Nigeria has seen a striking 31.12 per cent increase in Point-of-Sale (POS) fraud cases during the first quarter of 2024, according to the latest Fraud and Forgeries Report by the Financial Institutions Training Centre (FITC). This rise in fraud comes as ATM usage has sharply decreased, indicating a significant shift in the country’s payment fraud landscape.
The FITC report revealed that the number of POS fraud cases jumped from 2,683 in the fourth quarter of 2023 to 3,518 in the first quarter of 2024. POS fraud now represents 30.67 per cent of the total 11,472 fraud cases reported for the quarter. Despite the uptick in fraud cases, the financial impact has diminished. The total amount involved in POS fraud decreased by 37.74 per cent, from N604.91 million in Q4 2023 to N376.59 million in Q1 2024. Additionally, the amount lost to POS fraud fell dramatically by 68.34 per cent, from N14.62 million to N4.63 million per quarter.
Fraud expert Adewale Johnson expressed concern over the growing trend, stating, “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.” Johnson emphasised that, despite improvements in fraud detection, the surge in cases underscores the necessity for continued vigilance and enhanced security measures.
The rise in PoS fraud is attributed to the widespread adoption of PoS terminals as Nigeria transitions towards a more cashless economy. The number of registered PoS terminals increased by 218,475 in Q1 2023, from 2,318,947 to 2,537,422. By March 2024, this number had surged to 3,730,441, reflecting a 47.02 per cent increase. However, the volume of PoS transactions declined by 19.03 per cent, from 387.81 million in Q1 2023 to 314 million in Q1 2024.
In contrast, ATM usage has dropped significantly, with transactions falling from 70 per cent to 40 per cent in 2023. This decline is attributed to a shortage of cash, high maintenance costs, and the growing adoption of alternative banking methods such as mobile apps and USSD. The number of ATMs in Nigeria has remained relatively stable, with 22,600 ATMs reported as of December 2023, following a peak of 21,000 in 2019.
Tope Dare, executive director of Inlaks, Nigeria’s largest ATM operator, noted, “Nigeria requires about 60,000 ATMs to meet its growing population and banking needs. Currently, we face a deficit of about 37,400 ATMs.”
The ATM sector is facing challenges due to high maintenance costs, foreign exchange fluctuations, and inflation. The cost of maintaining ATMs has been significantly impacted by the devaluation of the naira, with the official exchange rate soaring from N250 per dollar in 2016 to N1,500 in recent months.
Olaoluwa Awoojodu, CEO of E-Settlement Limited, highlighted the shift towards digital payments, stating, “The rapid adoption of digital payment methods is influencing consumer behaviour, leading to a shift away from traditional ATMs in favour of more convenient digital alternatives.”
The rise in PoS fraud comes amidst a broader context of regulatory changes. The Corporate Affairs Commission (CAC) recently extended the deadline for fintech operators, including major players like OPay, Palmpay, and Moniepoint, to complete their business registrations. Originally set for July 7, 2024, the deadline has been extended by 60 days to September 5, 2024. The CAC explained that this extension aims to safeguard fintech businesses and their customers while strengthening the economy.
The Association of Mobile Money and Bank Agents in Nigeria (AMMBAN) has criticised the registration mandate, describing it as a move to impose additional taxes on Nigerians to generate government revenue.
