### Online Fraud Soars as Nigerian Banks Report 78,584 Cases in a Year, Highlighting Increased Risk in Electronic Payments
Online fraud has experienced a significant surge in Nigeria, with Nigerian banks recording a staggering 78,584 cases within a span of one year, shedding light on the growing risk associated with electronic payments. These findings have been highlighted in the ‘Reports on Frauds and Forgeries in Nigerian Banks,’ conducted by FITC.
An alarming trend noted in the report is the targeting of e-payment channels, such as computer/web, mobile, and Point of Sales (PoS), by fraudsters over the past year. During the period from the second quarter of 2022 to the second quarter of 2023, a total of 10,098 fraud cases amounting to N1.95 billion were recorded on PoS channels alone.
The report further revealed that computer-based fraud cases reached 34,772, involving a staggering N18.97 billion during the same period. Additionally, 33,714 fraud cases involving N6.48 billion were reported in relation to mobile-based transactions.
The rise in online fraud can be attributed to the exponential growth of electronic payment channels. According to FITC, in the first quarter of 2023, electronic transactions witnessed a significant increase of 44.84%, amounting to N126.73 trillion compared to N87.49 trillion in the corresponding period of the previous year.
Recognizing this concerning trend, the Central Bank of Nigeria has made predictions that cash transactions will be reduced by 2025, and cashless terminals will become the preferred mode of payment. However, this push towards a cashless economy poses a challenge, as it opens doors for fraudsters to exploit vulnerabilities in the system.
Ms. Celestina Appeal, Chairperson of CeBIH, has foreseen online fraud becoming the predominant form of fraudulent activity by 2030, as transactions continue to shift online. She emphasized that although e-banking facilitates seamless transactions, it also exposes users to risks. The finance sector suffers billions in losses annually, with reports from NIBSS indicating a fourfold increase in successful fraud between 2019 and 2021.
Meanwhile, Musa Jimoh, the Director of Payments System at the CBN, acknowledged the expanding rate and incidence of fraud. He explained that fraudsters constantly endeavor to explore and infiltrate new payment channels as soon as the CBN introduces regulations.
Victor Irechukwu, Head of Engineering at OnePipe, raised concerns that the rising rate of fraud could hinder the adoption of e-payment platforms in Nigeria. Negative experiences resulting from fraud incidents leave a bitter taste and undermine efforts to go cashless.
The Association of Mobile Money and Bank Agents in Nigeria revealed that unlicensed Point of Sales (PoS) agents are responsible for theft and fraud through PoS terminals, thereby negatively impacting the entire industry. In response to the surge in PoS frauds, the Lagos State Government announced its intent to curb the activities of fraudulent PoS players by issuing Lag ID Cards through its Residents Registration Agency, aiming to protect Lagosians from this rising menace.
As electronic payment platforms continue to evolve and gain prominence, it is crucial for Nigerian banks, regulatory bodies, and customers to work collaboratively in implementing robust security measures, raising awareness, and enhancing the integrity of the financial ecosystem. Addressing these issues head-on is vital to safeguarding the interests and trust of individuals and businesses alike in the pursuit of a seamless and secure cashless economy.
