According to eCommerce industry stakeholders, the sector’s growth has been hindered by a significant increase in fraudulent activities, exerting a negative impact.
The information was shared by industry experts in a statement given to the widely readable newspaper, the Punch.
It was revealed by Henry Owolabi, DPO Pay Country Manager that the fraudulent activities have become a big challenge for them, and each year, the local economy suffers significant losses amounting to hundreds of millions of US dollars due to this issue.
“Hurting the growth of a promising e-commerce sector because players across the ecosystem are nervous about losing money – merchants because of the chargebacks they face, and shoppers are worried about sharing their card details in case they have their accounts compromised”, he added.
Henry highlighted that the increase in fraudulent activities has resulted in a wary online shopping population. Research conducted by his company revealed that approximately 60 percent of users favor pay-on-delivery alternatives, demonstrating their unwillingness to share card details when utilizing online payment options.
According to him, as people are losing confidence in the payment systems, it is certainly impacting the growth of the eCommerce sector. “Users are missing out on a low-friction customer experience because of the far-reaching security and control options deployed in order to safeguard customers.”
Besides, he stated that although online sales are still in effect, they are getting executed in a less favorable environment. “E-commerce is seen as high risk by shoppers, impacting sales, and new merchants are wary of entering the market, cutting off earning potential for young entrepreneurs”, he noted.
In his remarks, Adelola Agbebiy, the Managing Director of Network International, Nigeria, emphasized the crucial role of payment service providers and their technology partners in safeguarding merchants and shoppers. Adelola stressed the importance of implementing robust measures, such as real-time risk monitors, dedicated risk teams, smart pattern recognition, instant payment confirmation, and continuous fraud monitoring, to ensure utmost security.
According to the latest fraud report by the Nigerian Inter-Bank Settlement System for 2021, Nigeria witnessed a staggering 187% increase in overall fraud attempts from 2019 to 2020. The report highlights that web-based fraud accounted for 47%, followed by mobile fraud at 36, ATM terminals at 9, and POS terminals at 7 percent.
Adding to the concerns, a cautionary warning has been issued by the Nigeria Deposit Insurance Corporation (NDIC) in March 2023, stating that fraudsters are adopting increasingly innovative tactics, demanding great vigilance from the Nigerian public.
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