The Central Bank of Nigeria, the financial regulator in Nigeria, has recently introduced fresh guidelines for digital payment providers that offer contactless payment solutions.
Contactless payments encompass transactions where individuals make payments by conveniently tapping or waving their payment devices at point-of-sale terminals. This form of payment is also known as proximity payments.
According to the newly implemented regulations, users now have the ability to make payments by tapping or waving their contactless-enabled devices, such as smartphones and cards, without the requirement of entering a PIN to authenticate the transaction.
But such transactions will be limited to ₦15,000 ($19.65) for a single payment or ₦50,000 ($65.5) daily.
Contactless payments leverage radio frequency identification (RFID) or near-field communication (NFC) technology, enabling authorized devices to initiate and authorize payment transactions without requiring additional confirmation from the user. This technology empowers users to seamlessly and securely conduct transactions without the need for additional authorization steps.
EMVCo, an organization named after its founding members, Europay, Mastercard, and Visa, collaborates with stakeholders in the payment industry worldwide to establish technical standards for smart payment cards and the point-of-sale (POS) readers that are compatible with them.
Following the COVID 19 pandemic, reports indicate that three-quarters of all Mastercard transactions in Europe are contactless. In the UK, Visa says the figure is as high as 80% of in-person payments.
The contactless payment regulations in Nigeria assign responsibility for fraud to acquirers (the bank of the payment recipient), issuers (the bank of the customers), and merchants (the business) that offer contactless payment options. According to the guidelines, they will be held liable for any fraudulent transactions that result from their negligence or collusion.
Furthermore, the guidelines stipulate that contactless payment functionality should only be enabled for users who possess Bank Verification Numbers (BVNs). For contactless transactions exceeding a certain limit, additional authorization in the form of a PIN, mobile code, or biometric identification will be required.
According to the CBN’s ‘Guidelines on Contactless Payments in Nigeria,’ contactless payments through accounts or wallets in Nigeria will have a transaction limit of N15,000 and a daily cumulative limit of N50,000. This means that customers can make contactless payments of up to N15,000 (~$20) per transaction and up to N50,000 (~$65) per day without entering their PIN or biometric verification.
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