The financial regulator in Nigeria has introduced new guidelines for digital payment providers offering contactless payment solutions. The rules specify that contactless transactions will be capped at N15,000 ($19.65) per transaction, with a daily maximum of N50,000 ($65.5). Contactless payments allow users to make transactions by tapping or waving their enabled devices, such as smartphones or cards, at point-of-sale terminals without requiring a PIN. The limits aim to mitigate fraud risks associated with contactless payments.

Contactless payments have gained traction globally, with the COVID-19 pandemic accelerating their adoption. In response to the pandemic, the World Health Organization (WHO) encouraged the use of contactless payments to reduce the spread of the virus. Several countries, including 30 European nations, raised their contactless payment limits in 2020. In the UK, the contactless payment limit was increased to £100 in October 2021, making it one of the highest limits globally without the need for additional authorization.

Nigeria's guidelines hold acquirers, issuers, and merchants responsible for fraudulent transactions resulting from negligence or connivance. The regulation also requires contactless payment to be available only to users with Bank Verification Numbers (BVNs). Transactions exceeding the limit will require additional authorization, such as a PIN, mobile code, or biometric identification.

To address fraud concerns, Nigerian fintech companies have started implementing ID verification as part of their onboarding processes. Paga, a Nigerian fintech founded in 2009, recently announced the introduction of additional ID verification measures for all customers, regardless of their Know Your Customer (KYC) level.

The decision to limit contactless payment amounts in Nigeria reflects standard fraud mitigation practices. Data from UK Finance showed that in 2020, only £16 million of card fraud out of a total of £574 million was related to contactless payments. This indicates a relatively low fraud rate compared to the overall value of contactless transactions.

South Africa is leading the way in contactless payments within Africa, with over half of First National Bank (FNB) customers using contactless payment methods. Consumers in South Africa have shown a strong preference for contactless payments using cards or smart devices.

Overall, the introduction of contactless payment guidelines in Nigeria aims to balance the convenience of contactless transactions with the need to protect users from fraud risks.

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