Over the past decade, digital payments have seen a significant rise in Nigeria. Despite this growth, contactless payments remain less popular. CashAfrica, a Nigerian fintech startup specializing in building payment infrastructure for banks and fintechs, sees a promising business opportunity in contactless payments.
Established in 2023, CashAfrica has developed an API that enables banks and fintechs to incorporate a tap-to-pay feature into their banking applications.
While in the process of integrating with banks, CashAfrica also offers a mobile app called CashMobile. This app allows users to conduct transactions using the tap-to-pay functionality. Users simply need to open the CashMobile app, input their password, and tap their phone on the payment terminal, completing the transaction in under two seconds.
Although contactless payments typically do not require authorization before a transaction, CashMobile often prompts users to enter a password for added security.
The founder of CashAfrica compares the tap-to-pay infrastructure to the successful NIBSS real-time payment system introduced 14 years ago. The focus for CashAfrica is on proper execution and functionality of their product.
Since its inception, CashAfrica claims to have processed ₦1 billion from its B2C customers via the app and has reached over 1,000 users. The fintech charges transaction fees ranging from 0.3% to 1.5% based on the transaction size and volume.
CashAfrica faces competition from Touch and Pay technologies backed by YC and potentially other Nigerian banks exploring their own contactless payment solutions.
When asked about the potential competition from existing fintechs offering tap-to-pay solutions, CashAfrica highlights its advantage in proprietary payment infrastructure. With fewer dependencies, CashAfrica claims to offer better margins to partner banks and fintechs. The company is in the final stages of integrating its solution into the Sterling Bank app and is also in discussions with Wema Bank, Fidelity, and Opay.
The startup acknowledges the challenge of changing customer behavior to embrace contactless payments as a preferred method. While some of CashAfrica’s target audience already use NFC-enabled cards for commuting, there is still a need to educate and encourage more people to adopt contactless payment methods.
CashAfrica believes that the increasing availability of NFC-enabled smartphones in the market will enhance the adoption of contactless payments. Although 83% of Nigerians use Android phones, not all devices have NFC capability, limiting the use of contactless payment options.
The success of CashAfrica depends on building a broad distribution network and leveraging network effects. Collaborating with banks and agent banking platforms like Opay and Moniepoint to integrate their contactless payment solution is crucial for CashAfrica.
By engaging actively with banks and fintechs, CashAfrica aims to onboard users ahead of other competitors in the market, establishing a first-mover advantage.
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