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Interswitch, Banks Push Tap-to-Pay as Alternative to Bank Transfers
Interswitch, Banks Push Tap-to-Pay as Alternative to Bank Transfers
Interswitch and partner banks are promoting tokenised payments that allow customers to pay by tapping compatible phones and devices at terminals.
The technology replaces sensitive card details with digital tokens and can support biometric authentication.
Wider adoption will depend on compatible payment terminals, participating banks and merchants, and customer acceptance.
October 26, () – Interswitch and its banking partners are pushing tokenised payments that allow customers to pay for goods and services by tapping compatible phones and other devices, positioning the technology as an alternative to conventional bank transfers and physical card payments.
At a tokenisation documentary press briefing in Lagos over the weekend, executives from the payments technology company and participating banks outlined how device-based payments could simplify transactions by reducing the steps required to complete purchases.
Akeem Lawal, managing director of Payment Processing and Switching at Interswitch Purepay, described the shift towards tap-to-pay as the next stage in Nigeria’s digital payments evolution.
“Where we are going is just tapping,” Lawal said, arguing that the technology could significantly reduce the friction customers encounter when making payments.
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Under the conventional transfer process, customers generally have to open a banking application, enter an account number, specify an amount and authorise the transaction.
Tokenised contactless payments can reduce these steps by allowing users to tap compatible devices against supported payment terminals and authenticate transactions where required.
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How tokenised payments work
Akeem Lawal managing director of Payment Processing and Switching at Interswitch Purepay Photo credit Interswitch
Tokenisation replaces sensitive card details with a substitute digital identifier, or token, reducing the need to expose the original card credentials during transactions.
When supported by a compatible device, digital wallet and payment terminal, the technology enables customers to make contactless payments using smartphones and potentially smartwatches and other wearable devices.
Biometric authentication, including fingerprint or facial recognition, may also be used where supported by the device and payment service.
Lawal said the technology could represent another major shift in Nigeria’s payments industry, following the growth of interbank ATM switching, point-of-sale payments and online transactions.
However, tapping a phone does not automatically eliminate every step involved in a payment. Adoption will depend on the devices, wallets, cards and terminals supported by participating banks and merchants.
The availability of compatible terminals will be particularly important for extending the service beyond retail outlets to transport systems and other everyday transactions.
Banks eye wider use across daily transactions
Tunde Mabawonku executive director at Wema Bank Photo credit ABF Conference
Tunde Mabawonku, executive director at Wema Bank, pointed to public transportation as one area where contactless payments could become more useful, arguing that customers should be able to use their phones across different settings.
He cited the potential to tap and pay on Lagos’ Bus Rapid Transit services and Blue and Red rail lines, as well as during international travel.
Such applications could expand the role of mobile devices beyond banking and online shopping, making them tools for everyday payments wherever compatible infrastructure is available.
Jimmy Banjoko, head of GTBank’s Digital Banking Division, said Nigeria was still in the early stages of adoption, but changing consumer behaviour suggested room for contactless payment innovation.
He linked the opportunity to customers’ growing preference for digital transactions and contactless services.
The push comes as banks and payment companies seek ways to make digital payments more convenient. Yet while tokenisation can improve how card credentials are handled and simplify the payment process, its success will depend on practical deployment, merchant acceptance, and customers’ willingness to adopt another payment method.
For Interswitch and its banking partners, the immediate challenge is to move tap-to-pay beyond a technology proposition and make it usable across enough everyday payment points to change how Nigerians transact.
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