Having achieved 96 per cent identity fraud reduction in the country, through the introduction electronic payment system in the last two years, Nigeria is most likely going to attain 99 per cent identity fraud reduction by the end of the year, according to the former Deputy Governor of the Central Bank of Nigeria, Mr. Tunde Lemo.
Lemo who retired from active service as Deputy Governor Operations, gave the assurance at a reception dinner, organised in his honour by the Electronic Payment Providers Association of Nigeria (EPPAN) in Lagos on Friday January 10, 2014.
Lemo told THISDAY that “Nigeria has been able to reduce identity fraud by 96 percent since the introduction of cashless economy scheme by the CBN in 2012, and going by the current rate, we are likely going to attain and surpass 99 per cent reduction in identity fraud by the end of 2014.”
he said: “The CBN was inundated with complaints from customers that unauthorised people were getting access to their accounts and were making unauthorised withdrawals, through ATM cards.
“We investigated the matter and discovered that some of them were releasing the ATM PIN to their wives, housemaids and mistresses, that in turn go round to make the unauthorised withdrawals. We also discovered that some fraudsters actually stood from a distance and watch other people carryout financial transactions with their ATM cards and they were able to get the PIN in the process, and after the rightful transactions were concluded, they will use the PIN to carryout unauthorised transactions, thereby defrauding the rightful owners of the accounts.”
In order to put an end to the fraud, CBN, according to him, decided to collaborate with electronic funds forum, which is a forum of bankers and the CBN and was able to deduce that magnetic stripe cards were vulnerable to identity fraud and decided to migrate from magnetic stripe cards to EMV compliant Chip & Pin cards, which was not even in operation in the United States at that time.
Lemo added that until date, US is still using magnetic stripe, where the card holder has to swipe the card in a machine before carrying out any financial transaction; a technology Nigeria had since left behind.
He said initially, Nigerians and the operators were skeptical about it, thinking it was a difficult task to meet, but CBN gave the operators one year to effect the change and today Nigerians are enjoying the security of the Chip & Pin cards, which of course has reduced fraud in the system.
After then, the CBN introduced the token and the second level authentication and these have further reduced identity fraud in the system, and we hope to raise the bar to 99 per cent fraud reduction very soon, Lemo said.
Speaking on the volume of electronic transactions carried out in the country as at today, Lemo said only 22 per cent of over 134 billion bulk money transactions were done by physical cash and by cheques. The rest he said, were done by electronic funds transfer and the needs instant payment.
He explained that electronic funds transfer goes through the clearinghouse and the customer gets the credit the following day, while with the needs instant payment enables the customer to get the credit instantly. Both methods of cashless funds transfer, account for 78 per cent of financial transaction in the country as at today.
“This means that Nigerians are embracing the cashless policy of the CBN and this also means of that Nigerians are now less dependent on cheques and cash,” he said.
Today in the US, cheques transaction still accounts for 30 per cent or more, but in Nigeria as at today, we have been able to reduce that by 22 per cent.
“In the retail end as at today, over 67, 000 financial transactions have been carried out on points of sales (PoS) machine transactions in Nigeria, totalling over a billion naira in cash volume. That is remarkable and I think we should be celebrating that, even as we still improve by the day,” Lemo added.