POS Fraud Cases Surge by 31.12% in Q1 Amid Security Concerns

POS Transactions See Sharp Rise in Fraud Cases

The prevalence of fraud and forgery in Nigeria’s payment system has shown a significant shift in the first quarter of the year, with Point-of-Sale (POS) transactions experiencing the highest increase in fraudulent activities.

According to the Fraud and Forgeries Report in Nigerian Banks for the first quarter of 2024 by the Financial Institutions Training Centre (FITC), POS fraud cases surged by 31.12% in Q1 2024.

In Q4 2023, there were 2,683 reported cases of fraud associated with POS terminals. However, this number escalated to 3,518 cases by Q1 2024. POS fraud cases made up 30.67% of the total fraud cases (11,472) recorded in the quarter under review.

“We Must Stay Vigilant,” Warns Expert

Fraud expert Adewale Johnson noted, “The rise in fraud is alarming. While we see better detection and prevention, the increasing cases indicate fraudsters are constantly finding new ways to exploit the system.”

N376.59 Million Involved in POS-Linked Fraud

While there was a rise in fraud cases, the amount of money involved in POS fraud declined. In Q4 2023, the total amount involved in POS fraud was N604.91 million.

READ ALSO: CAC Extends Deadline For PoS Operators By 60days To Register Businesses

This amount decreased by 37.74% to N376.59 million by Q1 2024. Additionally, the amount of money lost to POS fraud saw a significant decline, falling from N14.62 million by 68.34% to N4.63 million every quarter.

The decrease in financial losses may indicate improved detection and prevention measures, but the overall rise in fraud cases highlights the need for continued vigilance.

POS Transactions: Convenience vs. Security

The rise in POS fraud cases is attributed to the widespread adoption of these terminals by merchants and consumers alike.

As a cash-driven Nigerian economy, the convenience and efficiency of POS transactions have made them a popular choice.

However, this widespread adoption has also made them a target for fraudsters seeking to exploit vulnerabilities in the system.

Increasing POS Terminals

In Q1 2023, the number of registered POS terminals increased by 218,475, from 2,318,947 in January 2023 to 2,537,422 by March 2023.

By the same quarter in 2024, the number of registered POS terminals had increased by 289,154, from 3,441,287 in January 2024 to 3,730,441 by March 2024.

Overall, between the end of Q1 2023 and that of Q1 2024, Nigeria has witnessed an additional 1,193,019 POS terminals, marking a 47.02% increase.

Despite this increase in the number of registered POS terminals, the first quarter of 2024 saw POS transaction volumes reach 314 million, which is a drop of 73.81 million, or 19.03%, from the 387.81 million transactions recorded in the first quarter of 2023.

CAC Extends Registration Deadline for Operators

The Corporate Affairs Commission (CAC) recently stated that agents of major fintechs in Nigeria, including OPay, Palmpay, and Moniepoint, among others, must have registered their businesses by July 7, 2024.

However, it extended the deadline by 60 days, giving operators until September 5, 2024.

The CAC explained that the registration aims to safeguard the businesses of fintechs and customers, as well as to strengthen the economy.

Meanwhile, the Association of Mobile Money and Bank Agents in Nigeria (AMMBAN) condemned the mandated registration, describing it as an attempt to tax more Nigerians to generate revenue for the government.

Balancing Growth and Security

The rise in POS fraud cases underscores the need for improved security measures as the use of these terminals continues to grow.

As Nigeria’s economy increasingly relies on it transactions, it is crucial to balance convenience with robust security to protect both businesses and consumers.