Nigeria Faces Rising POS Fraud and Unlicensed Crypto Services, Lawmakers Warn
In 2024 alone, Nigeria’s Point-of-Sale (POS) and digital-payment channels reportedly lost over ₦52 billion to fraud, a sharp rise from ₦17.67 billion the previous year. Much of this surge is linked to unlicensed cryptocurrency services being offered through POS terminals.
Criminals have increasingly exploited POS agents to withdraw illicit funds, with informal POS channels reportedly handling nearly 40% of kidnap ransom payments in some states. Highlighting the urgency of the situation, Paul Okafor, President of the Association of Digital Payment and POS Operators of Nigeria (ADPPON), called the sector a “critical emergency point.” He explained that Nigeria’s POS ecosystem has ballooned from 50,000 operators in 2017 to over 2.3 million today, growth that has far outstripped regulatory oversight.
In response, the House of Representatives established an ad-hoc committee to examine the “economic, regulatory, and security implications” of POS operations and cryptocurrency adoption. Committee chairman Olufemi Bamisile revealed that consultations with stakeholders had uncovered deep gaps in Nigeria’s rapidly expanding digital finance sector, noting that vulnerabilities such as cloned terminals, anonymous transactions, unprofiled POS agents, and weak Know-Your-Customer (KYC) protocols, expose Nigerians to financial loss, cybercrime and security breaches.
Bamisile also flagged a disturbing trend of POS operators engaging in cryptocurrency-related services without regulatory approval, which according to him, raises serious red flags around consumer protection, anti-money laundering standards, terrorism-financing risks, data integrity and the misuse of instruments originally designed for basic payment services.
Fraudulent companies registered with the Corporate Affairs Commission (CAC) have reportedly used stolen National Identification Numbers (NIN) and Bank Verification Numbers (BVN) to open accounts and launder illicit funds. Offshore storage of customer data by fintech companies compounds the risk, as it limits regulators’ ability to trace suspicious transactions or conduct timely audits, posing direct national-security implications.
Okafor urged the Central Bank of Nigeria to implement immediate reforms, including mandatory police cybercrime clearance certificates for POS operators, compulsory business registration, and statutory membership in recognised trade associations. He also pointed to international examples from India, Kenya, Brazil, South Africa, and the United Kingdom, where strong oversight and continuous verification have effectively reduced fraud.
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“Our mandate is to recommend legislation that will deliver a harmonised regulatory framework, stronger safeguards, improved consumer protection and an environment where innovation can flourish responsibly,” said Bamisile.
Paul Okafor explained that attempted fraud across financial platforms had risen by 338%, with POS channels alone responsible for 26.37% of all reported cases. “More than 38,000 POS fraud cases were officially reported in one year,” he said. “Unofficially, we estimate that over 70,000 cases go unreported because victims simply give up.”
