As digital payments grow in Nigeria and the country makes progress in its financial inclusion drive, fraud incidents have also reached worrying levels. In the past year, banks and fintech have lost billions of naira to bad actors, sparking industry-wide conversations on tighter Know Your Customer (KYC) processes. In December 2023, the Central Bank mandated stricter KYC processes for banks and fintechs.

Perhaps on the strength of these efforts, fraud losses decreased to ₦3.007 billion in Q1 2024 from ₦5.47 billion in Q4 2023, according to data from the NIBSS fraud industry report released today. The decline in fraud losses was despite an increase in fraud attempts—there were 20,638 attempts in Q1 2024 and 7,423 in February alone. 

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While fraud occurs across several channels, Mobile, POS, and Web are the most popular choices for bad actors. Channels like ATM and Internet banking saw only a handful of attempts. 

It is crucial to state that the numbers reflected in the NIBSS report are subject to how diligently banks and financial institutions report their fraud data. 

“In Q1 2024, 27 deposit money banks, 65 microfinance banks, 20 payment service providers, 5 mobile money operators, 2 payment service banks and 3 EFT Switches and 15 Other Financial Instituitons complied with this directive,” said the NIBSS report.

In a sign that customers need to be more careful in sharing their personal information, social engineering was the most popular fraud technique in Q1 (10,007 attempts) followed by phone and card theft (4,008 attempts). 

Nigeria’s commercial capital, Lagos, is where most of the incidents are concentrated, accounting for more than 60% of all the attempts in Q1 and also a significant amount of the actual losses suffered.