Feature/OPED

Shifting Consumer Habits Demand Fresh Focus to Fight Fraud

Published

4 years ago

12/08/2020

By Aribidesi Lawal

Nearly every part of daily life has changed as the world continues to fight back against COVID-19. Most observers agree that the increased focus on digital commerce by consumers and merchants will likely remain even after a vaccine is found and the economy rebounds.

As the pandemic and its economic impact extend into 2021 and beyond, these new habits will likely crystalize. It is important for merchants and financial institutions to adapt now to support consumer behaviour through safe, reliable digital commerce.

A shift to online channels by consumers and fraudsters

Globally, consumers are shopping more online. Just look at the numbers.

In Nigeria, more consumers turned to online shopping for the first time with 42% of shoppers starting to purchase food via eCommerce platforms.
In South Africa, in-store physical activity greatly dwindled, with 63% of consumers visiting physical grocery stores less often.
In Kenya, consumers’ preference for digital solutions is fast increasing as customers turned online for shopping. 43% of consumers started purchasing from pharmacies online
In the U.S., Visa credentials active in spending on eCommerce channels, excluding travel, were over 12% higher in June than in January. Moreover, when you examine the active credentials who tend to be more significantly engaged in eCommerce, the spend per active credential increased by over 25%.
In the U.K., active eCommerce credentials increased by 16% while spend per active credential increased by 3%.

Where consumers go, fraudsters follow and Visa’s Payment Fraud Disruption (PFD) team has seen a similar shift in fraudulent activities/fraud attempts from in-store to online.

Between March and April 2020, there was a rise in fraudsters establishing short-term “COVID”-named merchants and using these fraudulent merchants to perform account testing and enumeration. This is where fraudsters use merchants or financial institutions to guess account numbers, expiration dates and CVV2/security codes through automated testing. This activity is often marked by high volumes of low-dollar declines.

Our Visa team also saw an increase in e-commerce skimming attacks, where fraudsters inject malicious JavaScript code into the websites of merchants and service providers to digitally harvest payment information such as billing address, account number, expiration date, and CVV2 from the checkout forms on e-commerce pages. In April 2020 alone, PFD identified 90 merchant websites compromised by multiple variants of e-commerce skimmers.

Fortunately, fraud prevention capabilities such as Visa Account Attack Intelligence, which prevents account testing, and Visa eCommerce Threat Disruption, which prevents online skimming, are free of charge and are among the many fraud prevention layers and security benefits available to Visa clients.

Visa, financial institutions, and payment providers work hard to keep consumers’ payments safe – using multiple layers of security to prevent fraud, protect data, and help them get their money back if someone uses their card without permission. Yet, fraudsters are counting on consumers to be distracted and let their guard down, so they can trick them into handing over their personal or financial information.

This is why we believe consumer education is key in the fight against fraud and we have been helping consumers understand how to spot fraudulent activity and how to protect their sensitive information, particularly now, when most of our payments have shifted to digital.

Here are three simple steps every consumer can follow to stay safe when shopping online:

Pay securely online – When paying online, use Visa Checkout that offers an extra layer of protection and always check the URL to ensure it begins with “https://”. The “s” at the end confirms a secure connection.
Pay securely in-app – Update your passwords with a strong password unique to each account or better yet, switch to fingerprint or facial recognition for account login and/or payments if it’s an option.
Beware of phishing scams – Be careful of unsolicited and suspicious emails, SMS or phone calls. They may try to steal personal information like your account number, username and password. If in doubt, do not click on any links or download files.

Additionally, we implement a rule-based authentication service called Visa Cardholder Authentication Service (VCAS) that combines risk intelligence and targeted rules strategy to help reduce customer friction as well as provide seamless payment experiences.

The need for contactless payment acceptance in Nigeria

While online commerce has increased, in-store purchases have not gone away. Essential workers still have to go into the office and re-fuel for their commute and some goods simply cannot be purchased online and delivered to consumers. In these situations, embracing contactless card payments can offer peace of mind. Visa data shows that consumers are increasingly embracing contactless across the world, and as Main Streets and High Streets reopen, consumers are asking for more touchless options to pay.

Touchless, or contactless payments, where one can tap to pay with a card or smart phone, enables a safe and secure experience without the need for consumers to touch the checkout terminal and early indications show usage is high among grocery stores and pharmacies around the world. A few other trends include:

Nearly 50 countries improved tap to pay penetration by more than 5% and over 10 countries increase by 10% or more from fiscal year Q2 to Q3.
Visa helped more than 55 countries increase the tap to pay limits, reducing the share of transactions that require consumer contact by more than 40% in several of those countries.
In the U.S., more than 80M contactless Visa payment cards were added in the first 6 months of the calendar year as financial institutions accelerated their issuance schedules.

