Agency banking has made it easier to pay millions of people faster, but also made it possible for criminals to steal money from them.
Mustapha Taofeek stated that he had stopped using PoS, points of sale vendors who have made a significant impact on how Nigerians do daily financial transactions, two years ago.
A week after withdrawing cash from a vendor in August 2020, Mr Taofeek claimed that he received N10,000 debit notifications. This was something he had never authorized. As he tried to verify the details of the transfer, he received a second notification on his mobile phone. The total debt from his bank was N486,000 on that day.
“I was confused, and suddenly began to sweat,” stated Mr Taofeek from Abuja. Before he could block his ATM card, he managed to transfer his balance to another account.
Guarantee Trust Bank, his bank, stated that the card details were stolen and used to make online purchases. There was nothing they could do about it, Mr Taofeek claimed. PREMIUM TIMES inquiries were not answered by the bank. The spokesperson for the bank did not promise to talk about the case.
Mr Taofeek stated that he had repaid the money to his company by April 2022. He said that he was often teary when he received his monthly salary because he was paying a debt he never used in his life.
Nigeria has been working for the past decade to increase citizens’ access to financial services. This is based on financial inclusion as a tool to create wealth and combat widespread poverty. The Central Bank of Nigeria coordinated the effort. It aimed to increase adult Nigerians’ access to financial services from 21.6 per cent to 70% by 2020.
To bring in the underbanked and unbanked, banks turned to agency banking. This predominantly uses PoS. Although Nigeria did not meet its 2020 targets, the number of adults who used financial service agents grew from approximately 4 million in 2018 up to 26 million agents in 2020 according to EfInA. This development-focused organisation promotes financial inclusion in Nigeria.
Agency banking has allowed for faster payment services for millions of customers across the country, even in rural areas. Customers claim that fraudsters have used their bank information to steal from them.
Ben Olakunle claimed that he had the same experience with Mr Taofeek, and lost nearly a million Nigerian naira.
“Just use a POS dealer point. My ATM information was taken and used to order the products. Below are details about the transaction. Nigerians, please help me to raise my voice for KONGAPAY and declare the recipient of this bought item.” Mr Olakunle was narrated by Twitter in April.
Funke Afolabomi commented on Mr Olakunle’s tweet, saying, “Happened before, but it was used for wish.com. (wish) I sent an email explaining why the transaction was fraudulent. My transaction was with First Bank. They couldn’t help.
“The bank’s customer service insisted that the transaction had been initiated by me …,”, she said.
In 2012, the country introduced Points of Sale terminals to encourage the CBN’s cashless policy. After the 2020 COVID-19 lockdowns, which prevented people from going to banks, it gained popularity.
Customers can withdraw money, transfer money and deposit without having to visit their banks with PoS machines. According to Statista, the number of POS terminals has increased from 150,000 in 2017 up to 543,000 by April 2021.
Some have wondered how customer details can be stolen after hearing about fraudulent activities. Olumide Balogun is a financial analyst and banker who said that he didn’t believe PoS machines were used after transactions to obtain customers’ card details.
He said, “I don’t believe it is possible. It is because the configurations of digital PoS machines (and ATM cards) change after each usage so that it is difficult to understand the entry of pins by customers.”
Confidence Richard is a POS agent in Abak, Akwa Ibom State. He also stated that it was unlikely customers’ information was extracted.
The POS machine that I’m using can’t download customer card details. Mr Richard stated that it will only display the last digits on the card after the transaction but it is not possible to download all of the customer’s details.
Abdulrahman Muslim, an operator in New Benin Market, Edo State, stated that he heard about how a PoS operator conspired with another person to photograph customers’ card details.
Muslim stated that a common problem for operators is when a transaction is declined but the customer is still debited. This is known as dispense error. Customers find it hard to believe that it is a network problem. They’d suspect fraud.
However, an assistant branch manager did not want to be identified because he wasn’t authorized to discuss the matter. He said that data can be downloaded from ATM cards of customers if a chip has been planted into the machine. This allows the machine to read and print card information.
Customers were advised not to disclose information such as card verification value (CVV), permanent account number(PAN), and expiration date to POS operators.
According to the banker, most customers are debited when important information about their accounts has been divulged to a third party.
The banker stated that it was important to keep the account and debit card information secure.
He advised customers not to reveal account information or debit card details to unidentified callers pretending to be bank staff.
There are no customer-focused regulations for agency banking yet, especially about the management of their data and privacy. Onofiok Kings, an analyst at Abuja-based Proficient Capital, a licensed money lending company which owns mobile pay points in many cities, said there is a need to regulate PoS operations to protect customers. He said banks should conduct due diligence on all operators.
Mr Kings said some of the challenges they encounter in the PoS business include delay in a reversal of wrongly debited funds, network issues from traditional banks, and banks/customers’ settlement of disputes.
Others lack security as insurance does not cover excess cash-outs, and of course and lack electricity to power their machines.
Mr Kings said customers should endeavour to make use of only registered cash points. “End-users should not use cash points that cannot afford an umbrella or kiosk stands, these are operators who are capable of defrauding people,” he said.
“Be sensitive to your environment and always be on alert, know if there are curfews in place or when someone is scoping out your location. Trust your instinct too, if something does not feel right or you don’t feel safe, call for help or leave the place,” he added.