Contactless Payments (“CPs”), aptly described as payments which involve the consummation of financial transactions without physical contact between the payer and the acquiring devices₁, have been gaining momentum and widespread adoption in recent times. First introduced in the 1990s₂, CPs recorded a significant boost in adoption following the Covid'19 Pandemic in 2020₃. Today, CPs are the preferred choice of payment in many countries, with the CPs market set to reach a global value of USD164.15 billion by 2030₄.

In September 2022, Interswitch, in partnership with Providus Bank, Mastercard and Thales Group, announced the introduction of a new Tap-to-Pay service in Nigeria. This CPs service allows cardholders to make fast, secure, and convenient in-store payments by tapping their Near Field Communication-enabled smart device at any contactless-enabled payment terminal₅. In addition, Now-Now, another Nigerian Company that offers Tap-and[1]Pay services₆, recently raised USD 13 Million seed and is expected to increase the adoption of CPs in Nigeria₇. Similarly, Squad₈ and Kuda₉ have introduced softPOS solutions, which are expected to drive the adoption of CPs further. In summary, it appears the private sector is gearing up to participate in the CPs space.

However, there are risks/security concerns inherent in the use and adoption of CPs. Some of the major risks include CPs fraud, hack of CPs networks, data privacy concerns for customers and implication of absence of authorization. For instance, in 2020, £16 million was lost to CPs fraud in the UK₁₀. However, it must be stressed that the referenced CPs fraud accounts for only 2.9% of overall card fraud losses, while 55% of all card transactions were CPs transactions. This strongly suggests that, where adequate standards are adhered to and best practices kept, CPs are not only smoother for participants, but also significantly safer across board.

Footnotes  

1. Exposure draft of the guidelines for contactless payments in Nigeria (“Draft Guidelines”) available at https://www.cbn.gov.ng/Out/2022/CCD/Draft%20Guidelines%20for%20Contactless%20Payments%20in%20Nigeria.pdf accessed 13 November 2022 
2. BanksAm, “History of contactless payments: from past century to the present day” available at https://banks.am/en/news/fintech/22668#:~:text=The%20first%20ever%20widespread%20use,making%20contactless% 20payments%20for%20trips. 
3. FinExtra, “WHO urges switch to contactless to slow virus transmission” available at https://www.finextra.com/newsarticle/35384/who-urges-switch-to-contactless-to-slow-virus[1]transmission#: ~:text=The%20World%20Health%20Organisation%20is%20advising%20consumers%20to,which%20are% 20known%20carriers%20of%20viruses%20and%20bacteria 
4. Grand View research, “Global Contactless Payments Market” available at https://www.grandviewresearch.com/press-release/global-contactless-payments-market 
5. Fintechnews, “Providus bank launches tap-to-pay service with Mastercard, Interswitch and Thales” available at https://fintechnews.africa/41118/fintech-nigeria/providusbank-launches-tap-to-pay-service-with-mastercard[1]interswitch-and[1]thales/#:~:text=Nigerian%20financial%20services%20company%20ProvidusBank,payment%20service%20in%20the%20 country 
6. Available at https://nownow.ng/introducing-nownow-tap-and-pay/ 
7. Financial Nigeria, “NowNow raises 13 Million in seed funding” available at https://www.financialnigeria.com/nigerian-fintech-startup-nownow-raises-13-million-in-seed-funding-news[1]2537.html 
8. Available at https://squadco.com/squad-pos/ 
9. Available at https://business.kuda.com/ 
10. UK Finance, “Fraud- The Facts 2021” available at https://www.ukfinance.org.uk/system/files/Fraud%20The%20Facts%202021-%20FINAL.pdf. It must however be stressed that CPS fraud accounts for only 2.9% of overall card fraud losses, while 55% of all card transactions were CPS transactions