach could also be extended to smartwatches and other compatible wearable devices, allowing customers to make payments without necessarily reaching for their smartphones or physical cards.
Such applications could broaden the role of digital wallets in everyday commerce, provided transport operators, merchants and payment service providers adopt the necessary infrastructure.
GTBank Sees Growing Appetite for Contactless Payments
The Head of the Digital Banking Division at GTBank, Jimmy Banjoko, said Nigeria’s market was still at an early stage of tokenisation adoption but showed signs of readiness for further innovation.
He attributed the opportunity to changing consumer preferences, particularly the growing interest in digital channels and more convenient ways of completing financial transactions.
“We see that is a signal to suggest that innovation can go in this line because market behaviour is already tending towards this contactless,” Banjoko said.
He expressed the view that tokenised payments could gain wider acceptance as consumers gradually move from app-based transfers towards tap-to-pay transactions.
Nevertheless, the pace of adoption will depend on how effectively financial institutions and payment providers deploy the technology, how widely merchants support compatible terminals and how readily customers embrace the new payment method.
For Interswitch and its banking partners, the initiative represents an effort to build on Nigeria’s established digital payments infrastructure while making transactions more convenient for consumers.
If implementation and adoption progress as anticipated, tokenised payments could expand the range of options available to Nigerians, particularly in retail and transport services, where speed and convenience are important.
The long-term impact, however, will depend on the reliability of the payment infrastructure, the accessibility of compatible devices and terminals, and consumers’ confidence in the security of contactless transactions.