Nigeria’s burgeoning electronic payment industry is gradually getting some relief from the encumbrance of fraudulent attacks as recent times have seen lower success rates in such activities committed online.
Analysts say this is as a result of a series of intervention policies such as the Bank Verification Number (BVN) churned out by the Central Bank of Nigeria (CBN) between late 2014 and 2015 which effects the harmonisation of multiple bank accounts held by any single individual under one and the same identifying number .
Although the global online fraud report by Iovation in 2012 ranked Nigeria at the top of the list for cybercrime activities, recent data from the Nigeria Inter-Bank Settlement System (NIBSS) on its fraud landscape report, shows the decline of e-fraud success in the country.
Femi Fadairo, Head, Industry Security, NIBSS, said at the Cyber Security and Banking Fraud Summit 2016, held in Lagos, that Nigerians are becoming more comfortable transacting on electronic channels which seem to be much safer than ever was.
“There has been a 43 percent increase in the volume of electronic transactions and 11.5 percent increase in the value of transactions done online between 2014 and 2015. Even with the bad economy, Nigeria still saw a volume of 166.6 million e-transactions compared to 43.86 billion in 2014,” he said.
Fadairo said that regardless of the fact that electronic transactions have increased, which should naturally translate to higher risk, Nigeria has seen less e-fraud successes over the years.
He said , “1,461 fraud cases were reported in 2014 with an attempted fraud value of N7.8 billion, but they were eventually able to steal about N6.2 billion. That is a success rate of over 80 percent. This means that every ten times someone tries to defraud, the person will be successful eight times.
“However, in 2015, we had a total of 10,743 fraud cases reported, with a value of about N4.3 billion and the actual loss was about N2.2 billion. From these statistics, we can see that the success rate has decreased to 50 percent. Also, the value of attempted fraud and the actual losses reduced. Although we had more fraud attempts reported, many of those frauds did not sail through, as compared to 2014,” he said.
Regha Onajite, Chief Executive Officer, Electronic Payment Providers Association (E-PPAN) said “most of the issues we have with e-commerce seem to revolve largely around anonymity that beclouds the whole process.”
Fortunately, the CBN recognised these issues and came up with the BVN registration, amongst other means to verify the identity and authenticate every account holder.
Dipo Fatokun, Director, banking and payment systems department at the CBN, who was represented by the assistant director, Sola Agboola, said in his key note speech that, “our reliance on mobile technology made it compulsory for the Central Bank to keep working on new ways to further the banking environment in Nigeria.
“The CBN remains in the fore-front of ensuring that hacking security is not upended and this we have been able to achieve by providing leadership to the Nigerian Electronic Fraud Forum (NEFF) which is an industry initiative that has aims such as educating and informing all banks and other stakeholders of various electronic fraud issues and trends both locally and globally.
“It also proactively shares data and fraud information among banks and service providers to enable prompt responses to prevent and limit fraud losses. We have included law enforcement agencies, consumer protection agencies and the ministry of justice to ensure a safe and secure payment environment,” he said.
Talking about the decline in successful electronic transaction fraud, David Isiavwe, managing director of Union Bank, said the steady decline is in no way related to the cyber-crime law which was recently passed after so many years of deliberation.
“The decline in success rate of e-transaction fraud is all thanks to the CBN who made available channels for fraud to be tracked and prevented and not because of the cybercrime law, as many people would like to think. This law has a maximum of seven years in prison if a person is found guilty and I am yet to see anyone being given the maximum sentence. Instead, we see people steal billions and sent to jail for two years,” Isiavwe said.
Moving forward, analysts foresee a continuous reduction of e-transaction fraud success rate in Nigeria with education and compliance amongst commercial banks, the regulators and customers.