December 23, 2011

ATM fraud drops by 99% as CBN sets up E-Fraud Forum

By Babajide Komolafe

The introduction of chip and pin payment cards has lead to 99 per cent drop in ATM card fraud, says Central Bank of Nigeria (CBN)

Deputy Governor, Operations, CBN, Mr. Tunde Lemo disclosed this in Lagos at a seminar organised by the Committee of E-Banking Industry Heads (CeBIH).

He said, “The ATM Fraud Prevention Group convened earlier this year, was successfully able to drive down ATM fraud incidences by 99%, also enabled by the introduction of the more secure chip & Pin cards versus the magstripe cards that were formerly used in the industry.   The success of this group demonstrates practically what can be achieved as an industry when we work together to address issues, for the good of the system and the public at large.”

Lemo also disclosed that to consolidate on this, the apex bank,  ”has recently set up an industry wide Nigeria E-Fraud Forum (NEFF), which will serve as an official body to represent the industry on fraud related issues, while enabling a forum for payment stakeholders to collaboratively share data on fraud attempts and proactively tackle these issues, with the objective of minimizing fraud attempts and limiting losses.”

This initiative he said was part of measures taken to ensure successful implementation of the cashless Nigeria policy, which will commence with a pilot scheme in Lagos on January 1st.

He said while the introduction 2012 of the chip and pin cards, and setting up of the NEFF were aimed at addressing concerns about security of electronic payment transactions, the apex bank is also working to address the challenge posed by infrastructure needed to drive electronic payment.

He said the CBN has, “progressed in forging effective partnership with telecommunication companies with the cooperation of the NCC while ensuring that structural impediments such as un-interoperability of payments networks of stakeholders are removed.”

In order to encourage Nigerians to use electronic payment channels instead of cash to pay for goods and services, the CBN introduced limits for free cash transactions across the counter in banks, and imposed charges for cash transactions above the limit. Though the policy is to commence June next year, a pilot scheme that would cover Lagos state is scheduled to commence January 2012.

The CeBIH seminar was designed to evaluate level of preparedness for the commencement of the pilot scheme in Lagos.

Also speaking at the seminar, Acting Managing Director, Chief Executive, Nigeria Interbank Settlement System (NIBSS), Mr Niyi Ajao noted that the entire necessary electronic payment infrastructure is already on ground but the readiness of the banking public is uncertain.

“Are people prepared for the scheme, to embrace the electronic payment channels provided by the industry? Are we sure there is enough awareness about the scheme?” He said there is need for banks and other electronic payment service providers to embark of massive publicity campaign to educate the people about the availability and benefits of electronic payment channels.