Despite the increase in penetration and card issuance, the fraud rate for contactless payments is significantly lower than the overall card-present fraud rate, which illustrates the security of tapping to pay.

Although there may be some regression back to the norm after the pandemic, it is not a leap to think some habits will remain. The shift to buying online is here to stay. For merchants and financial institutions, adapting to new consumer habits not only means meeting customer preference, but it is also an investment in the future of digital payments. It is time for Nigeria to embrace the convenience and security of tapping to pay in-store.

Aribidesi Lawal is the Risk Manager at Visa West Africa

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Feature/OPED

The Future of Payments: Key Trends to Watch in 2025

Published

4 days ago

09/12/2024

Business Post Contributor

By Luke Kyohere

The global payments landscape is undergoing a rapid transformation. New technologies coupled with the rising demand for seamless, secure, and efficient transactions has spurred on an exciting new era of innovation and growth. With 2025 fast approaching, here are important trends that will shape the future of payments:

1. The rise of real-time payments

Until recently, real-time payments have been used in Africa for cross-border mobile money payments, but less so for traditional payments. We are seeing companies like Mastercard investing in this area, as well as central banks in Africa putting focus on this.

2. Cashless payments will increase

In 2025, we will see the continued acceleration of cashless payments across Africa. B2B payments in particular will also increase. Digital payments began between individuals but are now becoming commonplace for larger corporate transactions.

3. Digital currency will hit mainstream

In the cryptocurrency space, we will see an increase in the use of stablecoins like United States Digital Currency (USDC) and Tether (USDT) which are linked to US dollars. These will come to replace traditional cryptocurrencies as their price point is more stable. This year, many countries will begin preparing for Central Bank Digital Currencies (CBDCs), government-backed digital currencies which use blockchain.

The increased uptake of digital currencies reflects the maturity of distributed ledger technology and improved API availability.

4. Increased government oversight

As adoption of digital currencies will increase, governments will also put more focus into monitoring these flows. In particular, this will centre on companies and banks rather than individuals. The goal of this will be to control and occasionally curb runaway foreign exchange (FX) rates.

5. Business leaders buy into AI technology

In 2025, we will see many business leaders buying into AI through respected providers relying on well-researched platforms and huge data sets. Most companies don’t have the budget to invest in their own research and development in AI, so many are now opting to ‘buy’ into the technology rather than ‘build’ it themselves. Moreover, many businesses are concerned about the risks associated with data ownership and accuracy so buying software is another way to avoid this risk.

6. Continued AI Adoption in Payments

In payments, the proliferation of AI will continue to improve user experience and increase security. To detect fraud, AI is used to track patterns and payment flows in real-time. If unusual activity is detected, the technology can be used to flag or even block payments which may be fraudulent.

When it comes to user experience, we will also see AI being used to improve the interface design of payment platforms. The technology will also increasingly be used for translation for international payment platforms.

7. Rise of Super Apps

To get more from their platforms, mobile network operators are building comprehensive service platforms, integrating multiple payment experiences into a single app. This reflects the shift of many users moving from text-based services to mobile apps. Rather than offering a single service, super apps are packing many other services into a single app. For example, apps which may have previously been used primarily for lending, now have options for saving and paying bills.

8. Business strategy shift

Recent major technological changes will force business leaders to focus on much shorter prediction and reaction cycles. Because the rate of change has been unprecedented in the past year, this will force decision-makers to adapt quickly, be decisive and nimble.

As the payments space evolves, businesses, banks, and governments must continually embrace innovation, collaboration, and prioritise customer needs. These efforts build a more inclusive, secure, and efficient payment system that supports local to global economic growth – enabling true financial inclusion across borders.

Luke Kyohere is the Group Chief Product and Innovation Officer at Onafriq

Feature/OPED

Ghana’s Democratic Triumph: A Call to Action for Nigeria’s 2027 Elections

Published

5 days ago

09/12/2024

Business Post Contributor

In a heartfelt statement released today, the Conference of Nigeria Political Parties (CNPP) has extended its warmest congratulations to Ghana’s President-Elect, emphasizing the importance of learning from Ghana’s recent electoral success as Nigeria gears up for its 2027 general elections.

In a statement signed by its Deputy National Publicity Secretary, Comrade James Ezema, the CNPP highlighted the need for Nigeria to reclaim its status as a leader in democratic governance in Africa.

