Nigeria’s digital payments sector has grown rapidly for years, yet contactless payment—common in markets like Europe and China—remain a rarity. PalmPay, one of Nigeria’s largest fintechs, is making a move that could change that.
In partnership with contactless payment infrastructure provider CashAfrica, PalmPay is rolling out tap-to-pay functionality on its POS terminals, starting with 1,000 devices in a pilot phase before a nationwide expansion in March. It could be a turning point for digital payments in Nigeria, where transactions are still dominated by cash, bank transfers and cards transactions that need PIN verifications.
Palmpay will rely on CashAfrica’s contactless technology, which enables PalmPay’s POS terminals to process NFC-based transactions from debit and credit cards, mobile wallets, and wearables. CashAfrica will charge PalmPay on a per-API-call basis, meaning the fintech will incur costs each time a contactless transaction is processed.
If the pilot phase is successful, Palmpay will expand the service to its 300,000 POS terminals across Nigeria. The company sees this upgrade as a step toward preparing for a future where tap-to-pay transactions become mainstream.
Why Contactless? Why Now?
Nigeria’s payments landscape has evolved dramatically in the last five years, thanks to fintechs like OPay, Moniepoint, Paga, and FirstMonie. These firms spent millions on customer education and infrastructure to push digital payments—first through agent banking, then through apps and cards. But growth in agent banking has plateaued, and traditional card payments remain expensive due to fees charged by international card schemes. Meanwhile, “pay with bank” options, while growing, still involve significant friction.
Industry players seem to agree that contactless payments—faster, more seamless, and potentially more cost-effective—could be the next big thing.
“The role of contactless payments cannot be emphasized, especially at this period where the country is faced with financial fraud risks just like other countries of the world.” Ajibade Laolu-Adewale, Chairman of the committee of E-Business Industry Heads (CeBIH), said while endorsing contactless payment in a stakeholder meeting last year. “Beyond the safety issues, this innovation will also enable merchants to provide faster, smoother and easier transactions,” he stated.
The Adoption Challenge
Despite the promise of tap-to-pay, Nigeria has been slow to embrace it. The primary alternative—NIBSS’ NQR (Nigeria Quick Response)—has seen limited adoption, with only First Bank and Providus Bank currently supporting it. That leaves a gap that PalmPay and CashAfrica hope to fill.
CashAfrica is also in talks with Sterling Bank, UBA, and Zenith Bank to integrate contactless payment into their mobile apps and POS systems. But getting merchants on board remains a challenge. PalmPay did not share details on its merchant education strategy, but training and incentives will likely be crucial to driving adoption.
If contactless payments take off, security concerns will be front and center. To prevent unauthorized transactions, CashAfrica’s system requires explicit authorization for every tap, ensuring that accidental or fraudulent taps do not go through automatically.
At the API level, PalmPay and CashAfrica will implement tokenization, encryption, and session expiration mechanisms to secure transactions.
For years, fintechs fought to pull Nigerians away from cash, pushing bank transfers, mobile apps, and even QR codes. But as they inch closer to victory, the next battle is already here: how to make digital payments faster, smoother, and nearly invisible. If PalmPay and CashAfrica succeed, the biggest challenge for Nigerian payments won’t be adoption—it’ll be remembering the last time you actually typed in a PIN.
