Nigeria's digital payments sector has grown rapidly in recent years, but contactless payment, a common feature in markets like Europe and China, remains a rarity. However, this is about to change with PalmPay, one of Nigeria's largest fintechs, partnering with contactless payment infrastructure provider CashAfrica to roll out tap-to-pay functionality on its POS terminals.

The partnership will see PalmPay's POS terminals, starting with 1,000 devices in a pilot phase, enabled with CashAfrica's contactless technology, allowing for NFC-based transactions from debit and credit cards, mobile wallets, and wearables. If the pilot phase is successful, PalmPay plans to expand the service to its 300,000 POS terminals across Nigeria, marking a significant step towards preparing for a future where tap-to-pay transactions become mainstream.

The move is seen as a turning point for digital payments in Nigeria, where transactions are still dominated by cash, bank transfers, and card transactions that require PIN verifications. Industry players agree that contactless payments, which are faster, more seamless, and potentially more cost-effective, could be the next big thing. Ajibade Laolu-Adewale, Chairman of the committee of E-Business Industry Heads (CeBIH), emphasized the role of contactless payments in enhancing safety and providing faster, smoother transactions.

Despite the promise of tap-to-pay, Nigeria has been slow to adopt contactless payments. The primary alternative, NIBSS' NQR (Nigeria Quick Response), has seen limited adoption, with only First Bank and Providus Bank currently supporting it. PalmPay and CashAfrica hope to fill this gap, with CashAfrica also in talks with Sterling Bank, UBA, and Zenith Bank to integrate contactless payment into their mobile apps and POS systems.

However, 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. Security concerns will also be a key focus, with CashAfrica's system requiring explicit authorization for every tap to prevent unauthorized transactions. At the API level, PalmPay and CashAfrica will implement tokenization, encryption, and session expiration mechanisms to secure transactions.

The partnership between PalmPay and CashAfrica marks a significant shift in Nigeria's payments landscape, as fintechs move beyond pushing digital payments through agent banking, apps, and cards to focus on making transactions faster, smoother, and nearly invisible. If successful, the biggest challenge for Nigerian payments won't be adoption – it'll be remembering the last time you actually typed in a PIN.