The House of Representatives’ Ad-hoc Committee probing the regulatory, economic and security risks linked to cryptocurrency use and Point-of-Sale (POS) operations has raised fresh alarm over what it described as a rapidly escalating fraud crisis threatening Nigeria’s financial stability.
At its resumed investigative hearing on Monday, the Committee Chairman, Hon Olufemi Bamisile, said interactions with key stakeholders had revealed “deep gaps” across the digital finance sector, leaving citizens vulnerable to increasing financial and security dangers.
Bamisile revealed that the Committee had received multiple reports involving unprofiled POS agents, cloned terminals, anonymous transactions and poor Know-Your-Customer (KYC) compliance—issues he said were driving a nationwide surge in POS fraud.
“We are concerned about the rising wave of fraud connected with POS operations,” he said. “Unprofiled agents, cloned terminals and weak KYC practices continue to expose citizens to avoidable threats.”
He further raised concerns about the growing infiltration of unlicensed cryptocurrency activities into POS services. According to him, some operators now provide crypto transactions without regulatory approval, creating “serious red flags” linked to money laundering, terrorism financing, data compromise and misuse of platforms originally designed for simple payment services.
Bamisile added that the Committee had been notified of schemes where fake companies were registered with the Corporate Affairs Commission (CAC) using stolen National Identification Numbers (NIN) and Bank Verification Numbers (BVN) to launder funds through unverified POS channels. He also warned that the storage of sensitive financial data on foreign servers by some fintech firms undermines regulatory oversight, making it difficult to trace suspicious transactions, enforce compliance or safeguard national security.
He, however, reassured industry players that the investigation was not intended to suppress innovation or growth. The sector itself, he noted, was grappling with fragmented regulations, overlapping mandates and inconsistent policies. The Committee, he said, aims to propose reforms that strengthen security, enhance consumer protection, harmonise laws and enable responsible innovation.
The Committee will continue engaging regulators, security agencies and fintech operators before submitting its final report to the House.
At the hearing, the National President of the Association of Digital Payment and POS Operators of Nigeria (ADPPON), Paul Okafor, said Nigeria’s POS ecosystem had reached a “critical emergency point,” with fraud rising to levels that now pose a national security danger.
He observed that the explosive growth of the sector—from about 50,000 operators in 2017 to more than 2.3 million today—had overwhelmed regulators, whose operational capacity expanded by “less than 10 percent” in the same period.
“This imbalance is what produced the crisis we are facing today. The regulators, especially the CBN, are not incompetent; they are simply overwhelmed by the speed and scale of growth,” he said.
Citing Nigeria Inter-Bank Settlement System (NIBSS) statistics, Okafor reported that POS, digital-payment and banking channels lost N17.67 billion to fraud in 2023, affecting over 80,000 customers.
He said the crisis worsened significantly in 2024, with losses rising to N52.26 billion—an increase of N34.59 billion in just one year.
Attempted fraud across financial platforms jumped by 338 percent, he noted, while POS systems accounted for 26.37 percent of all recorded incidents. Industry tracker FITC also reported a 95 percent rise in POS-related fraud in Q4 2024.
“More than 38,000 POS fraud cases were officially reported in one year,” he said, adding that an estimated 70,000 additional cases may have gone unreported.
Okafor warned that criminals were increasingly using POS agents as cash-out points for illicit funds, including kidnap ransom payments.
“In some states, nearly 40 percent of kidnap ransom payments go through informal POS cash-out channels. This is no longer a fintech issue; it is a national-security threat,” he stressed.
He urged the Committee to compel the Central Bank of Nigeria to implement urgent systemic reforms, cautioning that failure to act would undermine financial inclusion, erode public trust and destabilise the country’s payment ecosystem.
To restore order, he recommended three immediate actions: mandatory Police–NCCC Cybercrime Clearance Certificates for all POS operators; compulsory CAC registration for every POS business; and mandatory membership of recognised trade associations to enforce discipline, training and self-regulation.
He said these measures align with global best practices in countries such as India, Kenya, Brazil, South Africa and the United Kingdom, which enforce strict oversight, police vetting and continuous certification.
“No country leaves its financial system open to millions of operators or allows foreign dominance without strict controls. Nigeria must not be the exception,” he said.
Okafor added that POS services have now penetrated nearly every household, market and community in the country.
