While digital payments have blown up in Nigeria in the last decade, contactless payments are still unpopular. CashAfrica, a Nigerian fintech startup that builds payment infrastructure for banks and fintechs, believes there’s a business opportunity in contactless payments.
Launched in 2023, CashAfrica builds an API that allows banks and fintechs to offer customers a tap-to-pay option within their banking apps.
While working to integrate with banks, the fintech offers a mobile app—Cash Mobile—that allows users to make transactions using the tap-to-pay feature. All you have to do is to open the CashMobile app, enter your password, and tap your phone on the payment terminal. The entire transaction process takes less than two seconds.
Although contactless payments don’t require authorization before a transaction, Cash Mobile often requires users to enter a password for use.
Asamu likened CashAfrica’s tap-to-pay infrastructure to the NIBSS real-time payment system introduced 14 years ago.
“Every bank has one send button today because NIBSS works and there is no point replicating it. Our focus is on executing correctly and making sure our product works.”
Since it launched, the fintech claims it has processed ₦1 billion from its B2C customers on the app and crossed 1,000 users. It charges 0.3%-1.5% per transaction based on size and volume.
CashAfrica must contend with YC-backed Touch and Pay technologies, and potentially other Nigerian banks exploring their own contactless payment solutions.
When asked about the possibility of incumbent fintechs implementing their tap-to-pay solutions, Asamu said CashAfrica’s proprietary payment infrastructure is an advantage. With fewer dependencies, Cash Africa claims to offer better margins to its partner banks and fintechs. The company claims it is in the final stages of integrating its solution on the Sterling Bank app. It is also in talks with Wema Bank, Fidelity, and Opay.
“Infrastructure-level software like ours is a winner-take-all, if you build it and it works well, the banks will have no reason to integrate two people doing the same thing.”
The startup faces an uphill climb in changing customer behavior to adopting contactless payment as a preferred payment medium. Although some of CashAfrica’s target audience already use NFC-enabled cards for commuting, Asamu admits that there is a need to orient people towards using contactless payment.
“We do a lot of organic reach and word of mouth.”
Adoption will also rely on the available of NFC-enabled smartphones in the market. 83% of Nigerians use Android phones, but not all of these devices have NFCs, reducing the use case for contactless payment options.
“We believe more NFC-enabled phones will be imported. You don’t want to ride on a wave of innovation when it is sinking. We believe tap to pay is new in Nigeria and we want to be among the first to the market,“ Asamu said.
CashAfrica’s success hinges on its ability to establish a wide distribution network and leverage network effects. The company needs to partner with banks and agent banking platforms like Opay and Moniepoint to integrate its contactless payment solution into their platforms.
While CashAfrica is actively engaging with banks and fintechs, its first-mover advantage lies in onboarding users before other players in the market.
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