Central Bank of Nigeria (CBN) Director, Banking and Payment System, Mr. Dipo Fatokun, who is also the chairman of the Nigerian Electronic Fraud Forum in this interview spoke on efforts to improve the countryâ€™s payment system. Nume Ekeghe presents the excerpts:
What are the efforts by Nigerian Electronic Fraud Forum (NeFF) to tackle electronic frauds which appears to be on the rise?
The CBN in collaboration with the NeFF, which as you know is a forum encompassing many stakeholders including the law enforcement agencies, the banks, switches and all payment systems providers. And what we have done is to identify various types of frauds that have evolved and then bring out mitigants to curb them. Remember that sometimes ago, precisely last year, the forum held a meeting in which the issue of ransomware was discussed and shortly after, that became a global problem. But because we had seen the problem coming, CBN had issued a guideline on what to do.
And that was why none of the banks in Nigeria was affected. Also, one of the steps we have taken to curtail fraud, which is that framework on USSD, which is a channel that is very prominent for banking transactions. Any channel that is prominent, fraudsters would also follow the channel. So, in order to curtail fraud in that angle, we have issued a framework which would become effective from October 1st. So, the issue of stability of the payment system, trust in the payment system are very close to the heart of the management of the CBN. And each time the Board of Governors come together, they discuss it and issue guidelines just as we have been doing.
You mentioned guideline for fintechs, how soon would we see that?
Financial technology (fintech) companies and the new players in the payment industry and in some quarters, there is this fear that fintechs would take the over the roles of the banks. But we believe that, would not happen because banks would continue to play their roles. However, some activities would have to be ceded to these fintechs. Because of the importance of these fintechs, the CBN is drafting guidelines that would enable their regulation and supervision to be put in place.
Currently, we already have guidelines for their licencing and we already have guidelines on what they are expected to do and what they not expected to do but because we know technology keeps on revolving so new guidelines would also be issued from time to time to look at areas that are not currently captured. It is an on-going process and it is not a one-size-fits all. As events unfold, then guidelines and circulars would also come out to ensure that the payment system is very safe and secured.
The report on fraud in the system seems to contradict each other as there are different figures being reported. How can that be rectified?
The figures coming from NeFF has to with fraud relating to electronic payments. But you know that electronic fraud is not the only type of fraud you have in the banking system. You have the credit fraud and check fraud which are not electronic payments. So, it depends on what you are looking at. So, if you look at electronic payment fraud, the figures we issue on the volume and value of fraud in the industry comes from the database of electronic fraud which is the anti-fraud portal we have at NIBBS. So, banks and other system players or system participants are expected to report their fraud figure to that portal and NIBBS collate and issues the figure on a quarterly basis, half year and on yearly basis. So, there can be no contradiction.
There has also been some complaints on Point of Sales (PoS) fraud. What is responsible for that?
When they use PoS at gunpoint telling you to put your pin, what they want to confirm is your pin. There is no way a PoS would dispense cash, it is not an ATM. The system we have for PoS in Nigeria is offline confirmation of pin. So, when armed robbers accost someone they want to confirm the pin on the card is actually accurate because if they asked the owner of the card he or she might tell them the wrong pin. So once the pin is okay they can now go ahead to withdraw.
What we have done is to collaborate with the banks to ensure that there is proper profiling in the people they give POS to. They give it to only genuine merchants and they profile them to know that these merchants are genuine merchants. The other side is that someone who has fallen victim, it might be because the person was not aware of the immediate steps they should take.
If the armed robbers do not lead you to an ATM what stops the card owner from making an immediate report. Some would say they were calling and the bankâ€™s lines were engaged. You can send an email which would minimise your loss. I have had cases of people saying the theft occurred on a weekend and they waited till the following working day and at that time a lot of money would been taken away from the account.
So, when it happens, make sure you give instant report to you bank and when that happens, your card would be hot listed immediately and the damages would be minimised. So, the management of CBN has actually directed that the banking and payment system department to look into this and to come up with strategies to ensure that this is totally eliminated.