Nena Okon dreads going to work. Like many Lagosians, the 26-year-old content creator lives on the mainland but works and rents camera equipment on the island—a busy district that hosts many businesses.  She gets to work using the ubiquitous Lagos danfos, which are often expensive and slow.

In September 2023, Bus Rapid Transit (BRT), a popular public-private metro partnership, became available on Okon’s route, coinciding with a time when the service was enjoying an upgrade. While BRTs have been in Lagos since the late 2000s, they got a refresh in 2018, introducing newer buses. In 2020, Cowry cards, a little-known product by Touch and Pay Technologies, an even lesser-known company, was launched. In four short years, the Cowry card has become an important feature of commuting in Lagos.

The fintech is solely responsible for accepting payments on Lagos’ intracity transport system, including the BRTs and Lagos Ferries. TAP is also the payments technology provider for the recently launched Lagos Blue and Red Lines, an intracity metro rail that stretches over 45km.

Key Takeaways

Touch and Pay technologies has 3.8 million users

The Y-Combinator-backed firm wants to raise another $4 million in funding

Their revenue in two months was ₦1.9 billion 

Cowry card, a contactless payment technology, allows commuters to pay for bus and train rides using near-field communication (NFC). The card retails for ₦500 in Lagos and has a wallet feature on Playstore for account top-up and airtime. The app also has a pay-with-phone feature but that remains an unpopular feature. Most commuters top up their cards from their bank accounts or through agents.

The Cowry cards have two advantages, said Okon, who is now a regular user. First, it creates an easier checking-in experience, removing the rowdiness and commotion that is a feature of commuting with the danfos while ensuring buses are less crowded. Additionally, the Cowry cards, which users can fund ahead of their commute, are doubly useful as Lagos state introduces more mobility options–last week, the city launched its 37km red line, a train network that stretches from Agbado to Oyingbo.  

In Nigeria, where railway officials have been accused of ticket scalping on federal government-run trains, digital payments reduce corruption by city transport workers. 

The YC-backed company behind Cowry cards

Cowry card technology is the brainchild of Touch and Pay Technologies, or TAP, a startup founded in 2017 by Olamide Afolabi, Michael Oluwole and Kabir Yabo to support payments for mobility services in Lagos.

“People don’t like that they have to worry over bus fare, battle bus conductors and go through rough days. They just tap, the amount is deducted and they move on,” Afolabi, TAP’s CEO, said.

3.8 million users in Lagos use Cowry cards to complete 500,000 trip payments daily, the company shared. TAP takes a 5-10% commission on fares and remits the remainder to city authorities. 

“The commission we receive varies for different states. In some cases, it’s less than 10% and others less than 5% depending on the volume, value and buying power [of state customers],” he added, noting that customers in some states don’t want to spend up to ₦200 for a 30-kilometre ride. The fintech is already expanding to Oyo, Ogun, Edo, and Kano. 

While TAP talks up its digital infrastructure, it also uses physical agents at bus terminals to sell cards to first-time users. Most card balance top-up transactions are completed in person with these same agents.

TAP has raised around $4 million in venture funding from Unicorn Growth Capital, a New York VC firm, and another undisclosed funding amount from True Capital Management, a San Francisco-based multi-family office, according to Crunchbase data. In January 2021, the startup was accepted into Y Combinator, the storied accelerator program that boasts successes like Stripe, Flutterwave, and Paystack.

TAP is looking to scale to over 10 million customers and is planning to raise $4 million in a new Series A round of funding which it expects to close by 2024.” 

But TAP is not the first startup to attempt to solve payments in Nigeria’s transportation sector. Gona, a China-based startup, attempted to digitize fare payments for danfos. And in the past, some startups had huge success providing digital platforms for bike hailing. But these efforts never really scaled, in the case of bike hailing, were killed by city regulators.

However, TAP has had a successful run, in no small part due to increased investment in transport infrastructure by the Lagos State government. Cowry Card was launched in 2020 when Governor Babajide Sanwoolu commissioned the Abule Egba-Oshodi BRT route. 

It has remained in partnership with the state government since then, although it claims it has never received an investment from the state.

The BRTs transported 7.4 million passengers between the start of August and the end of September 2023 and transported an additional 17,543 commuters through the ferries, collecting ride fares of nearly N2 billion during this period, according to a statement from the Lagos state government. 

“One thing is clear: our electronic payment platform [Cowry] is assisting us to gather useful data which will allow us to plan transport services to the teeming people of Lagos State,” said Abimbola Akinajo, Managing Director of the Lagos Metropolitan Area Transport Authority (LAMATA), which runs the city’s mobility services.

TAP is looking forward

TAP is currently on the expansion path and is making inroads into Ghana.

“Ghana is an essential market and a public transport market,” Afolabi says, pointing out that Ghana has a lot of structural similarities with Nigeria. He also believes customer behaviour is similar across both markets.  

“In Africa, we have a lot of mobile money penetration if you go to Kenya and other countries, [and] If we can succeed in Ghana with mobile money penetration, we will be able to repeat the same model in other countries with mobile money penetration.”

While TAP’s website shows the company offers NFC services for health services, event management, and identity tools, Afolabi said the company doesn’t have plans to play outside the transportation space. He also inferred that Cowry card’s microtransaction use case could be useful in other scenarios that don’t require huge amounts of cash.

If the company explores that use case, Cowry cards could power retail payments at markets, surrounding shops, and roadside traders in 2024.