As electronic payment (e-payment) fraud continues to be on the increase in Nigeria as the years roll by, experts have projected that with intensified collaborative efforts of financial sector operators, regulatory authorities and other key stakeholders the scourge of e-frauds in the nation's financial system will continue to be mitigated as the results of such initiatives continue to be felt in the industry in the years ahead. UDO ONYEKA reports

Payment intermediation and payment systems are the economic support mechanism used to transfer funds from individuals, firms and institutions.

The payment system plays a very crucial role in any economy, being the channel through which financial resources flow from one segment of the economy to the other, according financial experts. The Central Bank of Nigeria, CBN, the apex financial services sector regulator has been at the forefront in the transformation of the payments system in the country. This has been demonstrated in various ways including the development of the Payments System Vision, PSV, 2020 document in 2007.

The PSV 2020 is aimed at providing a roadmap for efficient payments system infrastructure that would be nationally utilised and internationally recognised. Payment system may be physical or electronic and each has its own procedures and protocols but e- payment is a payment that is initiated processed and received electronically.

According to Director, Research, Nigeria Deposit of Insurance Corporation, NDIC, Dr. Jacob Afolabi, an electronic payments systems are therefore means by which monetary values exchange hands between transacting parties through automated processes and transmission over ICT networks within a defined regulatory framework.

Even though standardisation has allowed some of these systems and networks to grow to a global scale such as creditDebit cards and Automated Teller Machines, ATMs, there are still many country and product -specific systems.

Payment systems are settled domestically using clearing and Real Time Gross Settlement, RTGS, systems and internationally using swift network.

However, e- payments with all its numerous advantages has several challenges facing it. The dependent on technology to drive electronic payments and banking has also exposed banks and other financial institutions to fraudulent activities of criminals, who in some instances are more sophisticated than operators in the financial industry.

Notwithstanding efforts of financial sector regulators such as CBN, NDIC and Economic and Financial Crimes Commission, EFCC, to minimise e- fraud the country it has remained on the rise.

For instance last week the NDIC expressed concern over the high incidence of fraud and forgeries in the banking system. The Managing Director/Chief Executive Officer, Alhaji Umaru Ibrahim, who noted this in an address presented at the 2015 workshop organised by the corporation for financial journalists in Ilorin, Kwara State pointed out that Section 35 and 36 of the NDIC Act, 2006 had mandated all deposit- taking financial institutions to send returns on frauds, forgeries and other financial malpractices to the corporation on monthly basis.

According to the NDIC boss, banks are also expected to notify the corporation on any member of staff that has been dismissed or have their appointments terminated or advised to retire on grounds of financial infractions.

He diasclosed: "A total of 10,612 fraud cases in banks were reported in 2014, as against 3,786 cases in 2013, which showed an increase of 183 per cent. The amount involved in 2013 was N21.80bn as against N25.61bn in 2014.

The types and nature of frauds and forgeries were largely web-based, ATM card related, fraudulent transfer/withdrawal of deposits, among others." Ibrahim, however, said the corporation in collaboration with the CBN had embarked on various public awareness initiatives with a view to drastically reducing the percentage of Nigerians who have no access to any form of financial services from 39 per cent to 20 per cent by 2020.

"The attention of the regulatory/supervisory authorities and operators has been drawn to this onerous task of focusing our attention to massive public awareness; hence, the rationale behind bringing to the fore the issues of e-banking, capacity of micro, small and medium-scale enterprises in the mobile payments system and effective management of associated risks to mobile payment system and effective management of associated risks to this workshop", he explained.

The NDIC boss listed challenges confronting e-banking, mobile payments and deposit insurance to include inadequate and poor infrastructure arising from lack of constant power supply, poor linkage access roads to remote locations and inadequate telecoms services in most locations and high overhead cost on the part of operators relying on alternative power source to ensure effective and efficient service delivery.

Experts have charged the Deposit Money Banks, DMBs, in the country to provide lasting solution to limiting the electronic frauds in the banking system. For instance, a senior detective, Bank Fraud Section, EFCC, Mr. Ibrahim Shazali, said it was very interesting that the country has recorded a remarkable increase in the adoption of electronic transactions with volume and value accounting for 86 per cent and 82 per cent of all transactions respectively in 2014 up from a mere 6 per cent in 2013.

However, he said this should serve as a pointer to the urgency required in developing rigorous standards for the monitoring and security of electronic banking transactions in Nigeria. With N80 billionn worth of daily transactions, he said it would be a remiss for Nigerian banks and authorities not to anticipate and adequately prepare for the huge risks that accompany electronic transactions.