“The recent victory of Ghana’s President-Elect is a testament to the maturity and resilience of Ghana’s democracy,” the CNPP stated. “As we celebrate this achievement, we must reflect on the lessons that Nigeria can learn from our West African neighbour.”

The CNPP’s message underscored the significance of free, fair, and credible elections, a standard that Ghana has set and one that Nigeria has previously achieved under former President Goodluck Jonathan in 2015. “It is high time for Nigeria to reclaim its position as a beacon of democracy in Africa,” the CNPP asserted, calling for a renewed commitment to the electoral process.

Central to CNPP’s message is the insistence that “the will of the people must be supreme in Nigeria’s electoral processes.” The umbrella body of all registered political parties and political associations in Nigeria CNPP emphasized the necessity of an electoral system that genuinely reflects the wishes of the Nigerian populace. “We must strive to create an environment where elections are free from manipulation, violence, and intimidation,” the CNPP urged, calling on the Independent National Electoral Commission (INEC) to take decisive action to ensure the integrity of the electoral process.

The CNPP also expressed concern over premature declarations regarding the 2027 elections, stating, “It is disheartening to note that some individuals are already announcing that there is no vacancy in Aso Rock in 2027. This kind of statement not only undermines the democratic principles that our nation holds dear but also distracts from the pressing need for the current administration to earn the trust of the electorate.”

The CNPP viewed the upcoming elections as a pivotal moment for Nigeria. “The 2027 general elections present a unique opportunity for Nigeria to reclaim its position as a leader in democratic governance in Africa,” it remarked. The body called on all stakeholders — including the executive, legislature, judiciary, the Independent National Electoral Commission (INEC), and civil society organisations — to collaborate in ensuring that elections are transparent, credible, and reflective of the will of the Nigerian people.

As the most populous African country prepares for the 2027 elections, the CNPP urged all Nigerians to remain vigilant and committed to democratic principles. “We must work together to ensure that our elections are free from violence, intimidation, and manipulation,” the statement stated, reaffirming the CNPP’s commitment to promoting a peaceful and credible electoral process.

In conclusion, the CNPP congratulated the President-Elect of Ghana and the Ghanaian people on their remarkable achievements.

“We look forward to learning from their experience and working together to strengthen democracy in our region,” the CNPP concluded.

Feature/OPED

The Need to Promote Equality, Equity and Fairness in Nigeria’s Proposed Tax Reforms

Published

5 days ago

08/12/2024

Business Post Contributor

By Kenechukwu Aguolu

The proposed tax reform, involving four tax bills introduced by the Federal Government, has received significant criticism. Notably, it was rejected by the Governors’ Forum but was still forwarded to the National Assembly. Unlike the various bold economic decisions made by this government, concessions will likely need to be made on these tax reforms, which involve legislative amendments and therefore cannot be imposed by the executive. This article highlights the purposes of taxation, the qualities of a good tax system, and some of the implications of the proposed tax reforms.

One of the major purposes of taxation is to generate revenue for the government to finance its activities. A good tax system should raise sufficient revenue for the government to fund its operations, and support economic and infrastructural development. For any country to achieve meaningful progress, its tax-to-GDP ratio should be at least 15%. Currently, Nigeria’s tax-to-GDP ratio is less than 11%. The proposed tax reforms aim to increase this ratio to 18% within the next three years.

A good tax system should also promote income redistribution and equality by implementing progressive tax policies. In line with this, the proposed tax reforms favour low-income earners. For example, individuals earning less than one million naira annually are exempted from personal income tax. Additionally, essential goods and services such as food, accommodation, and transportation, which constitute a significant portion of household consumption for low- and middle-income groups, are to be exempted from VAT.

In addition to equality, a good tax system should ensure equity and fairness, a key area of contention surrounding the proposed reforms. If implemented, the amendments to the Value Added Tax could lead to a significant reduction in the federal allocation for some states; impairing their ability to finance government operations and development projects. The VAT amendments should be holistically revisited to promote fairness and national unity.

The establishment of a single agency to collect government taxes, the Nigeria Revenue Service, could reduce loopholes that have previously resulted in revenue losses, provided proper controls are put in place. It is logically easier to monitor revenue collection by one agency than by multiple agencies. However, this is not a magical solution. With automation, revenue collection can be seamless whether it is managed by one agency or several, as long as monitoring and accountability measures are implemented effectively.

The proposed tax reforms by the Federal Government are well-intentioned. However, all concerns raised by Nigerians should be looked into, and concessions should be made where necessary. Policies are more effective when they are adapted to suit the unique characteristics of a nation, rather than adopted wholesale. A good tax system should aim to raise sufficient revenue, ensure equitable income distribution, and promote equality, equity, and fairness.