The adoption of contactless digital payment for transport in Nigeria is facing challenges.
Public transport is the lifeblood of cities in many countries, moving millions daily to work, school and essential services. But paying for it in cash is not efficient. Long queues, fare disputes, revenue leakage, and increased operational costs plague cash-based transport systems.
Contactless payment technologies, where commuters tap a card or mobile device, offer a potential solution. These are in wide use in developed nations, but adoption in developing economies has been slower and more complex. Infrastructure limitations, financial exclusion and consumer scepticism have been challenges. So is the integration of informal transport sectors.
Some cities, however, have decided to modernise their transport systems. For instance, Lagos in Nigeria introduced the Cowry card in 2020, aiming to replace cash on public buses. Kigali in Rwanda uses the Tap&Go card for cashless travel, with top-ups via app or agents. Cape Town in South Africa has the MyCiTi card, streamlining payments and reducing queuing.
These initiatives demonstrate the potential of contactless systems, but they also highlight the hurdles that remain. Unreliable internet access, frequent technical glitches, a persistent preference for cash among many commuters and the existence of informal transport operators are some of them. It’s crucial to find a way around these challenges, to build efficient, accessible and financially sustainable public transport systems in developing countries.
My research sits at the intersection of digital transformation, transportation service marketing and consumer behaviour, with a focus on emerging economies. I have studied the adoption of digital financial technologies, especially the way they can be used in public transport, to bring about change.
In a recent study I investigated the complex dynamics of contactless payment adoption in Lagos. The study looked at how consumers engaged with these systems and identified barriers to wider adoption. It also examined the governance of transport payment data. My findings affirmed that while interest in contactless cards was growing, people still preferred cash, especially outside the formal bus rapid transport system in Lagos.
City transport planners should note that these findings point to the need for inclusive, hybrid payment options.
Transport in Lagos
The research used ethnographic fieldwork, commuter interviews and sentiment analysis to assess consumer behaviour towards contactless transport payments. Over 18 months, we observed commuter interactions with the Cowry card system and conducted interviews to explore adoption patterns, perceived benefits and underlying barriers. The research tracked the stages of adoption, from initial awareness and consideration to actual engagement and post-adoption evaluation. This approach provided insights into the psychological, social and economic factors influencing payment method preferences.
Findings suggest that only around 15% of commuters are fully engaged with the Cowry card system. This small but growing group consists mainly of early adopters, tech-savvy individuals and regular bus users. These are people who consistently use the contactless payment option as part of their daily commute.
Low digital literacy and limited smartphone access are significant obstacles. Many commuters lack the skills and resources to use digital payment systems effectively.
To use the Cowry system, commuters must first purchase a physical card and download the Cowry app on a smartphone. They can then top up the card using a bank card, mobile wallet, or by visiting a kiosk at bus stops. The card is tapped at entry points to board buses, or payments can be made via the app by scanning a QR code or entering a bus code. The system depends on access to smartphones, digital payment methods, and basic tech literacy factors.
There are around 170 million mobile subscriptions in Nigeria, but currently, only between 10% and 20% of the population uses a smartphone. Further, 60% remained unbanked in 2024. Those factors limit the potential reach of digital solutions.
Distrust of financial technology providers and anxieties about system failures, hidden fees or fraud deter adoption. Commuters are wary of digital transactions. The lack of clear dispute resolution mechanisms amplifies these concerns.
Concerns about data privacy and security are also prominent. Many people are acutely aware of the risks, even if they don’t fully understand the technical details. Their caution is rooted in lived experiences with scams, mistrust of government systems, and fear of surveillance. Commuters are often reluctant to link their bank cards or mobile wallets to yet another app, worrying about who is tracking their movements through tap-in and tap-out data. There’s a general suspicion that sharing personal information might expose them to fraud or unwanted oversight. For many, paying by cash feels safer.
As one respondent said:
They know when I enter and leave the bus. What else are they watching?
While Nigeria now has a formal data protection law (the Nigeria Data Protection Act), the system is still underdeveloped in terms of enforcement, public awareness, and institutional capacity.
Integrating informal transport operators, who tend to operate on a cash-only basis, into the digital ecosystem is another challenge. They’re concerned about fees, technical complexities, and perceived loss of control over earnings if they adopt digital payment.
Digital infrastructure limitations, including patchy internet and unreliable mobile networks, further complicate the transition. Although there are card kiosks at bus terminals, these are not always convenient or operational. A respondent put it like this:
Sometimes the card doesn’t work, network is bad, and you’re just stuck there. Cash doesn’t fail like that.
While interest in contactless cards is growing, commuters see cash as quick and straightforward, especially in a fast-paced commuting culture. As one respondent said:
I’m used to cash, it’s easy for me. I just enter the bus, pay, and go.
The way forward
Contactless payments offer many benefits. They promote financial inclusion, providing an entry point to digital banking for the unbanked. Transport data can revolutionise urban mobility planning, enabling data-driven decisions on routes, congestion and infrastructure. But there must be clear data protection policies to build public trust.
A multi-pronged strategy is essential:
- Public awareness campaigns: educate commuters about the benefits and security of digital payments, addressing misconceptions and building trust.
- Infrastructure improvement: expand contactless options across all transport modes.
- Data protection policies: establish clear regulations on data ownership, usage and access. This will enhance privacy and improve public confidence.
- Public-private partnerships: foster collaboration to create affordable, user-friendly systems, calling on expertise from both sectors. Successful projects like South Korea’s T-Money system offer useful lessons.
This article was authored by Emmanuel Mogaji, Associate Professor in Marketing, Keele University. It is republished from The Conversation under a Creative Commons license. Read the original article.