As banks becomes more reliant on technology to drives electronic banking, he said this also comes with sophistication of fraud, especially as banks expose sensitive information of customers online , which the hackers leverage on to carry out their evil act of defrauding unsuspecting bank customers. "Nigerian banks must not only develop attractive electronic financial products for their clients but must put in place, the highest possible security and protection from attacks.

Corporate controls, such as, internal audits, rotation of personnel, and physical & IT security procedures must be coupled with intensified fraud risk mitigation, assessment and management," he stressed. Banks, according to him, must ensure that their in-house Know Your Customer, KYC, procedures and processes are consistent across all their different platforms to ensure uniformity of information and allow for easier detection of identity duplication and theft and possible fraudulent activities by customers, saying, the Bank Verification Number, BVN, initiative by the CBN was particularly encouraging in this regard.

While advocating for the creation of a financial regulator specifically assigned to monitor electronic transactions and investigate real and possible cyber attacks as it is being done in United Kingdom, among others, he said the recently passed Cybercrime Act, 2015, is a good development as it would regulate e-commerce and prosecute offender, while ensuring that cyber crime offenders are brought to justice. He equally charged banks to be careful in the way they recruit their workforce in order to avoid insider connivance in electronic fraud, stating that, if banks are stringent in their recruitment process, this will enhance the integrity of the banking system.

Also Director, Banking & Payment System Department CBN, Dipo Fatokun, presenting a paper titled; 'Enhancing the capacity of Micro, Small & Medium Scale Enterprises, MSMEs, for job creation through Mobile a Payment System' pointed out that given the fast growing level of mobile phone subscribers which presently stood at 120 million in the country, the need to promote financial inclusion via the use of phone became of utmost important. Fatokun who was represented by Assistant Director, Banking and Payments System Department, CBN, Shola Agbola noted that the need for e- banking became necessary to bridge the gap that exists between banking services and rural dwellers who may lack other basic needs like television or radio but must have access mobile telephone.

According him, CBN saw the necessity of involving these rural dwellers into banking services using e-banking given the fact that most of these people are poor illiterates who neither have accounts with banks nor have requirements needed for opening of bank account. Giving an update on mobile money in the country, Fatokun disclosed that as at 30th of September 2015, agents enrolled into the business stood at 98,158 while total number of subscribers grew to 24.3 million.

Total volume of transactions, he said increased to 76.9 million while value of transactions equally appreciated to N815.4trn. He highlighted some of the challenges that affect the MSMEs to include in the process of job creation through mobile payment system to include epileptic power supply, poor telecommunication connectivity, lack of synergy between mobile money operators and Telcos need for enhanced customer awareness.

Corroborating Fatokun , NDIC boss noted that the success of the mobile money operators and e-banking cannot also be complete without mentioning the collaboration of all the key players, particularly the CBN, Nigeria Communication Commission, Federal Ministry of Finance, Ministry of Communication Technology, telecommunication companies and the media. According to him the NDIC's role is to protect the interest of the subscribers of MMOs through reimbursement of their claims in the event of failure of banks where their MMOs maintain their pool accounts.

"It has so far been observed that majority of the general public is still very much in the dark about the advantages of the mobile banking services, mobile payment systems and pass-through deposit insurance, which therefore calls for intensive public awareness in order to ensure the success of the mobile payment system in Nigeria", he said.

Head, Financial Inclusion Secretariat, the Central Bank of Nigeria, CBN, Mrs. Temitope Akin-Fadeyi, said rising incidences of e- fraud was a serious challenge to financial inclusion.

According to her to collaborative of efforts of the key regulators in the financial service would in no distance time reduce e- fraud to the barest minimum. She said the motive of the CBN for launching the Financial Inclusion Strategy was to reduce the percentage of adult Nigerians excluded from financial services, saying, from then till now; the number of those financially excluded has drastically reduced.

While speaking on how e-banking can support financial inclusion, she urged financial institutions to understand the customers' needs and know what products suits them, provide systems security, having multiple integrated channels, as well as provide good customers services.

She, however, said the apex bank had done a lot of sensitisation to enhance financial inclusion in the grassroots, stating that the regulatory authority had currently carried out awareness in virtually each of the local governments in the three States of the federation, promising that the campaign would continue until all local governments throughout the 36 states of the federation are touched.