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Your guide to switch companies in Nigeria; how they work & the best service provider for your business

Electronic payment processing involves an elaborate and complex process that requires data to be routed back and forth between various parties and payment service providers involved in the transaction. The key technology that makes this possible is called a payment switch which is a tool embedded into payment gateways and sits at the centre of payment processing and is responsible for authenticating, processing and authorising transactions.

Although payment switch software systems can be built internally within an eCommerce or payment platform, switch companies in Nigeria are the major provider of this technology in the country. In this article, we’ll highlight the unique service they offer and how to select one for your online business.

What are Switch Companies in Nigeria?

Switching companies in Nigeria provide end-to-end payment processing technology that enables merchants to route transactions between multiple payment service providers, and financial institutions for the transaction to be completed. Once a transaction has been initiated by a customer, the switching company provides a range of payment processing services until the transaction is approved and settled. This includes receiving the transaction data through the payment gateway embedded in the eCommerce store or POS point, authenticating, processing, authorising and settling the payment.

What Services do Switch Companies in Nigeria Offer?

As described above, switching companies in Nigeria provide fully-integrated payment services across the lifespan of a transaction. Here is a breakdown of each service: 

Payment Authentication: To mitigate against fraud and identity theft, the authentication technology of a switch company ensures that the identity of the end user who is initiating a transaction is verified.

Risk Management: While routing transaction data, switching companies protect against fraud by detecting suspicious fraud attempts, automatically blocking such transactions and immediately alerting the customer and operators via SMS, email, etc.

Payment Authorisation: When a transaction is initiated, switching companies communicate with the issuing bank to authorise the transfer of funds to take place, ensuring that required funds are in the holder’s account while also taking and taking into account pre-set payment limits and ceilings. 

Payment Clearing & Settlement: Switching companies facilitate interbank clearing so that the involved financial institutions can accurately receive and process payment instructions for the clearing settlement of funds. A transaction is settled when the funds have been deposited in the destination account. 

Payment Dispute & Refund: Switching companies investigate and resolve various forms of electronic payment disputes while using automatic multi-channel notifications to update customers and customers and operators on the resolution decision.

Which is the Best Available Switch Company in Nigeria?

Only a few financial technology companies in Nigeria are able to provide payment-switching services to customers. This is because switching companies are required to obtain the Switching & Processing License from the Central Bank of Nigeria before they can operate. Chamsswitch is one of such highly regarded companies with the CBN license to provide switching and payment processing services in Nigeria. Established in 2008, the Chamsswitch payment processing system is easily integrated into any platform and orchestrates all aspects of payment processing for both in-store and eCommerce transactions, enabling merchants to accept various electronic payments across multiple currencies. 

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