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POS Fraud: Beat The Fraudsters In Their Game In 5 Easy Steps


The prevalence of financial (internet and POS) frauds is on the rise in Nigeria largely due to ignorance and carelessness on the part of the populace.  In this blog article today, we want to show you 5 easy steps to beat fraudsters and hackers in their own game. Agent banking popularly seen as POS Cash Back services in Nigeria is regarded as one of the very important positive innovative interventions coming out of the Nigerian financial sector.  The POS service agents have undoubtedly made banking easier and promoted financial inclusion in no small measure, especially in rural areas where the majority of the poor and unbanked population resides.  However, in every good there is bad and vice versa, as some of the operators with the dubious mind have turned it into a tool through which they defraud and swindle unsuspecting customers.  To make matters worse, the authorities, the banks as well as the financial regulators are doing next to nothing in putting up measures to stem the tide. With no one to turn to for protection, now it is time to protect yourself and beat the fraudsters in their own game in the 5 easy steps plus a bonus, all outlined below

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POS Services

POS services involve the use of a POS machine, which is a mini hardware computer that accepts both credit and debit cards to carry out financial transactions like transfers, withdrawals, airtime recharge and payment of utility bills.  This is done at the street corners and anywhere without the need to be present in the bank hall and it is most helpful in facilitating financial transactions in rural areas where banking services are not readily available.

In a 2021 report published by Enhancing Financial Innovation and Access, an organization that promotes financial inclusion, it was revealed that 38 million Nigerian adults lack basic banking services.  In another report, the data shows that as of 2020, only 64% of adult Nigerians had access to banking services.  This huge unbanked population of Nigerians are now being serviced by POS service operator and will be instrumental in helping the meet up with CBN deadline of 31 January 2023 to exchange their old naira (N200, N500 and N1000) notes.  We recommend you read our previous post on The Challenge And Opportunity Inherent In Naira Redesign to understand better and see how you can take advantage of the opportunities.

 POS Business In Nigeria

As you can see in our previous post, the POS services business is one of the booming businesses in Nigeria today even though we cannot guarantee how long into the future that will be.  So you should join the bandwagon to take advantage of the opportunity now. The POS services gained prominence and the popularity it enjoys today got to its peaked during the COVID-19 lockdown in 2020 when the banks and other public facilities were on lockdown giving rise to the need and usefulness of the service, and the naira redesign has even heightened and a contributing factor to the profitability of the business in 2022 into 2023.

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According to data from the Nigeria Inter-Bank Settlement System Plc. portal, published by PUNCH in May 2022, Nigerians made use of POS terminals 178.9 million times in two months indicating a 25.59% increase from 142.51 million times in 2021 with a total transaction value at N1.15 trillion, a 19.76% increase from the N958.14 billion processed in the corresponding period of 2021.

How profitable Is POS Business In Nigeria?

It is hard to walk through any street in Nigeria today without sighting a POS service centre.  Data from Statista, an online platform that provides data on the global digital economy and trends, shows that the number of POS terminals in Nigeria from 2017 to 2022 is over 1.1 million.  Experts have described the POS business as very lucrative, revealing that an outlet sited in a busy location has the propensity to attract an average of 30 to 50 customers daily, raking in a minimum of N5000 profit

The Flip Side Of POS Growing Popularity  

Ironically, amid the growing patronage of the POS service business also came along the monstrous challenge of fraudsters infiltrating the system to defraud customers who use their cards for transactions in their centres. The CBN, in its Financial Stability Report of 2018, revealed that ATMs, Mobile Money and POS, are the worst culprits when it comes to e-payment crime in Nigeria at the rate of 34.87%, 28.21% and  19.55% respectively.  And it was projected that POS fraud would become more prevalent in the post-COVID-19 cashless era and that has proven to be true with the growing prevalence of frauds associated with POS

 How POS Fraud or Theft Is Being Perpetrated

The fraudulent POS operators perpetrate the theft by stealing a customer’s details, such as card number, Card Verification Value number, expiration date and passwords; thereafter use the details to facilitate electronic transfer from the victim’s account and when this happens you will agree that the banks, the regulators and the police authorities have not been useful in tracking and arresting these fraudsters.

