Reps Decry Increased PoS Related Fraud

The Chairman of the House of Representatives Ad-hoc Committee on the Economic, Regulatory and Security Implications of Cryptocurrency Adoption and POS Operations in Nigeria, Hon Olufemi Bamisile, has expressed concerns over the increasing fraud linked to Point-of-Sale (POS) operations and the infiltration of unlicensed crypto-related activities in the sector.

He stated this Monday during the resumed investigative session with fintech leaders, POS operators, and representatives of regulatory and security agencies in Abuja.

Bamisile said recent engagements with stakeholders had exposed deep gaps within the country’s fast-growing digital finance ecosystem.

He revealed that the committee has received multiple reports of unprofiled agents, cloned terminals, anonymous transactions and weak Know-Your-Customer (KYC) practices, which he warned are putting Nigerians at serious risk of financial loss, cybercrime and security breaches.

“We are concerned about the growing rise in fraud associated with POS operations,” Bamisile said. “Unprofiled agents, cloned terminals, and weak KYC practices continue to expose citizens to preventable dangers.”

The chairman complained of POS operators venturing into digital-asset and cryptocurrency services without regulatory approval, stressing that such activities pose major threats to consumer protection and national security.

“There are allegations and credible information that some POS operators now engage in crypto-related services for which they are not licensed.

“This raises serious red flags around anti–money laundering, terrorism financing, data integrity and the misuse of instruments originally designed for basic payment services,” he said.

Bamisile further disclosed that the Committee had been alerted to the registration of phoney companies at the Corporate Affairs Commission (CAC), some of which allegedly use the National Identification Number (NIN) and Bank Verification Number (BVN) of unsuspecting citizens to open accounts and launder illicit funds through unverified POS channels.

“This highlights weak verification mechanisms and underscores the urgent need for a coordinated oversight framework,” he said.

The National President of the Association of Digital Payment and POS Operators of Nigeria (ADPPON), Mr Paul Okafor, warned that the Point-of-Sale (POS) ecosystem in Nigeria has reached a critical emergency point, with fraud escalating to levels that now pose a direct threat to national security.

Okafor said the rapid expansion of the industry has overwhelmed regulators, leaving significant gaps that criminals are exploiting.

He told lawmakers that while POS operators have grown from 50,000 in 2017 to over 2.3 million today, regulatory capacity has expanded by “less than 10 per cent.”

“This imbalance is what has produced the crisis we are facing today,” he said. “The regulators, especially the CBN, are not incompetent; they are overwhelmed by the sheer speed and scale of growth.”

Quoting data from the Nigeria Inter-Bank Settlement System (NIBSS), Okafor said POS, banking and digital-payment channels suffered N17.67 billion in fraud losses in 2023, affecting more than 80,000 customers. But the situation worsened drastically in 2024, with losses rising to N52.26 billion — an increase of N34.59 billion in just one year.

He added that attempted fraud across financial channels surged by 338 per cent, while POS channels alone accounted for 26.37 per cent of all cases recorded.

FITC, another industry monitor, also reported a 95 per cent spike in POS fraud in the fourth quarter of 2024.

“More than 38,000 POS fraud cases were officially reported in one year,” Okafor said. “Unofficially, we estimate that over 70,000 cases go unreported because victims simply give up.”

He also disclosed that criminals are increasingly using POS operators as cash-out points for ransom and illicit funds.

“In some states, security agencies report that nearly 40 per cent of kidnap ransom payments pass through informal POS cash-out channels. This is no longer a fintech issue; this is a national security threat,” he warned.