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New payment solution to drive easy, efficient cashless options

The Central Bank of Nigeria (CBN) has introduced a new payment option into the banking and finance sector, known as contactless payments.

This was seen in an exposure draft of the guidelines for contactless payments in Nigeria, released on the CBN’s website on Tuesday.

The move is in furtherance of the CBN’s efforts to standardise operations in the payments system, while encouraging the deployment of innovative products and sustain financial system stability.

According to the CBN, contactless payments, which involves the consummation of financial transactions without physical contact between the payer and the acquiring devices, has been identified as an innovative payment option for safe and efficient conduct of low-value large-volume payments.

The draft guidelines were conceived to ensure that participants in contactless payments implement appropriate risk management processes and measures while keeping to best relevant standards, a circular to all banks, Other Financial Institutions (OFIs), and payments Service Providers, stated.

“The draft Guidelines is hereby exposed to all banks, other financial institutions, payments service providers and the general public for comments. The comments should reach the Director, Payments System Management Department, CBN not later than November 5, 2022,” the circular signed by Musa Jimo, director, payments system management department, said.

Contactless technology enables an alternative payment method whereby payment instruments are used without physical contact with devices.

Contactless technology in payments provides easy, convenient, and efficient cashless options for users. Examples of contactless payment instruments include pre-paid, debit and credit cards, stickers. fobs, wearable devices, tokens and mobile electronic devices. Contactless-enabled payment terminals interact with contactless payment devices to facilitate payments.

The exposure guidelines listed the stakeholders in contactless payments include: acquirers, consisting of issuers, payment schemes, card schemes, switching companies – Payments Terminal Service Providers {PTSPs), Payments Terminal Service Aggregator {PTSA), merchants – terminal owners, customers and any other stakeholder/participant(s), as designated by the Central Bank of Nigeria (CBN).

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According to the exposure guidelines, Merchants who engage in contactless payments, shall ensure that deployed devices and applications are available for contactless payments of goods and services.

Also, the contactless payment device shall request the customer’s authorisation (such as Personal Identification Number [PIN), tokens, biometrics, etc.), where the transaction amount is greater than stipulated limits per transaction/day.

Merchants shall be held liable for fraudulent contactless payments arising from negligence/connivance. Contactless payment transaction value and associated charges shall be clearly communicated to the customer prior to consummation of the transaction.

Merchants that accept contactless payments shall display the contactless symbol. Merchants shall exercise due diligence in carrying out contactless payment transactions.

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