CBN, others outline steps to curb fraud in payment industry

The Central Bank of Nigeria (CBN) and stakeholders in the payment industry, on Thursday, outlined steps to curb fraud and transform the industry.

Aishah Ahmad, deputy governor, financial system stability at the CBN, who spoke at the BusinessDay’s Future of Payments and Fraud Conference in Lagos, regulatory priorities to improve Nigeria’s payment system.

“The rapid digitisation of finance provides a great opportunity for growth in the financial ecosystem, as such, the role of operators can be seen as a catalyst for the change of Nigeria’s payment space,” Ahmad, who is the chairman of Nigeria Inter-Bank Settlement System Plc, said.

Innovation, according to her, is acknowledged as an important lever to drive meaningful progress in this direction.

“While financial inclusion continues to improve in Nigeria, the Central Bank of Nigeria has set an ambitious target and that is to achieve means for enabling competition within the fintech sector, which facilitates digital financial services,” Ahmad said.

She highlighted the need for new innovative players to be identified and licensed in order to bring them within the regulatory limits, as well as the creation of a framework to understand the markets for new players.

Another priority, according to Ahmad, is to achieve financial inclusion and democratised access to quality, affordable and cost-effective financial services for all Nigerians by resolving the challenges related to identity management, neutral financial access points into operability of payment systems, electronic payments, and open banking among others.

She said a framework for self-regulation so that the fintech ecosystem is complete would complement the efforts of the regulator to improve cyber resilience, corporate governance and operational risk standards across the industry.

She said to improve Nigeria’s payment industry, an improved access to credit through the development of necessary supporting infrastructure, such as a credit scoring module, would go a long way.

“The payment system transformation will take Nigeria in meeting the aspiration of a wide spectrum of stepping into the financial ecosystem. Customers will enjoy more efficient services at more favourable prices, banks will become more efficient with lower costs and a greater resilience,” Ahmad said. “Also, access to credit will be boosted where it is needed most, especially for individuals and small businesses, and the financial system will be more inclusive into greater depth and diversity.”

Citing data from NIBSS, Usman Belel, of FCID Alagbon, Nigeria Police Force, said Nigerian banks lost N3.5 billion and N5.2 billion in the third and fourth quarters of 202 to fraud.

“We’re trying to see if there could be a kind of collaboration between the courts, the banks and the law enforcement,” he said.

Over 100,000 fraud cases are pending at the Federal High Court, according to Mobolaji Oriola, senior partner at Allen & Brooks.

He said this was a result of evolution and adoption of electronic payments to businesses and commercial enterprises, stressing the need for integration to build a firewall against fraud.

“We need to cultivate a whistleblower policy, administering operations and ensure that organisations have adequate technical support as well as security specialists, and excellence to monitor electronic processing and other sensitive transactions function constantly with wrong security checks,” Oriola said.

Andrew Uaboi, country manager at Visa, described contactless payment as the next frontier in the Nigerian Fintech and payment ecosystem.

Read also: CBN will meet 85% financial inclusion target – Emefiele

Contactless payment is a means of payment that does not require cash or even swiping a card. It requires tapping or holding the contactless card or smartphone near a compatible card reader while checking out.

According to Uaboi, the innovation will enable the growth of small businesses and also assist individual businesses thrive.

He said: “There has been a significant increase in contactless payment since the COVID-19 era. In the US, for example, one in six people testified that they carried out their first contactless payment during the COVID last year.

“We’ve also seen a 40 percent year on year growth of contactless payment, and all of this payment is also enabling small businesses. It enables the growth of individual businesses as well as economies.”

According to him, Visa is working with the Nigerian government, CBN and other partners to build a framework for which contactless will come in and thrive in Nigeria.

He said a strong security on the new innovation would curb fraud and other financial related misconduct.

“I can assure you that it’s very secured. It’s as secure as using your regular cards to pay on the PoS machine. It even comes with some additional security features, which enables us to be able to ensure that transactions are not done in a fraudulent manner,” he said.

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