By Ahmed Hassan Ahmed
The Chairman of the House of Representatives Ad-hoc Committee on the Economic, Regulatory and Security Implications of Cryptocurrency Adoption and POS Operations in Nigeria, Hon Olufemi Bamisile, has expressed deep concerns over the increasing fraud linked to Point-of-Sale (POS) operations and the infiltration of unlicensed crypto-related activities in the sector.
Speaking during the Committee’s resumed investigative session with fintech leaders, POS operators, and representatives of regulatory and security agencies, Bamisile said recent engagements with stakeholders had exposed deep gaps within the country’s fast-growing digital finance ecosystem.
According to him, the Committee has received multiple reports of unprofiled agents, cloned terminals, anonymous transactions and weak Know-Your-Customer (KYC) practices, which he warned are putting Nigerians at serious risk of financial loss, cybercrime and security breaches.
“We are concerned about the growing rise in fraud associated with POS operations,” Bamisile said. “Unprofiled agents, cloned terminals, and weak KYC practices continue to expose citizens to preventable dangers.”
The lawmaker also raised what he described as a disturbing trend of POS operators venturing into digital-asset and cryptocurrency services without regulatory approval, stressing that such activities pose major threats to consumer protection and national security.
“There are allegations and credible information that some POS operators now engage in crypto-related services for which they are not licensed. This raises serious red flags around anti–money laundering, terrorism financing, data integrity and the misuse of instruments originally designed for basic payment services,” he said.
Bamisile further disclosed that the Committee had been alerted to the registration of phoney companies at the Corporate Affairs Commission (CAC), some of which allegedly use the National Identification Number (NIN) and Bank Verification Number (BVN) of unsuspecting citizens to open accounts and launder illicit funds through unverified POS channels.
“This highlights weak verification mechanisms and underscores the urgent need for a coordinated oversight framework,” he said.
Another issue the Committee intends to probe is the storage of sensitive customer data on foreign servers by major fintech companies operating in Nigeria. Bamisile warned that keeping data outside the country’s jurisdiction undermines the ability of regulators and security agencies to conduct timely audits, trace suspicious transactions or enforce compliance orders.
“This has direct national-security implications, especially in a sector connected to terrorism financing risks and cyber-enabled crimes,” he said.
Despite the concerns raised, Bamisile assured operators that the engagement was not adversarial. He acknowledged that the industry also faces challenges such as fragmented regulation, overlapping mandates by government agencies, policy inconsistencies and multiple compliance requirements.
“Our mandate is clear: to recommend legislation that will deliver a harmonised regulatory framework, stronger security safeguards, improved consumer protection, and an environment where innovation and investment can flourish responsibly,” he said.
The Committee is expected to continue its interface with regulatory institutions, fintech actors and security agencies in the coming days before submitting its final recommendations to the House.
The National President of the Association of Digital Payment and POS Operators of Nigeria (ADPPON), Mr. Paul Okafor, warned that the Point-of-Sale (POS) ecosystem in Nigeria has reached a critical emergency point, with fraud escalating to levels that now pose a direct threat to national security.
Okafor said the rapid expansion of the industry has overwhelmed regulators, leaving significant gaps that criminals are exploiting.
He told lawmakers that while POS operators have grown from 50,000 in 2017 to over 2.3 million today, regulatory capacity has expanded by “less than 10 percent.”
“This imbalance is what has produced the crisis we are facing today,” he said. “The regulators, especially the CBN, are not incompetent; they are overwhelmed by the sheer speed and scale of growth.”
Quoting data from the Nigeria Inter-Bank Settlement System (NIBSS), Okafor said POS, banking and digital-payment channels suffered N17.67 billion in fraud losses in 2023, affecting more than 80,000 customers. But the situation worsened drastically in 2024, with losses rising to N52.26 billion an increase of N34.59 billion in just one year.
He added that attempted fraud across financial channels surged by 338 percent, while POS channels alone accounted for 26.37 percent of all cases recorded.
FITC, another industry monitor, also reported a 95 percent spike in POS fraud in the fourth quarter of 2024.
“More than 38,000 POS fraud cases were officially reported in one year,” Okafor said. “Unofficially, we estimate that over 70,000 cases go unreported because victims simply give up.”
He also disclosed that criminals are increasingly using POS operators as cash-out points for ransom and illicit funds.
“In some states, security agencies report that nearly 40 percent of kidnap ransom payments pass through informal POS cash-out channels. This is no longer a fintech issue; this is a national security threat,” he warned.
Okafor urged the Committee to issue a clear directive compelling the Central Bank of Nigeria (CBN) to introduce urgent reforms to rescue the system.
“If we fail to act, fraud will escalate, kidnappers will continue to exploit the system, Nigerians will lose more money, financial inclusion will collapse, and trust in the financial system will be destroyed. And when trust dies, the financial system dies,” he said.
To restore order and rebuild confidence, Okafor outlined three key measures ADPPON wants implemented without delay which are mandatory Nigeria Police Force, NCCC Cybercrime Clearance Certificate (CCC) for all POS operators; mandatory CAC registration for every POS business to ensure traceability; and mandatory membership of recognised trade associations to enforce discipline, training and self-regulation.
“These are practical, lawful solutions aligned with existing laws and international standards. They can be implemented without creating new legislation,” he told lawmakers.
Okafor also referenced global best practices, noting that India, Kenya, Brazil, South Africa and the United Kingdom enforce strict oversight to safeguard their POS ecosystems.
He said these countries require mandatory police background checks, compulsory business registration, and continuous recertification — measures that have significantly reduced fraud.
“In Brazil, agent fraud dropped by over 60 percent after the government mandated police vetting. India, with over five million agents, maintains low fraud rates because verification is non-negotiable,” he said.
“No country leaves its financial system open to millions of operators or puts it in the hands of foreigners without strict controls. Nigeria must not be the exception.”
Okafor told the lawmakers that the stakes are extremely high, noting that POS services now touch every household, market, local government and business sector in the country.
“You are the custodians of Nigeria’s financial future,” he said. “If this Committee acts decisively, Nigeria will be safer. If it hesitates, criminals will continue to win.”
