Concern is mounting in financial circles in the country over increasing reports of Point of Sale (POS) terminal fraud, findings by New Telegraph show.
According to financial analysts, the growing perception that PoS terminals have become fraudsters’ favourite tool for siphoning funds from the bank accounts of unsuspecting members of the public could adversely affect efforts by the Central Bank of Nigeria (CBN) to boost Nigerians’ access to financial services.
The apex bank, in its bid to boost financial inclusion by increasing access to financial services, had introduced the agent banking system in 2013, under which financial institutions and mobile money operators could appoint third parties as agents, equipped with PoS terminals, to provide financial services on their behalf to members of the public.
In the wake of restrictions imposed by the authorities last year to curb the spread of COVID- 19, the banking agents saw their business grow rapidly, as there was a significant increase in the adoption of electronic payment (e-payment) channels such as PoS by Nigerians.
Indeed, latest Nigeria Interbank Settlement System (NIBSS)’ data shows that the value of transactions through PoS terminals across the country in the first six months of this year stood at N3.01trillion, rep resenting an increase by 50.02 per cent compared with the N2.03 trillion recorded value of transactions through PoS terminals in the first half of 2020.
However, the growth in epayments, especially PoS transactions, seems to have triggered an increase in the number of fraud incidents involving the use of the terminals.
Hardly a week goes by these days without mainstream or social media in the country carrying a report about the experience of someone who had substantial amounts stolen from his or her bank account via POS terminals.
A recent trending video on WhatsApp, for instance, shows a man, narrating in Igbo language, how over N100,000 was stolen from his bank account in the last few weeks after he patronised a PoS agent on August 1.
According to the unidentified man, when he rushed to his bank to complain after he started receiving the debit alerts, he was informed that the criminals were perpetrating the fraud through a PoS terminal.
Also in an article titled: “The rising spate of PoS fraud In Nigeria and how best to avoid getting scammed,” posted on DailyDigitalng.com a few days ago, the author, who identified himself as Mazi Victor Uzoaganaobi, stated: “For those of you in Nigeria, I am advising you right now to minimise how you carry out debit transactions with your Automated Teller Machine (ATM) card in most of these numberless Point of sale (POS) agents in Nigeria.
“Reason is that the majority of them posing as PoS agents are nothing but shameless scammers. What their machine does anytime an ATM card is slotted into it, is to copy your ATM card unique number and some security information, such as serial number, e.g. 23407972020172, an expiration date, e.g. (02/204) and your card 3-digit number, aka Card Verification Code (CVC), and then when inputting your Personal Identification Number (PIN), same machine will automatically store your PIN.
“After a few hours or days, you’d start receiving debit alerts which you never carried out because those criminals will empty your account.
“Biko, I am advising that instead of making transactions via PoS with your ATM card, download your bank mobile app and whenever you wish to carry out a transaction, go to any PoS agent and tell them that you’d wish to send them money via your mobile app. Let them call out their account numbers to you, do the transaction with your phone and then collect your money.
“You can also make your debit transactions via Unstructured Supplementary Service Data aka USSD code. You can also go to any nearby bank ATM gallery. Avoid PoS agents unless you want someone to live off your life savings. Criminals are on the loose in Nigeria posing as POS agents.
“These steps I just suggested right now are the safest way of preventing criminals from ripping you off your life savings. Don’t say nobody gave you a heads up cos I just did. Thank you.”
However, reacting to the widespread reports of PoS fraud, a Lagos-based banking agent, Mr. Okanlawon Johnson, told New Telegraph’s correspondent that while some fraudsters in the country popularly known as “yahoo boys” had found their way into the agent banking business, the increase in e-payment fraud was also the result of many Nigerians not adequately protecting their PIN as well as ATM (debit) card details.
He said: “What is happening is that a lot of yahoo boys are taking advantage of the increased adoption of e-payments by Nigerians to apply to become PoS agents. So being the criminals that they are, you can imagine that they would use the terminals to try to defraud people.
“However, apart from the activities of fraudsters, we have recorded a number of incidents where it would be a husband, for instance, who would use his wife’s PIN to steal money from her account. Some of these husbands would ensure that they are in possession of their wives’ phones when they carry out the act so that they can quickly delete the debit alerts that the bank sends.
We have seen cases where, despite vehement denials by husbands, investigation by the bank would trace the missing funds to such husbands.”
On whether rising PoS fraud was negatively impacting business for banking agents, Okanlawon said it was not, noting that the issue has even made customers prefer patronizing agents that they can trust.
He said: “Anything that has to do with money usually involves trust. So customers that I have had over the years keep coming to my shop because they know that I have a name to protect and that I will not do anything that will affect the image of my business.”
He advised members of the public to avoid patronising PoS agents that they don’t know very well and to always ensure that they protect their PIN and card details. Efforts by New Telegraph to get the CBN’s response on the issue were not successful.
However, a source at the apex bank advised members of the public to always ensure that they report cases of PoS fraud both to the regulator and the police. In November last year, the National President, Association of Mobile Money and Bank Agents of Nigeria (AMMBAN), Olojo Victor, in a chat with journalists, attributed the surge in POS fraud to illegal POS agents’ infiltration of the system.
He stated that the association was trying its best to fish out the bad eggs. He was quoted as saying: “For us at AMMBAN we will continue to sensitise our members and fish out the bad ones and ensure that where there is laxity we report to operators advising them to tidy up their platforms if we feel that the platforms can be compromised easily.”
Olojo acknowledged that there had been complaints by customers who were defrauded at banking agents’ shops and that most of the transactions were via cardless withdrawals using pay codes.
A pay code is a 10 to 14 digit code that can be used to withdraw cash from an ATM or make payments on a pay codeenabled POS terminal.