Nigeria’s Central Bank issues new rules for contactless payments

Contactless transactions can be capped at N15,000 per transaction, with a every day most of N50,000.

Nigeria’s monetary regulator on Tuesday introduced new pointers for digital cost suppliers who supply contactless cost options. Contactless payments broadly confer with transactions the place customers pay by merely tapping or waving their cost units at point-of-sale terminals. It can be referred to as proximity payments. 

Under the new rules, customers can faucet or wave their units (together with smartphones and playing cards) which might be enabled with contactless know-how to make payments with no need to enter a PIN to verify the transaction. But such transactions can be restricted to ₦15,000 ($19.65) for a single cost or ₦50,000 ($65.5) every day.

Contactless payments are powered by radio frequency identification (RFID) or near-field communication (NFC) know-how each of which permit enabled units to provoke and authorise cost transactions with out further authorisation affirmation from the consumer.

EMVCo—named for the organizations (Europay, Mastercard and Visa) that established it— works with cost business stakeholders globally to set technical requirements for sensible cost playing cards and the POS readers that settle for them. 

The COVID-19 pandemic is credited for accelerating using contactless payments.  In 2020, the WHO urged a change to contactless as a part of measures to assist gradual the unfold of COVID-19. In response 30 European international locations raised their limits on contactless payments in the identical yr. In 2021 the UK contactless cost limits once more to £100 in October 2021, making UK customers among the many world’s greatest spenders with out having to verify their identification.  Three-quarters of all Mastercard transactions in Europe are contactless. In the UK, Visa says the determine is as excessive as 80% of in-person payments.

Nigeria’s contactless payments rules place the burden of fraud with acquirers (i.e. the financial institution of the cost recipient), issuers (i.e. the financial institution of the purchasers) and retailers (the enterprise) who supply contactless cost channels. Per the rules, they are going to be liable for fraudulent transactions “arising from their negligence and/connivance.”  In addition, the rule of thumb specifies that contactless cost be solely enabled for customers who’ve Bank Verification Numbers (BVNs). Contactless transactions which might be greater than the restrict would require further authorisation within the type of a PIN, cell code or biometric identification.

Regulators within the US and Ecuador don’t place any limits on single contactless transactions.

To fight fraud Nigerian fintechs have moved to incorporate ID verification as a part of the onboarding course of as a substitute of merely inserting limits on transactions. Paga, based in 2009 lately introduced that it might require all clients to cross further ID verification no matter their KYC degree.

Nigeria’s central financial institution stated it thought-about the dangers related to contactless payments earlier than limiting how a lot customers could make with contactless cost strategies. Limiting transaction quantities on contactless payments is a normal fraud mitigation danger. There is proof that it really works. According to the information analytics firm, FICO, “data from UK Finance revealed that in 2020 there was a total of £574 million lost through card fraud. Of this, only £16 million represented contactless payment fraud. Against a total of £9.46 billion worth of contactless transactions, that equates to 1.8p worth of fraud in every £100 spent using contactless technology.” 

South Africa leads the best way in contactless payments in Africa. In January Tech Central reported that greater than half the purchasers of First National Bank (FNB) use contactless payments. “Consumers have shown a strong preference for contactless payments using their contactless-enabled cards or smart devices,” stated Ashley Saffy, head of enterprise growth at FNB South Africa.