PoS Fraud Spikes 31% in Nigeria Despite Industry Efforts

…Mobile Fraud Maintains Top Rank

Despite collaborative efforts to combat Point-of-Sale (PoS) fraud, Nigerian authorities report a concerning increase in these incidents. This rise comes even as mobile phone fraud remains the most common channel for fraudsters.

The Nigerian Electronic Fraud Forum (NeFF), the Association of Mobile Money and Banking Agents of Nigeria (AMMBAN), and the Nigerian Inter-Bank Settlement System (NIBSS) launched a joint initiative in early 2024 to tackle PoS fraud. This initiative aimed to introduce a feature requiring specific customer identification details before processing transactions at PoS terminals.

However, recent data from the Financial Institutions Training Centre (FITC) paints a concerning picture in its Report on Fraud and Forgeries Report in Nigerian Banks for Q1 2024 just released. While overall financial losses from fraud declined by 77.62% in the first quarter of 2024 compared to the same period in 2023, the number of PoS fraud cases actually rose by 31.12%. This suggests that while the overall volume of fraud may be decreasing, PoS fraud is becoming a more prominent concern.

While overall financial losses from fraud have dipped by a significant 77.62% in the first quarter of 2024, the rise in PoS fraud cases suggests a worrying shift in tactics by criminals.

“Specifically, there was a 31.12% rise in fraud cases through the POS Channel, rising from 2,683 cases in Q4 2023 to 3,518 cases in QI 2024. Similarly, the number of fraud cases through the Mobile Channel increased by 0.45%, rising from 3173 cases in Q4 2023 to 3393 cases in Ql 2024,” FITC stated in the report.

Experts attribute this rise to several factors. One is the increasing popularity of PoS transactions, as more Nigerians shift towards cashless payments. This creates a larger pool of potential victims for fraudsters. Additionally, some weaknesses in PoS terminal security and agent training might be leaving them vulnerable to exploitation.

The Nigerian government is not taking this issue lightly. The Central Bank of Nigeria (CBN), through the NeFF, is actively working with stakeholders to improve PoS security. The planned implementation of features requiring identification details is still on the table, with hopes of a launch in the near future.

Furthermore, efforts are underway to enhance agent training and certification programs. This will equip PoS operators with the knowledge and skills to identify and deter fraudulent transactions.

More data from the FITC report also revealed that, mobile fraud accounted for 46.29% of the total losses recorded by the banks in Q1 2024 with a value of N216.83 million, while computer/web fraud entries accounted for 17.00%, totalling N79.61 million.

According to the report, Nigerian banks lost N468.42 million in the first quarter, a substantial decline from the N2.09 billion loss they recorded in Q4, 2023.

In terms of the amount involved in fraud, the report revealed that a total of N2.99 billion was involved in fraud in the quarter, representing a 56.73% decline compared with the N6.91 billion recorded in the preceding quarter.

Security experts also emphasize the importance of consumer vigilance. Customers are advised to be wary of suspicious transactions, never share their PINs, and report any irregularities to their banks or mobile money operators immediately.

While the fight against PoS fraud is ongoing, the recent increase in cases highlights the need for continued vigilance and collaboration between authorities, financial institutions, PoS operators, and consumers. By working together, Nigeria can create a more secure and reliable cashless payment environment.