Recent news that Nigerian Deposit Money Banks (DMBs), lost as much as N2.19 billion to fraudsters through electronic channels, otherwise called e-payments, or e-banking in 2016 fiscal year, is an indication that all is still not well with the security of electronic payment system in the country. Of the amount lost to e-payment fraud, across the counter transactions amounted to N511.07milllion, followed by Automated Teller Machine (ATM) transactions worth N464.5 million, Internet banking worth N320.66 million, Point- of- Sale (POS) transactions worth N243.32 million and mobile banking transactions worth N235.17 million, among others. The news, coming from the Central Bank of Nigeria (CBN) is an indication that e-payment system in Nigeria needs to be more strengthened so that it will be safer, more secured and enduring in the interest of safe banking. According to the CBN, e-payment is any form of payment that allows for the use of electronics system to initiate, authorize and confirm the transfer of money between two parties. The transaction reason could be for the payment for goods and services, settlement of obligations and gifts, among others.
According to the CBN, e-payment transaction volumes grew at 8 .9% to reach $387.3 billion in 2014, an increase driven by accelerated growth in developing markets. Cards have been the fastest growing payment instrument since 2010, while payments using cheques have declined consistently and significantly.
In 2014, debit cards accounted for the highest share (45.7%) of global e-payment transactions and were also the fastest growing (12.8%) payment instrument. Thus, it is incumbent on all stakeholders, users, regulatory authorities, particularly the CBN and the federal government to put in place strict legislation and rules that will safeguard the safety of e-payment system in the country.
There is no doubt that there are hard challenges facing the CBN, the banks and the security agencies in enforcing the provisions of the Cybercrime Act of 2015, a situation which has not helped much in nabbing cyber crime perpetrators, thus making a review of the act imperative.
While e-frauds can happen at any time, their frequencies of occurrence increase towards the end of the year because of the festivities around the end of the year and the need for people to hold more money for their expenses. The fact that as much as N2.19 billion was lost to fraudsters last year through electronic fraud is a clear indication that the existing preventive and detective strategies currently in place at the banks are not enough to prevent e-frauds.
It is true that the introduction of e-banking into the Nigerian financial system has made the conduct of financial transactions much easier than before, especially in this era of cashless policy. Unfortunately, e-banking has been abused by fraudsters and it has become Nigeria’s biggest economic enemy. The CBN and the banks must therefore embark on enlightenment of the banking public on how to drastically reduce cyber-fraud and e-banking abuses in the country.
At the same time, the National Assembly would need to review the Cybercrime (Prohibition and Prevention) Act of 2015 to make it more difficult for fraudsters to embark on e-fraud and to increase the penalties for those convicted for e-fraud.
In addition, given the very significant importance attached across the world to the protection of information infrastructure in the delivery of financial services, persons who attempt to compromise e-payment infrastructure should be visited with heavy sanctions to deter other like- minded criminals from committing such crimes.
There is also a need for the CBN to use the biometric information on the Bank Verification Number of bank customers to identify, verify and authenticate all customers at the point of their e-transactions. By blocking all loopholes that could make e-fraud possible and by enacting an effective anti-cybercrime law, there is no doubt that incidences of e-fraud would be drastically reduced in the country.