How I really wish we have officially started using contactless cards in Nigeria, especially during this period of social distancing. Before the lockdown due to the coronavirus pandemic in Lagos, I used to cringe anytime I am forced to hand over my debit card to the teller at the supermarket cashpoint or attendant at the fuel station for payment. Thereafter I am told to type in my PIN on the Point-Of-Sale (POS) terminal for payment approval.
Imagine the number of cards the teller/attendant would have handled and the number of people that would have also typed on the keypad of the POS terminal.
You can imagine me bathing my hands with sanitizer after the transaction and cleaning my debit card furiously all in a bid to reduce the probability of catching the coronavirus.
I wish we have started contactless transactions before the onset of the coronavirus in Nigeria. I wonder why not. Meanwhile some other African countries have even recently reviewed their Cardholder verification method (CVM) limits upwards to cope with ongoing pandemic.
We already have over 10 million payment cards with contactless feature in Nigeria which have been issued by banks but cardholders have not started using the contactless feature because the stakeholders have not agreed on the modalities such as the CVM limit and more.
Allow me, at this point, to tell you what a contactless card is. Simply put, a contactless card is a smart card that uses radio frequency (RF) technology to interact with a reader or POS terminal. Each card has an antenna embedded inside the card that enables communication with the reader without physical contact. Contactless cards have a wavelike symbol on them to show they can do contactless transactions.
To make payment with a contactless card, all you have to do is wave or tap your contactless card over a reader, whether a POS terminal or an ATM. If the amount is less than the CVM, the transaction will take place. If it is above the CVM, it will request for a PIN entry for authorisation.
According to the Nigerian Interbank Settlement System (NIBSS) as at January 2020, Nigeria has 449,998 registered POS terminals, with 306,409 of these terminals deployed. For 2019, there were 438.6 million POS transactions with a value of 3.2 trillion Naira, with a mean value of 7,307 Naira.
Imagine if we had a CVM limit, say, N10,000, we would have faster, safer and more convenient transactions.
NIBSS also says that we have 17,518 Automated Teller Machines (ATMs) as at December 2019. For 2019, there were 839.8 million transactions with a value of 6.5 trillion Naira.
I know that the three main card payment processors Visa, Mastercard and Verve have been pushing for contactless transactions to commence. Even the card manufacturers and issuers know that they have been instructed to only make and issue payment cards with contactless features.
So it behoves all the stakeholders in Nigeria to quickly agree on the modalities and commence operations. It is faster and safer.
The article first appeared on Innovation Village