Nigeria: Interswitch expands tokenised payment infrastructure across Nigeria

Interswitch Group is expanding the infrastructure supporting tokenised digital payments in Nigeria, working with banks, financial institutions, card schemes and merchants to encourage broader adoption of contactless payments and digital wallets. The initiative focuses on helping financial institutions deploy payment tokenisation, a security technology that replaces sensitive card details with substitute digital identifiers during transactions.

The Nigerian payments technology company said its efforts also support payment infrastructure development in other African markets, including Kenya and Uganda. The expansion is intended to help financial institutions strengthen transaction security, improve payment processing and offer customers more ways to make electronic payments.

By developing the connectivity and processing systems required to support tap-to-pay and wallet-based transactions, Interswitch is seeking to address some of the technical requirements for wider adoption of these payment methods.

How payment tokenisation protects transactions

Payment tokenisation is a security process that replaces sensitive payment information, such as a card’s primary account number, with a substitute identifier known as a token. The token can be used to process eligible transactions without repeatedly exposing the original card details.

Depending on how a payment system is configured, tokens may be restricted to particular devices, merchants or payment environments. These restrictions can reduce the usefulness of compromised credentials and limit the exposure of sensitive payment information during processing.

Tokenisation is commonly associated with digital wallets and contactless transactions, although it can also be used in other electronic payment environments.

Tap-to-pay, meanwhile, refers to contactless payments made by bringing an enabled card or compatible device close to a payment terminal. While the two technologies can work together, they serve different purposes. A contactless payment may use tokenised credentials, but tokenisation can also protect transactions that do not involve tapping a device at a terminal.

Interswitch said its infrastructure is designed to help banks, card schemes and merchants support these payment experiences more widely by providing the technical connections needed to process tokenised transactions.

Banks and merchants are central to adoption

The company said it was working with financial institutions and other payment ecosystem participants to establish the technical connections required for tokenised payments. These capabilities include issuer connectivity, token management and payment processing.

Issuing banks play a central role because they provide payment cards to customers and must support the authentication and transaction authorisation arrangements required for tokenised payments. Card schemes, payment processors and merchants must also operate compatible systems for transactions to move successfully through the payment network.

Interswitch’s role involves supporting these connections and helping participating organisations integrate tokenisation into their existing payment infrastructure.

The company identified improved payment authorisation, reduced exposure of sensitive card information and greater customer confidence as potential benefits of the technology.

Akeem Lawal, Managing Director of Payment Switching and Processing at Interswitch, said collaboration among financial institutions and payment service providers would be essential to expanding secure digital payment options in Nigeria.

“Collaboration across the payments ecosystem is essential to expanding secure and accessible digital-payment options in Nigeria,” Lawal said.

He explained that Interswitch was developing the infrastructure to enable more financial institutions to support tokenised payments, reducing the need to expose customers’ original payment credentials during transactions.

Instead, a substitute identifier can be used within the relevant payment environment. However, the level of protection depends on how tokens are issued, restricted, stored and authenticated.

Although a stolen token may be less useful than compromised card details, tokenisation does not eliminate all forms of payment fraud. Threats such as account takeover, social engineering and unauthorised transactions still require appropriate security controls.

Lawal said Interswitch intended to strengthen its relationships with financial institutions and other payment ecosystem participants to support the adoption of contactless and digital-wallet services.

“As Interswitch, we are helping to establish the issuer connectivity, tokenisation and payment processing capabilities required to bring ‘tap-to-pay’ and wallet-based payments to Nigerian consumers,” he said.

He added that the company was working to make secure payment experiences more accessible across African markets.

Tokenisation supports stronger digital payment security

The expansion comes as financial institutions continue to explore ways to protect payment credentials during electronic transactions. Traditional card payments can involve the transmission or storage of sensitive information at different stages of processing, creating potential points of exposure.

Tokenisation can reduce this exposure by substituting original card numbers with identifiers governed by defined security controls. This may limit the consequences of certain forms of data compromise and support safer handling of payment credentials.

For financial institutions, the technology can also contribute to more efficient transaction processing when integrated with appropriate authentication systems and payment network infrastructure.

However, tokenisation should be viewed as one component of a broader payment security framework rather than a standalone solution. Its effectiveness depends on how it is implemented alongside other controls designed to protect accounts, authenticate users and detect suspicious transactions.

Contactless payments and digital wallets offer new options

For consumers, one of the most visible applications of tokenisation is its use in mobile devices and digital wallets for contactless payments. Where the necessary infrastructure is available, customers can make eligible purchases by presenting a compatible card, smartphone or wearable device at a contactless terminal.

These payment methods can reduce the need to enter card details manually and offer an additional checkout option for consumers. Merchants may also benefit from supporting a wider range of payment methods to meet customer preferences.

Nevertheless, broader adoption requires more than tokenisation infrastructure alone. Banks must support the relevant payment products, merchants need compatible acceptance systems, and consumers must have access to eligible cards or devices.

Transaction security, network reliability, consumer education and the cost of deploying payment terminals can also influence how quickly contactless payments gain acceptance.

Interswitch said its work was intended to support these requirements by connecting participating institutions through its payments infrastructure. However, the company has not announced a timetable for nationwide availability or specified when tokenised tap-to-pay services will become accessible to customers of particular banks.

Interswitch positions infrastructure as a long-term investment

Cherry Eromosele, Executive Vice-President of Marketing and Communications at Interswitch, said the company’s tokenisation activities formed part of its broader investment in payment infrastructure.

She described the initiative as an effort to improve the reliability and security of digital transactions for businesses and consumers. Eromosele also pointed to Interswitch’s more than two decades of developing technology to support electronic payments across Africa.

According to her, the company’s approach focuses on the underlying systems that enable everyday transactions, rather than individual product features alone.

The announcement highlights the importance of payment infrastructure as digital financial services continue to expand. As more transactions move through electronic channels, payment providers face increasing pressure to improve convenience while maintaining secure and reliable processing.

Tokenisation offers one way to reduce the exposure of sensitive payment information, but its wider impact will depend on adoption by banks, merchants and consumers.

For Interswitch, progress will ultimately be measured by how effectively the infrastructure translates into operational services, broader payment acceptance and demonstrable improvements in transaction security across Nigeria and other African markets.