Rising fraud incidents in Nigeria can sometimes be due to poor digital and financial literacy, but most especially the failure of many victims to report an attack, a fintech firm, PalmPay, has said.
In a report last year, Head of IT
and Payments, PalmPay, Temitayo Oduwole, observed that customers do not take
prompt action in incidents of fraud and that “only 33 per cent report the same
day or take the necessary right action on the same day”.
Effective investigation into
incidents of fraud begins when the user reports to their bank that fraud has
occurred. However, fraud, if not reported within the hour the crime occurred,
allows criminals to move the stolen funds to ‘safe’ places.
Oduwole therefore urged victims
of cyber frauds to quickly lodge complaints so as to take prompt action.
Also speaking, Anti-fraud expert
Tosin Adenekan, said precaution remained the best remedy to protect oneself
from cyber fraud. She warned fintech users against trusting strangers with
their personal information when performing digital transactions.
Mrs Adenekan said: “Users of
fintech platforms owe it to themselves to follow standard safety precautions to
avoid being defrauded by cyber criminals.
“Do not allow strangers such as
PoS operators to handle personal ATM cards. This is because cybercriminals
often posing as helpful PoS operators can exploit this to observe PIN entries
and distract card owners, ultimately swapping ATM cards.”
She urged fintech users to take
steps to reduce incidents of fraud on their wallets by creating strong
passwords, enabling the two-factor authentication features on their fintech
app, monitoring their wallets for unauthorised transactions, and protecting
their personal login information when in public from prying eyes.
Other steps to take include
“regularly updating their apps, setting limits for their wallets, staying alert
for phishing attempts, getting the proper financial education, using secure
internet connection, being aware of pop-ups and fraudulent emails, and ensuring
that operating systems and internet connections are up to date.”
To prevent falling victim to
cyber fraud, Mrs Adenekan urged fintech users to adhere to these safety
guidelines and “don’t trust everything on the internet.”
The financial inclusion rate in
Nigeria has improved. Since the country adopted an inclusion strategy in 2012,
adult Nigerians with a bank account have increased, and now account for more
than two-thirds of the financially included.
According to the 2023 Report on
Access to Financial Services in Nigeria, financial inclusion continues to
expand and has so far been fuelled by marginal growth among the country’s
banked population and major gains in non-bank formal adoption.
Although approximately 40 million
adult Nigerians remain formally excluded, formal financial inclusion was said
to have grown from 56per cent in 2020 to 64per cent in 2023.
In the last four years, fintech
companies in the country have played a vital role in closing this gap, bringing
financial services to the country’s unbanked and driving economic growth. Their
successes, however, have not come without challenges.
Following the penetration of
digital payment platforms in Africa, a fraud epidemic has plagued the fintech
ecosystem in Nigeria, with Mobile, Web and PoS being the most exploited
channels by fraudsters in the country in 2023.
According to the 2023 NIBSS
Annual Fraud Landscape report, incidents of “Fraud loss via Internet Banking
increased by 325 per cent between 2022 and 2023.”
The rise of digital payment
platforms in Nigeria has increased the potential for cyber fraud, with fintech
companies now forced to balance between making payment apps user-friendly and
prioritising users’ safety to stem increased cyber fraud.
To address the fraud epidemic,
the Fintech Association of Nigeria (FintechNGR) plans to unveil a fraud
reporting framework sometime this year, while fintech platforms such as PalmPay
continue to take the initiative to reevaluate their in-app safety features to
protect their users from the activities of fraudsters.
Since launching in Nigeria in
2019 under a Mobile Money Operator (MMO) licence by CBN, PalmPay has grown to
over 30 million users as part of its payment ecosystem.
In building a user-friendly app,
PalmPay has also sought to foster a secure financial ecosystem by integrating
safety features into its app so that the millions of users who transact with
the app do so in a safe and trusted environment.
In general, PalmPay said it
employs a closed-loop risk management system that involves continuous
monitoring, analysis and response to fraud threats and allows it to detect and
prevent security risks in real-time and reduce the potential impact of fraud.
In particular, to reduce
incidents of fraud, protect their users from fraudsters, and provide a safe
banking environment, PalmPay said it binds their users’ phones to the app and
has an auto-logout and biometrics feature to confirm users’ identity.
Speaking on safety measures,
Managing Director, PalmPay, Chika Nwosu, said the reason why the fintech
platform has witnessed growth in four years was because “We prioritise the
safety and security of our users.” He said the firm been able to achieve this
by marrying security and safety with the customer experience to create a
balance.
Because it understands that
curtailing fraud is a two-way street, PalmPay runs a Wallet Safety Workshop to
teach users of its app and point of sale (PoS) machines various security topics
covering payment security and common security issues in daily life, such as
password management, fraud detection, phishing and risk identification.
The safety workshop underscores
PalmPay’s understanding of user security as an important part of curtailing
fraud and encourages its users to ensure that they always secure their wallets
using the several built-in safety features in its app.
A recent example was a series of
campaigns encouraging its users to link their wallets with their BVN or NIN,
following the directive by the Central Bank of Nigeria (CBN) for users of
fintech platforms to link their wallets with their BVN or NIN.
To encourage the users to meet
the CBN deadline of January 31, 2024, PalmPay said it has introduced an
incentive payment system where up to N500 was paid to users who got ahead of
the deadline and validated their wallet information.
“PalmPay users have several
options for protecting themselves against fraudsters such as the two-factor
verification process that makes it difficult for fraudsters to gain access to
users’ apps without spooking them. In
the first half of 2023, millions of users linked their secure email addresses
to their PalmPay app. With this feature, PalmPay users effortlessly receive
OTPs for their in-app login.
“The PalmPay app has a device
management feature that allows users to manage trusted devices and remove
untrusted devices. When logging in on an untrusted device, users complete a
comprehensive security verification process that involves inputting an OTP and
their PIN to ensure security,” Nwosu said.
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