POS fraud surge in Nigeria raises national security risks, with lawmakers calling for urgent reforms to protect consumers and stabilise fintech operations

The House of Representatives has raised alarm over a POS fraud surge across Nigeria, highlighting growing risks to financial security and national stability.

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Speaking at a resumed investigative hearing with fintech stakeholders at the National Assembly Complex on Monday, Hon. Olufemi Bamisile, Chairman of the House Ad-hoc Committee on the Economic, Regulatory and Security Implications of Cryptocurrency Adoption and POS Operations, warned that unlicensed crypto activities, cloned terminals, and weak Know-Your-Customer practices are leaving citizens vulnerable to cybercrime and financial loss.

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

He added that some POS operators are allegedly engaging in crypto services without proper licensing, raising serious red flags around anti-money laundering, terrorism financing, and data integrity.

The Committee has also received reports of phony companies registered with the Corporate Affairs Commission using unsuspecting citizens’ NIN and BVN to launder funds through unverified POS channels.

Bamisile warned that storing sensitive customer data on foreign servers undermines the ability of regulators and security agencies to trace suspicious transactions, creating national security vulnerabilities.

Despite the concerns, the Committee assured stakeholders that its investigation is not a witch-hunt, but a step toward implementing a harmonised regulatory framework, stronger security safeguards, and improved consumer protection.

Paul Okafor, National President of the Association of Digital Payment and POS Operators of Nigeria (ADPPON), described the current situation as a critical emergency, citing that fraud losses rose from N17.67bn in 2023 to N52.26bn in 2024, affecting over 80,000 customers.

He said unreported cases could exceed 70,000, warning that informal POS channels are increasingly exploited for kidnap ransom payments.

Okafor urged immediate reforms, including mandatory police and NCCC cybercrime clearance for all POS operators, CAC registration for POS businesses, and compulsory membership of recognised trade associations to enforce training and discipline.

Citing examples from India, Kenya, Brazil, South Africa, and the UK, he noted that rigorous oversight and verification significantly reduce POS fraud.

“In Brazil, agent fraud dropped by over 60 per cent after police vetting was mandated. India maintains low fraud rates with over five million agents through strict verification,” Okafor emphasised. “Nigeria must not be the exception.”

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The House Committee plans to propose measures to stabilise the POS ecosystem, protect consumers, and safeguard Nigeria’s financial system.