PoS scams on the rise as Nigerians lose millions to fraudulent money transfers

Although Point of Sale (PoS) machines have brought significant convenience to financial transactions in Nigeria, numerous individuals in the country have fallen prey to fraudulent activities.

The unscrupulous actions of scammers are dissuading many Nigerians from embracing this technology for their business transactions.

This development follows Legit.ng's earlier report that Nigerian banks lost a massive N9.5 billion to electronic fraud from January to August 2023.

Many Nigerians favoured it primarily because it allows consumers to withdraw money with minimal commissions, especially when the closest Automated Teller Machines (ATMs) or banks are inconveniently distant.

PoS transactions spared bank customers from enduring extended queues and the intermittent network issues frequently encountered at ATM locations.

This convenience motivated numerous Nigerians to adopt PoS as an alternative method for depositing or receiving money in any bank account nationwide.

They also facilitate various banking transactions, such as paying utility bills for electricity and water and purchasing airtime and data, among other services.

PoS fraudsters on the prowl

Despite the policy's positive impact on the populace and the economy, there is a growing sense of unease among Nigerians when it comes to conducting business transactions through PoS machines.

According to a report by The Guardian, unscrupulous PoS operators have now resorted to using these machines to defraud unsuspecting customers, resulting in many more falling victim to such fraudulent activities.

A new facet of the fraud associated with PoS machines involves incorporating mobility into illicit business practices.

Instead of operating from stationary kiosks, some fraudulent PoS operators have adopted an itinerant approach, moving from one location to another in open markets, motor parks, and other areas with large crowds, actively advertising their services.

PoS operators are victims, too

Point of Sale (PoS) operators are not immune to fraudulent activities and fall victim to deceptive customers.

Similar to how customers are scammed, PoS operators are also encountering scams from their customers.

One PoS operator shared an incident where they received a transfer from a customer, only to realize later that it was a fraudulent transaction after having already disbursed funds to the customer.

The negative accounts of such experiences with PoS customers have led to a sense of caution among some Nigerians, making them hesitant to patronize PoS agents.

Beyond physical scams, there is also a risk posed by hackers who exploit weak and unsecured networks.

These cybercriminals find it relatively easy to infiltrate systems and steal valuable customer information, including credit card numbers, National Identification Numbers (NIN), Bank Verification Numbers, and other sensitive business details.

PoS, gift and curse

In the face of elevated unemployment rates, limited financial inclusion, and the challenges linked to conventional banking services, the Point of Sale (PoS) model is undeniably accomplishing its goals.

It effectively generates employment opportunities for the youth, facilitates access to petty cash for small-scale business transactions, and contributes to alleviating congestion in traditional banking halls.

Numerous individuals have expressed concerns that if the current trajectory persists without intervention, it may erode people's trust in digital financial transactions.

This is particularly true for those who primarily view the PoS system as an alternative to the traditional banking system.

It has also been observed that such criminal activities can lead people to abandon the nation's cashless policy; hence, the government needs to establish a robust security network to combat this menace effectively.