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Electronic transactions record 50% growth in 2014


windows-atm-cash-machine-640x353STATISTICS from the Nigeria Inter Bank Settlement System (NIBSS) Plc have shown a 50 per cent growth in the level of usage of various electronic payment transactions in the country in 2014.

According to NIBSS, across all payment channels in the financial industry, including electronic and non-electronic based platform, Nigeria has experienced a massive rise in the volume and value of transactions processed yearly.

The electronic payments platforms include the Internet banking, e-Commerce, Point of Sales (PoS), Automated Teller Machines (ATM) and the mobile platforms.

Indeed, NIBSS, in its ‘2014 E-Payment Fraud Landscape in Nigeria”, a document obtained by The Guardian at the weekend, showed that in 2014, it processed over 100 million transactions in terms of volume with a corresponding value of over N40 trillion (over $208 billion).

It also disclosed that the volume of transactions grew by over 50 per cent between 2013 and 2014 with its value also growing by 28 per cent.

Meanwhile, the Central Switch said fraud in the Nigerian payments system and also on a global scale has been on the increase over the past few years as technological advances impact on the way people pay.

According to it, Internet banking, the ever-increasing use of the ATMs and other electronic platforms have in one way or the other accelerated the growth of fraudulent activities, adding that cheques and over-the-counter fraud has given more room to a sophisticated and more concise electronic type of fraud.

In Nigeria, it disclosed that Internet banking and ATM were the lead channels for perpetuating e-fraud in 2014.

Specifically, NIBSS disclosed that in 2014, Nigeria recorded 1,461 cases of fraud compared to 822 in 2013.

It explained that from the 1,461 cases, the value of attempted fraud reported was N7, 750, 152, 748, while the actual loss was N6, 215, 987, 323 in 2014 compared to N19, 148, 787, 069 attempts and N485, 194, 350 actual loss value reported in 2013.

“The figures depict that more fraud occurred in 2014 and more loss was recorded in terms of value compared to the attempted fraud value”, the document stated.

NIBSS disclosed that in 2014, ATM machines were the major victims of fraudulent activities in terms of volume as it experienced the highest number of fraudulent transactions. It however, said that Internet banking actually accounted for a loss of about N3.2 billion to fraudulent transactions in terms of value.

“As for 2013, there were quite a substantial amount fraudulent transactions in terms of volume on Internet banking and Web based transactions. Also, Across the Counter accounted for almost N16 billion of the attempted fraud, which is the bulk of fraud witnessed in 2013”, the document disclosed.

According to NIBSS, electronic platforms such as Internet Banking had 287 volume of fraud for 2014; eCommerce 114; Point of Sales 166; Web 218; ATM 491, Mobile 21. Non-electronic platforms including Across Counter and Cheques recorded 153 and 11 volume of transactions.

NIBSS, while giving more insight into the menace, explained that in the first quarter of 2014, the country recorded 336 volume of fraud, whose attempted value was N1, 003, 124, 742 with an actual loss of N172, 920, 263, which was 17 per cent actual loss value in attempted fraud value.

In the second quarter, 298 volume was recorded, with and attempted value of N523, 849, 238 and actual loss value of N441, 714, 718 and 84 per cent actual loss value in attempted fraud value.

For the third quarter, there were 366 fraud cases, N3, 708, 992, 359 attempted value and N3, 170, 221, 230 actual loss value and 85 per cent actual loss value in attempted fraud value.

For the last quarter of 2014, the figure increased to 461, with an attempted value put at N2, 514, 186, 408 and actual loss value of N2, 431, 131, 110, resulting in 97 per cent actual loss vale in attempted fraud value.

NIBSS informed that in the year under review, as part of the investigation process, a number of suspects and criminals were apprehended after fraud had been reported.

“Although, the figures show that more work needs to be done to improve apprehension rate. However, the low number is due to some constraints like the law/legal context that isn’t clearly defined when it comes to financial and cyber-crimes carried out using electronic platforms. A major issue is the collaboration of the law enforcement agents and the financial industry”, it stated.

In the document, NIBSS said 2014 was quite alarming in terms of fraud as it recorded very high volume and value of fraudulent transactions in Nigeria (Note that we suspect that the actual volumes and values are usually way higher than reported).

However, fraudulent transactions (attempted fraud value) as a percentage of the total transactions value for 2014 was less than one per cent. This generally showed that transactions are highly secure but the success rate at which attempted fraudulent transactions are successful is equally high up to 80 per cent in 2014 as against three per cent in 2013.

Speaking on fraud outlook for 2015, NIBSS posited that the advent of the fraud scene in 2014, which was a rollercoaster ride for all holders of critical intellectual and financial property all over the world and in Nigeria, 2015 must not be underestimated. Here at NIBSS, we give a concise look towards the future on possible trends and events that might potentially occur in the fraud scene in Nigeria.

In mitigating the effect in 2015, NIBSS said the introduction of the biometrics project, also known as Bank Verification Number (BVN), which is a number used for proper customer identification, and can be used as verification at the point of Banking operations, said this initiative is expected to solve the age long problem of proper identity in the banking sector.

“We believe that once the BVN is made mandatory, e- payment and Bank frauds would reduce by about 60 per cent. It is being hoped that the BVN would be made mandatory before the end of 2015.”

From 2014, the Federal Government of Nigeria, CBN and major players in the financial industry took steps to better improve security measures in the country. In terms of legal aspect to improve prosecution, the National Assembly in collaboration with the Senate passed a Cybercrime Bill. This bill spells out punishment for e-crimes that were hitherto not deemed as crimes before.

We believe this would serve as deterrents to fraudsters.

“However, if the bill is not signed into law by the president before the expiration of the tenure on May 29th 2015, the Cyber-crime bill would have to start its process all over again from the beginning”, NIBSS stated.

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