POS Vulnerabilities

The vulnerabilities inherent in POS technologies as a result of the use of near-field communication and radio-frequency identification make it possible for hackers, scammers and cyber-criminals to perpetuate their evil acts by penetrating the system. Forbes reports, noted that when a customer uses a smartphone or any other contactless payment method, credit card numbers are left vulnerable if they are not properly encrypted.  That is what we want to teach you in this tutorial, how to protect your personal details.

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How To Beat The Fraudsters To Their Game In 5 Easy Steps

You beat the fraudsters by taking steps to protect yourself from the loss of your funds.  This is the most important part of this article as it is what we are here to learn today.  It will interest you to note that customers or POS users are not the only victims of financial fraud, the POS operators are also victims of fraud and should equally take extra care and follow the 5 steps to protect their hard-earned money as well.  Make securing your funds your priority as no one will do that for you.  Following the following steps, we have outlined below will surely help you;

1. Have A Designated Expense Account

An expense account is not only a great way to keep track of your spending and make sure that you are getting the most value for your money.   It is also a great trick to beat the fraudulent elements to their own game.   It is a grievous error to spend from your savings account or any other account other than a designated expense account.  An expense account is not just for management and account purposes but for also security purposes.  Here are some tips for setting up and running an expense account:

i. Determine your daily budget. Before you start putting money into your expense account, ensure you have a good idea of how much money you want to spend per time or day. When you have determined what you need to spend, then transfer the money from your main account to the expense account.  This will help you protect your main account from POS and internet fraudsters.

ii. Carry only the ATM card of your expense account around.   By so doing, even if your card detail is compromised or you are rubbed, you won’t lose much. And always disable the cards to your main accounts from your mobile app after use if you must use it anywhere

2. Have A Designated Phone Number And E-mail For Your Bank Accounts

I am sure you must have heard if it has not happened to you, of fake SMS alerts and unsolicited calls from fraudsters claiming to be from your bank, and demanding pins and OTP numbers.  Yes! That is what having a designated phone number and e-mail for your bank accounts will help you mitigate.  This number and e-mail should be known by ONLY you and your immediate family.  What this does is that if someone who knows your regular number tries to send you one of those fake alerts you will know that it is fake right away because the number with which you receive it is not attached to your account.  Just the same way it is important for a business owner to have a designated phone number and e-mail for their business, so it is for you to have for your bank account.

3. Avoid Road Side POS Service Operators As Much As Possible

One may argue that POS operators are meant to be strategically located by the roadsides and corners of the street for ease and convenience.  As true as that argument may be, you must understand that in some cases convincing also comes with some attendant risks.  The original idea behind POS services was for businesses to incorporate it into their businesses so that their customers and others can easily use it while shopping or patronizing them.  But today there are over a million POS operators across the country who render no other service other than POS services and unfortunately, some of them have other ideas and intent.  This is not to imply that some shop owners are not dubious but in most cases, it is safer to use POS service in an identifiable shop or business outlet than those with just a table across the drainage unless you know them well.

4. Don’t Leave Your Receipt Or Printout

Thanks to the banks, they have all stopped putting receipts in their ATM.  I use to see people with dismay say yes to the ATM to issue them a receipt but they drop it unattended and walk away thinking that they just punishing the banks or the cleaners.  The information on your transaction receipt or POS printout may not mean much to you but to a serious hacker or fraudster, it does.  I know what I am telling you because I was working in the bank in the early days of ATMs in Nigeria.  If you don’t need the receipt or printout for a record of your expense destroy it, and never again abandon or squeeze and fling it into the trash.

5. Be Observant While Carrying Out Your transactions In The POS

Being observant of your surrounding environment will save you so many dangers and risks.  The same goes when carrying out transactions either at the POS terminal or elsewhere and if you feel uncomfortable, or if you feel like someone is following you or watching you with interest, do not continue with the transaction. Immediately leave the place for a safer place or report the situation to the authorities.  While carrying out your transaction be it at a POS terminal or ATM or even in the banking hall, be sure that the attendant or other customers are not looking over your shoulders while you are putting your secret pin

Things To Lockout For In A POS Terminal

Image is showing what to do when in POS service terminal to protect yourself from POS fraud
POS Attendant


1. Make sure that when once you hand your ATM card to the attendant that he or she does not drop it to do other things or try to look at it front and back murmuring or observing the card details because that may be them trying to memorize the part of your card number that does not appear on the printout, you card authentication pin and expiring date.

