Nigeria’s digital payments sector has seen rapid growth over the years, yet contactless payments—widely adopted in markets like Europe and China—remain uncommon. PalmPay, one of Nigeria’s largest fintech firms, is aiming to change that.
In collaboration with contactless payment infrastructure provider CashAfrica, PalmPay is introducing tap-to-pay functionality on its POS terminals. The rollout will begin with 1,000 devices in a pilot phase, with a nationwide expansion planned for March. This move could mark a pivotal shift for digital payments in Nigeria, where cash, bank transfers, and PIN-verified card transactions still dominate.
PalmPay will leverage CashAfrica’s contactless technology, allowing its POS terminals to process NFC-based transactions from debit and credit cards, mobile wallets, and wearables. The partnership operates on a per-API-call pricing model, meaning PalmPay incurs costs each time a contactless transaction is processed.
If the pilot phase proves successful, PalmPay intends to expand the service to its network of 300,000 POS terminals across the country. The company views this upgrade as a step toward making tap-to-pay transactions a mainstream payment method in Nigeria.
Nigeria’s payments landscape has evolved significantly in the past five years, driven by fintech players like OPay, Moniepoint, Paga, and FirstMonie. These companies invested heavily in customer education and infrastructure, first through agent banking, then through mobile apps and card payments. However, agent banking growth has plateaued, and traditional card transactions remain costly due to fees imposed by international card schemes. Meanwhile, “pay with bank” solutions, though growing, still involve considerable friction.
Industry experts believe contactless payments—faster, more seamless, and potentially more cost-effective—could be the next frontier in Nigeria’s financial sector.
“The role of contactless payments cannot be emphasized enough, especially at a time when the country, like others, is facing financial fraud risks,” said Ajibade Laolu-Adewale, Chairman of the Committee of E-Business Industry Heads (CeBIH), during a stakeholder meeting last year. “Beyond security concerns, this innovation will also enable merchants to offer faster, smoother, and more convenient transactions.”
Despite its potential, Nigeria has been slow to embrace tap-to-pay technology. The primary alternative, NIBSS’ NQR (Nigeria Quick Response), has seen limited adoption, with only First Bank and Providus Bank actively supporting it. This gap presents an opportunity that PalmPay and CashAfrica hope to fill.
CashAfrica is also in discussions with Sterling Bank, UBA, and Zenith Bank to integrate contactless payments into their mobile apps and POS systems. However, getting merchants on board remains a hurdle. While PalmPay has yet to disclose details on its merchant education strategy, incentives and training will likely play a crucial role in driving adoption.
If contactless payments gain traction, security will be a major concern. To mitigate risks, CashAfrica’s system requires explicit authorization for every transaction, preventing unauthorized or accidental taps. At the API level, PalmPay and CashAfrica will implement tokenization, encryption, and session expiration mechanisms to enhance transaction security.
For years, fintechs have worked to transition Nigerians away from cash, promoting bank transfers, mobile payments, and QR codes. As they make strides in that battle, a new challenge emerges—ensuring digital payments are not only widely adopted but also frictionless and nearly invisible. If PalmPay and CashAfrica succeed, the real question for Nigerian consumers won’t be whether to use contactless payments—it’ll be remembering the last time they had to type in a PIN.
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