* Ransom repeatedly paid via electronic means
* As criminals capitalise on inadequate regulation of instant payment system
* Nigerans living in perpetual fear, apprehension
Despite the fact that each and every bank account is connected to the biomedic data of the owner, kidnappers and armed robbers have continued to either accept via electronic means, or used POS machines to forcefully withdraw or transfer victims’ monies, DAVID MAXWELL writes.
Owunari Datubo (not real name) was accredited as a domestic observer during the 2023 general elections and was posted to Bayelsa State. After the federal elections, he proceeded to Port Harcourt, Rivers State to see his older cousins. But unknown to him, fate had a different plan for him.
The minibus he boarded from Eleme Junction to Waterside was a trap; the driver, front seat passenger, as well as the two passengers in the back seat were all members of a kidnapping gang; so Datubo and the other two passengers in the middle seat were the victims.
All the victims were dispossessed of their Automated Teller Machine, ATM cards, their phones and other valuables. They were forced to disclose the Personal Identification Numbers, PINs of their cards and mobile apps, after which the funds in their accounts were transferred to other accounts.
Some of the kidnapped victims were released after the payment of ransom, while others were killed.
Upon regaining freedom, Datubo quickly reported the kidnap at Onwa Police Division, but up till December 2024, no arrest had been made. The reason given was that the criminals transferred the funds into cash wallets, not to a commercial bank account.
Nigeria’s instant payment system continues to evolve despite the mandatory linking of all bank accounts to the Bank Verification Number, BVN, a unique 11-digit identifier that connects an individual’s financial accounts to their biometric data.
A recent report from the National Bureau of Statistics (NBS) revealed that N2.2 trillion was reportedly paid as ransom to kidnappers within a 12-month period. The Crime Experience and Security Perception Survey, CESPS, estimated that the average ransom amount was N2.7 million. This concerning report highlights a serious threat to Nigeria’s rapidly growing instant payment system.
Premier Oiwoh, CEO and Managing Director of NIBSS, revealed that 10 billion mobile transactions were conducted in Nigeria in 2023. Speaking at the launch of the 2024 State of Inclusive Instant Payment Systems, SIPS, report in Accra, Ghana, Mr Oiwoh stated that the country is projected to handle around 12 billion transactions in 2024.
In recent years, Nigeria’s instant payment system has grown significantly, with experts attributing this growth to the inclusion of fintech companies. The naira redesign in 2022 and the ensuing cash shortages further accelerated the adoption of mobile money, with even market traders now using POS machines. However, ensuring regulatory compliance has been a major challenge, especially with Payment Service Providers who own the POS devices.
The 2024 report highlights that this lack of regulatory adherence impedes the full maturity of the Nigeria Instant Payment, NIP, system.
“As for how inclusivity is likely to evolve at the system level, NIP in Nigeria currently has the highest potential of reaching mature inclusivity in the future. It has integrated all use cases, including G2P and cross-border payments, the latter through integration with PAPSS. The only mature criteria it has not yet met is providing additional recourse channels for end users to dispute transactions. To be fair, recourse is a development challenge for all systems and is complex to implement as it requires additional resources and monitoring,” states the 2024 SIPS report.
Experts assert that stricter compliance enforcement could help address the challenges. Stanley Jacob, a fintech expert, suggested that criminals could be more easily tracked if banks or operators are held accountable for providing information about their customers.
“It’s not impossible to track the criminals. It’s easier than many realise. Banking is like a club. When a bad player is admitted, the club is exposed to bad behaviour. I believe the Central Bank needs to do more to protect consumers. This applies to any settlement, whether electronic or paper. If I transfer money to a bad actor in a bank, the bank should also be held responsible if they fail to provide information on the customer. Once you admit them to the settlement system, they should be subject to the same stringent rules as other banks. They must be able to identify and present their customers. A POS is just a device; the money is still held in a specific bank account,” he said.
Another expert, Babatunde Obrimah, highlighted that some criminals use gaming and cryptocurrency platforms to make their transactions harder to trace. To tackle this issue, calling for greater interoperability between telecom regulators and anti-graft agencies.
“The problem is that some money is channelled through gaming and cryptocurrency platforms. If money moves from bank to bank, it’s easy to trace. This is why regulation is so important. There must be interoperability among the regulators. Some even use the funds to buy airtime. Collaboration between telecom operators, the NCC, EFCC, NFIO, the Central Bank, and the banks is essential. There’s ongoing dialogue, but collaboration among regulators is no easy task,” he said.
Recently, the Central Bank of Nigeria, CBN, has tried to curb the activities of these criminals by issuing strict circulars to regulate the activities of POS operators in the country.
Last September, the CBN issued a new directive requiring all Payment Service Providers, PSPs, to integrate their transactions through a Payment Terminal Service Aggregator, PTSA, to streamline and track electronic transactions in the country.
PSPs are required to submit monthly returns to the CBN, detailing the number of merchants and agents they manage, their POS terminal deployment, and the volume of corresponding transactions.
The report is expected to reach the CBN no later than seven days after the end of each month.
The circular also warned that noncompliance within 30 days of issuance would result in appropriate sanctions.
A source at the central bank, who did not want his name mentioned because he is not permitted to speak to the media, said some of the bank’s actions are expected to yield results by 2025. He added that POS operators had in the past operated with impunity, but most now comply or risk sanctions.
Last month, the House of Representatives also took measures to address the problem following a motion moved by Idem Uyime.
In the motion, the lawmakers resolved that the CBN should shut down platforms used by the one-chance operators.
But while the results are yet to be seen, Nigerians continue to live in fear and apprehension as they do not know where or to whom they would turn to for socure.
In the interim, many like Datubo and other victims, have resorted to temporary self-help measures to protect themselves and their bank accounts. “Since after armed robbers broke into my house with Point of Sale, PoS, machines and whipped clean my two bank accounts and three of my husband’s, as well as my husband’s younger sister’s account though her bank application, I no longer have an app or ATM card for my main account where I keep reasonable money.
“Any time I want to either withdraw or transfer cash from that account to any of my other accounts, I go to the bank early, pick a number and wait in line for my turn to be attended to no matter how long I wait. You know as they say, ‘once bitten, twice shy’,” a lady who gave her name as Mama Ejima, told this medium.
