Mustapha Taofeek said he stopped using PoS, point-of-sale providers that have significantly changed the way Nigerians conduct daily financial transactions, two years ago.
In August 2020, a week after making a cash withdrawal from a supplier, Mr Taofeek said he received a debit notice for N10,000 which he never authorised. While trying to confirm the details of the transfer, he received another notification on his phone, then another and a few more. His bank reported a total debit of N486,000 that day.
“I was confused and suddenly started sweating,” said Taofeek, a sales representative from Abuja. He managed to transfer his balance, mostly sales proceeds belonging to the baby care company he works with, to another account before blocking his ATM card.
His bank, Guarantee Trust Bank, said the card details had been stolen and used for online purchases and there was nothing he could do, Taofeek said. The bank did not respond to inquiries from PREMIUM TIMES. A spokesman did not keep his promise to discuss the case.
Taofeek said he completed the payment of the money to his company in April 2022. “I always cried every time I received my monthly salary during this period, because I was paying off a debt that I never used for anything in my life,” he said.
Nigeria has made efforts over the past decade to increase the number of citizens who have access to financial services, relying on greater financial inclusion as a tool to create wealth and address widespread poverty. The Central Bank of Nigeria, which is coordinating the effort, had targeted adult Nigerians with access to financial services to increase from 21.6% to 70% by 2020.
Banks turned to agency banking, which predominantly uses PoS, to bring the unbanked and unbanked into the pool. Although Nigeria did not meet the 2020 target, the number of adults using financial services agents raised from around 4 million in 2018 to 26 million using agents in 2020, according to EfInA, a development-focused organization that promotes financial inclusion in the country.
The rise of banking agencies in the country has enabled easier and faster payment services for millions of customers, even in rural communities. But it has also posed a challenge: Customers say fraudsters have taken advantage of the widespread use of their bank details to steal from them.
Ben Olakunle said that he had a similar experience with Mr. Taofeek and lost almost a million naira.
“Just using a point of sale point of sale. My ATM information was extracted and used to order products. Below are the details of the transaction. Please Nigerians help me raise my voice for KONGAPAY to declare the recipient of this purchased item.” Mr. Olakunle narrated on Twitter in April.
Funmike Afolabomi, who commented under Mr Olakunle’s tweet, said: “Happened to me before but used to order on wish.com. I sent (want) an email explaining how the transaction was fraudulent. Mine was with First Bank; they couldn’t help me.”
“The bank’s customer service insisted that the transaction was initiated by me…” he added.
POS terminals were introduced in the country in 2012 to promote CBN’s cashless policy. His popularity increased after the 2020 COVID-19 lockdowns that prevented people from going to banks.
With PoS machines, customers can withdraw money, make transfers and deposits without visiting their banks. The number of POS terminals in Nigeria grew from 150,000 in 2017 to 543,000 in April 2021, according to Statista.
Mr. Olumide Balogun, Senior Banker
Reports of fraudulent activity have caused some to wonder how customer data is obtained for theft. A financial analyst and banker, Olumide Balogun, said he did not believe point-of-sale machines would be used to extract customers’ card details after transactions.
“I’m not sure it’s possible and I don’t think it will happen because the designs and settings of digital POS machines and ATM cards change settings after each use so it’s difficult for nearby viewers dominate the input of pins by customers. ,” he said.
Confidence Richard, a POS agent operating in Akwa Ibom state’s Abak market, also said it was unlikely that customer data would be mined.
“The POS machine I am using cannot download a customer’s card details. It will only show the last digits of the card after the transaction, but it is not possible to download everything to the customer’s card,” said Mr. Richard.
Mr. Richard speaking at his outlet in Abak Market, Akwa Ibom State
Abdulrahman Muslim, an operator at the New Benin market in Edo state, said he had heard of how a PoS operator colluded with another person to take photos of customers’ card details.
Mr. Muslim said that a common problem faced by operators is that when a transaction is declined and the customer is debited nonetheless, a problem called a dispensing error, most customers find it hard to believe that it is a network problem. They would suspect fraud.
But an assistant branch manager who didn’t want his name printed because he wasn’t authorized to speak on the subject said data can be downloaded from customers’ ATM cards if a chip is planted in the machine to read and copy the card information.
It advised customers not to expose information such as card verification value (CVV), permanent account number (PAN) and expiration date of their debit card to POS operators.
The banker said that most customers are debited because important information about their accounts has been disclosed to a third party.
“It is important that they keep the information related to the account and the debit card safe,” added the banker.
He said customers should not reveal account or debit card information to unknown people pretending to be bank employees and requesting classified information.
Poor regulation Competent mobile money cash point and trading post
There are still no customer-centric regulations for agency banking, especially regarding the management of their data and privacy. Onofiok Kings, an analyst at Abuja-based Proficient Capital, a licensed money lending company that owns mobile payment points in many cities, said PoS operations need to be regulated to protect customers. He said that banks must perform due diligence on all operators.
Kings Onofiok
Kings said some of the challenges they face in the PoS business include delays in reversing misdebited funds, traditional bank network issues, and resolving disputes between banks and customers.
Others are lack of security, as excess cash withdrawals are not covered by insurance, and of course the lack of electricity to power their machines.
Kings said customers should strive to only use registered cash points. “End users should not use ATMs that cannot pay for an umbrella or a kiosk, these are operators that are capable of scamming people,” he said.
“Be sensitive to your surroundings and always be alert, know if there are curfews or if someone is scanning your location. Also trust your gut, if something doesn’t feel right or you don’t feel safe, ask for help or leave the place,” he added.