🍔Quick Bite: Contactless payments are growing in Africa, driven by fintech innovations and regulatory support. However, adoption remains slow due to infrastructure gaps, security concerns, and a strong cash culture. Overcoming these barriers will be key to mainstream adoption.
🧠 The Breakdown
Across Africa, the way people pay for goods and services is evolving. Fintech innovations and digital banking have introduced new payment methods, including contactless payments, which are gaining momentum.
But despite multiple attempts to push contactless payments, adoption has been slow. Infrastructure gaps, security concerns, and a long-standing preference for cash have held back widespread use.
Now, with some renewed regulatory support and major partnerships between banks, fintechs, and payment providers, will contactless payments finally become mainstream in Africa?
A fresh wave of contactless payment initiatives
Nigeria’s Access Bank recently partnered with Visa to launch Tap to Phone, a solution that allows merchants to accept payments with nothing more than an NFC-enabled Android phone, eliminating the need for traditional PoS machines. This follows similar moves across Africa, such as Interswitch’s collaboration with Tuma to introduce a contactless payment system in Kenya and Moniepoint and PalmPay’s partnership with AfriGO to roll out five million contactless cards in Nigeria.
At the same time, regulators are stepping in to accelerate the shift to a cashless economy. In June 2023, Nigeria’s Central Bank (CBN) introduced new guidelines for contactless payments, setting a per-transaction limit of ₦15,000 and a daily cumulative limit of ₦50,000.
Driving adoption through everyday use cases
Fintech companies and financial institutions are actively driving innovation in this space. In 2022, Nigerian fintech company NowNow raised $13 million in seed funding to develop contactless payment solutions, signaling strong investor confidence in the sector.
Meanwhile, banks and payment providers are embedding contactless technology into everyday transactions, including public transportation systems. The Lagos Blue Rail Line and the Lagos State Bus Rapid Transit Scheme now accept contactless payments via Touch and Pay (TAP) Technologies, the issuers of the Cowry card. FCMB has also entered the space, partnering with Mastercard to launch EasyPay in May 2023, while Verve introduced its contactless payment solutions in April of the same year.
Is Africa catching up with global trends?
While Africa is still in the early stages of adoption, global markets provide a glimpse into the future. Countries like the UK, Australia, and South Korea have widely embraced contactless payments, with high adoption rates driven by strong financial infrastructure and consumer trust.
For example, as far back as 2018, contactless payments were reported to have made up 19% of all transactions in the UK. In Australia, contactless payments approached saturation point by 2017, being used in over 90% of purchases.
However, Africa is rapidly closing the gap, with digital payment penetration in Nigeria and other African nations doubling from 23% to 46% in less than eight years. Mobile money solutions and fintech-driven innovations are propelling this shift.
What needs to be different this time
For contactless payments to become a lasting fixture in Africa’s financial ecosystem, several challenges must be addressed.
A key issue is infrastructure reliability. While digital payments have improved, many regions still experience unreliable mobile networks and internet connectivity, which can lead to transaction failures. Users could frequently encounter disruptions during payments, which creates uncertainty and undermines trust in digital systems.
Security concerns are another major barrier. As digital transactions increase, so do incidents of fraud and data breaches. Many consumers remain hesitant due to fears about the safety of their financial information. At the same time, consumer education will play a vital role in building trust. Providing clear information on security features and safe digital payment practices can encourage more people to adopt contactless payments with confidence.
Regulatory inconsistencies across African markets also pose a challenge. Varying compliance requirements can slow down the deployment of new payment technologies and discourage investment. Merchant adoption is equally important. Many small businesses are hesitant to implement new payment technologies due to perceived costs or operational complexities. Offering affordable and user-friendly solutions, along with incentives, could drive adoption.
A cashless future? Not yet
While the momentum behind contactless payments in Africa is undeniable, Cash remains deeply embedded in African economies.
As of 2023, cash remained the dominant payment method at points of sale in several African countries, with Kenya leading at 84%. Morocco followed closely at 77%, while 76% of transactions in Nigeria were still cash-based.
While digital payment adoption is growing, cash will likely remain a key part of the financial landscape for the foreseeable future.
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