2. I have said this before; make sure no one is watching you put your pin. Don’t put your pin leaving the POS machine on the table or the hands of the attendant.  That is bad practice and risky behaviour. The example in the image below must be avoided while putting in your ATM card pin.

Image is showing how not to put ATM card pin in POS servvice point
๐Ÿ‘ฟThis Is A No-No If You Care About The Security Of Your Money๐Ÿ‘ฟ


3. This is the most important: No POS machine should ingest more than a quarter (25%) of your card be it at a POS services centre or a shop.  See the images below to understand what I’m saying

Image showing how ATM card should be sloted into POS machine
Best Practice


If the attendant slots your card into the machine and more than half of the card enters the machine, it is a very big red flag because that may be the attendant trying to clone your card to get the card information.  It's advised that if you notice that, pull your card out immediately and take off, but if you notice later it will be safer to go and block the card immediately or move any money in the account out.  You will know if it is a case of a clone if the attendant tries it and tell you the transaction was declined without showing any interest to try again but want you to just go away.

The Bonus

Have you ever opened a website and your browser shows you a warning about the site you are about to visit? You must have one if you are using a good browser.  But that is not the issue for now maybe next time we will teach you how to spot a fraudulent website. Check this website link at the top of your browser you will see that it starts with something like https://. That shows that the site is SSL certified.  

What is SSL You May Ask?

SSL is the acronym for Secure Sockets Layer. Secure Sockets Layer (SSL) is a standard security technology for establishing an encrypted link between a server and a client (you) the user of the site.  What this means is that if you put your personal details such as e-mail and password, a hacker cannot sniff into it remotely if they do all they will see is something like **** they will not be able to see your e-mail or password.  So in this case, if your detail is compromised then it is from the website owners.

If you also notice that if you visit some sites the URL will start with http:// without the s. That shows the site is not SSL certified and could be vulnerable to cyber-attacks.  So we STRONGLY advise that you check these things before you put your personal or banking information, especially your ATM card detail.  Don’t shop in any online store that is not SSL-certified because you may be vulnerable. 

Conclusively

It is no news that fraudsters set up POS outlets just like every other one but with different agendas to copy customers’ pins and other details, and subsequently gain access to their accounts.  If you have not been a victim you must have seen or heard of someone whose money just vanished from their accounts mysteriously.  And we hoped that this blog post article today has been able to help you in learning how to better safe gaud your money and personal details.

WOW! It's been a long read and we did not intend it to be so but we sincerely hope it is worth the while.  Leave a comment below and share to let your friend know about this and to take precautions, that is the aim and reason why we put in so much effort to put these pieces together. We must run the fraudsters out of business.

 FAQs

What is POS?

POS is the acronym for Point of Sales POS is the acronym for Point of Sales.

How have the POS service agents helped deepened financial inclusion in Nigeria?

The Point of Sales system has undoubtedly made banking easy and promoted financial inclusion, especially in rural areas. The service was originally designed to allow people to send and receive remittances within the country. But adoption and usage have spread beyond those original intentions, so people can now deposit and withdraw cash, register for BVN and open bank accounts at POS centres around the country.

How profitable is the POS business?

Experts reports show that a POS service point in a busy location makes an average profit of about N5000 daily.

When was POS introduced in the Nigerian banking system?

Although the invention of the POS system dates back to the 1800s, the Central Bank of Nigeria officially introduced it to the Nigerian banking sector in 2012 as part of the apex bank’s steps towards the much-touted cashless policy in the country.

Why did the CBN introduce a cashless policy in Nigeria?

One of the reasons cited by the CBN for introducing the new policy was that it would reduce the amount of physical cash in circulation, encourage more electronic-based transactions, and increase financial inclusion.

How is the CBN enforcing its cashless policy?

The CBN in an attempt to enforce the cashless policy specified punitive charges for individuals and corporate organizations that withdraw or lodge cash above the prescribed limits of N500, 000, per day and N3m for corporate accounts.

 

Shout out to cardsystems for that head image

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2 Comments

  1. This is a good topic and its has helped enlighten me so far thanks

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