House Panel Sounds Alarm Over Soaring POS Fraud And Rogue Crypto Operators

According to Ireporter Online, the House of Representatives’ ad-hoc committee on the Economic, Regulatory and Security Implications of Cryptocurrency Adoption and POS Operations has raised serious concerns over escalating fraud in Nigeria’s Point-of-Sale (POS) sector and unlicensed cryptocurrency activities. The committee chairman, Hon. Olufemi Bamisile, highlighted the increasing risks during a session with fintech leaders, POS operators, and regulatory and security agencies.

Bamisile noted that unprofiled agents, cloned POS terminals, anonymous transactions, and weak Know-Your-Customer (KYC) procedures are placing Nigerians at heightened risk of financial losses, cybercrime, and security breaches. He also warned that some POS operators are now engaging in cryptocurrency services without regulatory approval, creating threats to consumer protection and national security.

The committee has been informed about the registration of fictitious companies at the Corporate Affairs Commission (CAC), which allegedly use citizens’ National Identification Numbers (NIN) and Bank Verification Numbers (BVN) to launder funds through unverified POS channels. Bamisile further expressed concern over major fintech companies storing sensitive customer data on foreign servers, noting that this limits regulators’ ability to monitor transactions and enforce compliance, with serious implications for national security.

Despite these challenges, Bamisile emphasized that the committee’s engagement is constructive, aiming to harmonize regulations, strengthen security safeguards, improve consumer protection, and foster responsible innovation and investment. The committee will continue consultations before submitting final recommendations to the House.

The National President of the Association of Digital Payment and POS Operators of Nigeria (ADPPON), Mr. Paul Okafor, described the POS ecosystem as reaching a “critical emergency point,” with fraud now posing a direct threat to national security. Okafor cited that while POS operators grew from 50,000 in 2017 to over 2.3 million today, regulatory capacity has barely expanded.

Data from the Nigeria Inter-Bank Settlement System (NIBSS) shows that fraud losses across POS and digital payment channels rose from N17.67 billion in 2023 to N52.26 billion in 2024. Okafor added that POS channels accounted for over a quarter of reported fraud, with many cases unreported due to discouragement among victims. He also revealed that POS operators are increasingly used for ransom and illicit fund transfers, warning that nearly 40 percent of kidnap ransom payments pass through informal POS channels in some states.

Okafor urged urgent reforms, including mandatory cybercrime clearance certificates for all POS operators, compulsory CAC registration for traceability, and enforced membership in recognized trade associations. Drawing on international best practices, he noted that countries like India, Brazil, Kenya, South Africa, and the United Kingdom employ strict vetting and recertification to reduce fraud. He emphasized that Nigeria cannot afford lax controls, given that POS services now permeate every sector of the economy.