Rising cases of electronic frauds, especially Automated Teller Machine-related scams, which have made Deposit Money Banks to lose billions of naira in recent times, have forced some of the lenders to prevent their payments cards from working in the United States of America, China and a few other countries.
It was gathered that the banks took the action following the huge amount they were spending in refunding customers who had lost money in payment cards related frauds.
“A number of banks decided to deactivate their payment cards from working in the USA, China and a few other countries that are still using magnetic stripe instead of the chip and PIN,” a top bank official familiar with the situation told our correspondent on Sunday.
“The decision was caused by the rising cases of fraudsters using cloned Nigerian ATM cards to make transactions at shopping in malls in the USA and China,” he added.
Apart from fraudsters using cloned payment cards issued by Nigerian banks to buy goods abroad, it was gathered that some of the payment cards had also been used to withdraw money from ATMs in foreign countries, especially in the US.
“This scam has been on for a very long time but it has reduced drastically since some banks decided to deactivate their payment cards from working overseas. However, what we have done as a bank is to tell our customers to inform us whenever they are travelling overseas so that we can activate their payment cards to work overseas. Once they tell us, we will activate it,” the banker explained.
According to the Central Bank of Nigeria statistics, banks lost N40bn to electronic frauds in 2013 alone.
However, findings by our correspondent showed that prior to the recent deactivation of the payment cards from working overseas, refunds made by banks to customers who were victims of cards frauds were in excess of N1bn.
One of the ‘Systemically Important Banks’ made refunds in excess of N200m in 2014, a top official said.
The PUNCH had in August last year exclusively reported that electronic fraudsters had been duplicating payment cards belonging to Nigerian bank customers and using them to buy items worth millions of dollars from shopping malls in the US.
It was gathered that the development had made the Nigerian banks and their customers to be losing millions of naira to the e-fraud.
The development had forced top executives of the banks and senior officials of the CBN to meet with the Economic and Financial Crimes Commission sometime last year.
Following the meeting, the EFCC was said to have commenced the process of collaborating with sister agencies in the US to effect the arrest of some of the fraudsters.
When contacted on Sunday about the deactivation of payment cards from working overseas, the Chairman, Committee of E-Banking Industry Heads, Mr. Tunde Kuponiyi, said banks had deployed a number of technologies to stem the tide of electronic frauds, including payment card related frauds.
He said millions of naira had been spent to deploy the electronic payment technologies, adding that the rate of e-frauds had gone down drastically in recent times following such moves.
He, however, was silent on whether some banks had deactivated their payments cards from working overseas unless informed by their customers travelling abroad.
The Chairman, Chartered Institute of Bankers of Nigeria, Lagos State Branch, Mr. Abolade Agbola, had emphasised the need for the CBN to fast-track the biometric registration of bank customers as a way of checking electronic fraud.
He said, “There is no justification for it (deactivation of ATM cards); and what that will do is that people will limit the amount of money or specify the kind of account they expose to online transactions.
“I think the CBN is also insisting that when this issue has happened, it must be resolved speedily so that confidence will not be lost. And that is one of the reasons why banks will keep on changing their software to make it safer; and, of course, that is also one of the reasons the issue of national identity card needs to be fast-tracked, which is at the government level.”
The President, Institute of Chartered Accountants of Nigeria, Mr. Chidi Ajaegbu, said the CBN had achieved a lot in the cashless drive but there was a need to continue to build public confidence in the electronic means of payments.
“If we are striving to become a 24-hour economy, then we must have the necessary controls in place to build people’s confidence in the cashless policy we are driving. And part of this is making sure that people believe that their liquid assets and details are secure. It is the key to the 24-hour economy we are driving towards,” he said.
The General Manager, Visa West Africa, Mr. Ade Ashaye, noted that the type of card used in the US might be prone to fraud.
He, however, said the development could be mitigated by new technologies.