Interswitch Group is expanding the payment infrastructure needed to support tokenised transactions in Nigeria, working with banks, financial institutions, card schemes and merchants to encourage wider adoption of contactless payments and digital wallets.
The Nigerian payments technology company said the initiative would help participating institutions integrate payment tokenisation into their systems, improving the protection of card information during electronic transactions.
The company is also supporting payment infrastructure development in other African markets, including Kenya and Uganda.
Payment tokenisation replaces sensitive card details, such as a card number, with a substitute identifier known as a token. This allows eligible transactions to be processed without repeatedly exposing the original payment credentials.
Depending on how it is configured, a token may be restricted to a particular device, merchant or payment environment, reducing its usefulness if intercepted or compromised.
Interswitch said its work includes providing issuer connectivity, token management and payment processing capabilities to help banks and other payment providers support tokenised transactions.
Banks must enable the relevant services for their customers, while card schemes, processors and merchants need compatible systems to ensure transactions are authorised and completed successfully.
Akeem Lawal, Managing Director, Payment Switching and Processing at Interswitch, said collaboration across the payments industry was essential to expanding secure and accessible digital payment options.
He said the company was developing the infrastructure required to bring tap-to-pay and wallet-based payments to more Nigerian consumers.
The initiative is intended to give customers additional ways to pay while reducing the exposure of their original card details during transactions.
Tokenisation is increasingly used in digital wallets and other electronic payment systems to protect sensitive information. Contactless payments, meanwhile, allow customers to pay by bringing a compatible card, phone or wearable device close to a payment terminal.
Although the technologies can work together, they are not the same. Contactless payments describe how a transaction is initiated, while tokenisation helps protect payment credentials. Tokenisation can also be used for transactions that do not involve tapping a device at a terminal.
For consumers, these technologies can make electronic payments more convenient. Merchants may also benefit from offering additional checkout options, although adoption depends on the availability of compatible terminals, supported cards and devices, and reliable payment networks.
Tokenisation can reduce the risk associated with the exposure of original card details, but it does not eliminate payment fraud. Account takeovers, social engineering and unauthorised transactions remain risks that require effective authentication and other security measures.
Cherry Eromosele, Executive Vice-President, Marketing and Communications at Interswitch, said the initiative formed part of the company’s broader investment in payment infrastructure.
She said the company’s focus was on building the underlying systems needed to support reliable and secure digital transactions for businesses and consumers.
Interswitch said its experience developing electronic payment technology across Africa positioned it to support financial institutions as they expand their digital payment services.
However, the company has not announced a timetable for nationwide availability or identified when customers of specific banks will be able to use tokenised tap-to-pay services.
The impact of the expansion will therefore depend on how quickly banks and merchants integrate the technology and make the services available to customers.
As electronic payments continue to develop, tokenisation offers a way to reduce the exposure of sensitive card information. Its broader benefits will depend on implementation, adoption and the effectiveness of the security controls surrounding each transaction.
