A House of Representatives Ad-hoc Committee has raised an alarm over Nigeria's digital payment vulnerabilities, noting that they expose Nigerians to cybercrime and security breaches.

This concern is expressed after the committee’s investigation into economic, regulatory and security implications of cryptocurrency adoption and Point of Sale operations.

The Chairperson of the committee, Olufemi Bamisile, said the committee uncovered loopholes in the financial system, Premium Times reported.

He added that the system is fragile and threatened by fraud and the infiltration of unlicensed crypto-related activities.

The committee reported that several reports indicate that unregistered agents, cloned payment terminals, anonymous transactions and poor Know-Your-Customer (KYC) compliance pose a threat to the growing digital financial sector.

The chairperson noted that reports of POS operators offering cryptocurrency and other digital-asset services without authorisation call for concerns, as such transactions may be related to terrorism financing and the use of platforms for other criminal activities.

The committee findings also include the registration of fictitious companies at the Corporate Affairs Commission (CAC) using the NIN and BVN of unsuspecting citizens; and the storage of sensitive customer data on foreign servers by some fintech companies.

Bamisile said: “This highlights weak verification mechanisms and underscores the urgent need for a more coordinated oversight framework.” He further highlighted the danger of storing personal data of customers in offshore data storage, adding that it undermines national security efforts.

POS at a “critical emergency point”

Addressing the lawmakers, the National President of the Association of Digital Payment and POS Operators of Nigeria (ADPPON), Paul Okafor, stated that the POS ecosystem has outpaced regulatory capacity. Okafor reportedly pointed to the explosive growth of the sector and limited regulatory framework as enabling the “crisis we are facing today,” Premium Times reported.

He further said data from the Nigeria Inter-Bank Settlement System (NIBSS) has shown that a loss of N17.67bn was recorded in financial-channel fraud in 2023. According to him, 80,000 customers were affected, and the losses jumped to N52.26bn in 2024.

Legit.ng reported that the Central Bank of Nigeria has been taking stricter measures regarding POS operators, due to fraudulent activities linked to the fintech business. One of such measures is a recent directive limiting POS transactions to N100,000 per customer.

The order given in December 2024 also included a cash-out limit of N1.2 million daily, while customers face a maximum cash withdrawal limit of N500,000 weekly.

Many PoS operators and Nigerians protested the CBN’s directive, which the apex bank said was necessary to boost the cashless policy in Nigeria.