Financial services executives are pushing for wider adoption of tokenised payments in Nigeria, citing the technology’s potential to reduce fraud risk and strengthen transaction security.
The executives from Verve International, GTBank, Wema Bank and ProvidusUnity Bank spoke at the Interswitch Tokenisation Documentary Press Briefing, where they highlighted how tokenisation could protect customers’ card details while making digital payments faster and more convenient.
Payment tokenisation replaces sensitive card information, such as a card’s primary account number, with a substitute identifier known as a token. The token can facilitate eligible transactions without exposing the underlying card details.
The executives said the technology could limit fraudsters’ ability to exploit stolen or exposed card information, particularly as more Nigerians embrace digital transactions and smartphone-based payments.
The Managing Director for Payments, Switching and Processing at Interswitch, Akeem Lawal, described tokenisation as a major shift in payment security, arguing that it reduces the risk of card details being compromised.
“We believe that tokenization is one of such industry-changing innovations. We believe that it is a step change in the security of payments transactions, because it takes away the ability of fraudsters to compromise your payment card by replacing that card information with a token that is useless to anyone else,” Lawal said.
He explained that conventional card payments can expose customers to risks when their card numbers and expiry dates are seen by others, when someone observes them entering their PIN or when card details are exposed during online transactions.
“With tokenisation, the only thing that they see is a token.”
According to Lawal, the token is linked to the actual card number but is not the same as the underlying card information. He said the token would be of no use to someone who obtained it, while encryption links it to the user’s phone.
Lawal said the technology builds on earlier payment security developments, including chip-and-PIN cards, while supporting a shift towards contactless transactions.
He recalled that Interswitch pioneered interbank ATM switching in 2002 before expanding into point-of-sale and online payments and developing a domestic card scheme. He said each innovation, introduced in collaboration with industry partners, had changed how payments were conducted in Nigeria.
According to him, the next phase of consumer payments would move towards “just tap,” following the progression from swiping and inserting cards to transfers and contactless payments.
The Executive Director, Retail and Digital Business at Wema Bank, Tunde Mabawonku, said tokenisation was increasingly relevant as consumers moved towards digital transactions.
He observed that Nigerians readily share their account numbers, but said protecting payment instruments was becoming more important as transactions shift online.
“As we move to digital transactions, the next best thing is to tokenize your payment instruments,” he said.
Mabawonku said younger consumers were more likely to leave their debit cards at home than their phones, creating opportunities for mobile-based payments.
He urged consumers to increasingly use their phones to pay for transport and other services in Nigeria and abroad.
“Tokenization is here to stay,” he said.