The House of Representatives Ad-hoc Committee probing the risks linked to cryptocurrency use and Point-of-Sale operations has warned that Nigeria is facing a fast-growing fraud crisis that threatens the country’s financial system.
At the resumed hearing on Monday, the Committee Chairman, Hon Olufemi Bamisile, said talks with industry stakeholders exposed serious gaps in the digital finance space. He noted that the weaknesses have allowed fraud to spread across POS networks nationwide.
Bamisile said, “We are concerned about the growing rise in fraud associated with POS operations. Unprofiled agents, cloned terminals and weak KYC practices continue to expose citizens to preventable dangers.”
He also raised concerns about unlicensed cryptocurrency activities creeping into POS operations, saying some agents now offer crypto services without any clearance from regulators. According to him, these acts pose risks linked to money laundering, terrorism financing, data breaches and the misuse of platforms meant for simple payment services.
The lawmaker revealed that the Committee had received reports of fake companies being registered with stolen National Identification Numbers and Bank Verification Numbers of unsuspecting Nigerians. He said the stolen details were then used to open accounts and move illegal funds through unverified POS channels.
Bamisile added that some fintech firms store sensitive financial information on foreign servers, making it difficult for regulators to audit transactions or enforce compliance. He described this as a direct national security risk.
Despite these issues, he said the investigation was not meant to stifle business growth. He noted that the sector also faces problems such as overlapping regulations and inconsistent policies. He added that the Committee’s goal is to propose laws that will improve security measures, protect consumers and support safe innovation.
The Committee will continue talks with regulators, fintech companies and security agencies before sending its final recommendations to the House.
At the hearing, the National President of the Association of Digital Payment and POS Operators of Nigeria, Paul Okafor, said the POS sector had reached a “critical emergency point.” He warned that fraud was now at a level that threatens national stability.
He said the number of POS operators rose from 50,000 in 2017 to more than 2.3 million today, but regulatory capacity grew by less than ten percent within the same period.
He said, “This imbalance is what has produced the crisis we are facing today. The regulators, especially the CBN, are not incompetent; they are overwhelmed by the sheer speed and scale of growth.”
Citing data from the Nigeria Inter-Bank Settlement System, he said banks, digital-payment platforms and POS channels lost N17.67 billion to fraud in 2023. More than 80,000 customers were affected. Losses jumped to N52.26 billion in 2024, a rise of N34.59 billion in one year.
He noted that attempted fraud across the financial system rose by 338 percent, with POS channels making up 26.37 percent of all cases. Industry tracker FITC also recorded a 95 percent increase in POS fraud in the last quarter of 2024.
Okafor said, “More than 38,000 POS fraud cases were officially reported in one year. Unofficially, we estimate that over 70,000 cases go unreported because victims simply give up.”
He added that criminals are now using POS agents to cash out illegal funds, including ransom from kidnapping.
He said, “In some states, security agencies report that nearly 40 percent of kidnap ransom payments pass through informal POS cash-out channels. This is no longer a fintech issue; this is a national security threat.”
Okafor urged the Committee to push the Central Bank of Nigeria to adopt urgent reforms. He warned that ignoring the problem would weaken financial inclusion, damage trust and destabilise payment systems.
To restore confidence, he suggested three key steps. They include compulsory police–NCCC Cybercrime Clearance Certificates for all POS operators, mandatory registration with the Corporate Affairs Commission and compulsory membership in recognised trade groups to enforce discipline and training.
He noted that these steps are in line with global standards in countries such as India, Kenya, Brazil, South Africa and the United Kingdom.
He said, “No country leaves its financial system open to millions of operators or puts it in the hands of foreigners without strict controls. Nigeria must not be the exception.”
Okafor added that POS services now reach nearly every home, market and community in the country.
