Many Nigerians are looking for alternative platforms to carry out their financial transactions as traditional banks falter due to a surge in online transactions amid naira scarcity.
The cash withdrawal limit and scarcity of the new naira notes have caused a remarkable shift from cash-related transactions to mobile payments.
In the past weeks, Nigerians have complained of failed transactions, network failure, system timeouts, and cumbersome transaction fees with traditional banks, forcing them to seek solace from fintech and mobile wallet platforms.
According to the Nigerian Communications Commission, it is estimated that there are about 210-250 fintech operators/companies operating in the Nigerian space, and these players have brought about the valuation of the industry to $153.1 million in 2017 and was projected to rise up to $543.3 million by 2022.
Data released by the Nigeria Inter-Bank Settlement System (NIBSS) show that payments made via electronic channels hit an all-time high value of N42 trillion in December 2022.
That is a 52 percent year-on-year increase from December 2021. Similarly, the total volume of transactions processed by NIBSS also jumped from 3.4 billion in 2021 to 5.1 billion in 2022. This represents a 50 percent increase year-on-year. The payment infrastructure is also unevenly distributed
While some of these platforms are reported to deliver on instant transfers and little to zero charges, it is vital not to fall victim to scams posing as a fintech.
The following are things to look out for to head off frauds.
To avoid downloading fake fintech apps, check the app store. Download apps only from official app stores such as Google Play Store, Apple App Store, or the fintech company’s official website. Avoid downloading from third-party websites or unofficial app stores.
Check the permissions: Review the app permissions and check if they make sense. If the app is requesting access to sensitive information that is not related to its functions, such as contacts, camera, or microphone, it might be a fake app
Check the URL: Ensure that the URL is correct and the website is secure. Check for HTTPS in the URL, a padlock symbol in the address bar, or other security indicators.
Verify the company: Research the fintech company behind the app to ensure that it is legitimate. Check their website, social media, and other sources to verify their identity.
Be wary of offers: Be cautious of apps that offer unrealistic incentives, such as free money or other rewards. These offers might be scams to lure unsuspecting users into downloading fake apps
The following are the main regulators in the fintech industry to look out for to avoid using a fraudulent platform;
Central Bank of Nigeria (CBN)
The CBN, being the lead regulatory body for banks and other financial institutions in Nigeria, issues guidelines related to consumer protection, licence to banks and other financial institutions, and also creates anti-money laundry provisions.
Although the NCC is a body that regulates the telecommunication sector in Nigeria, it also issues licences to fintech companies that involve the use of mobile network and mobile phones.
Nigeria Deposit Insurance Commission (NDIC)
The NDIC undertakes supervision of insured institutions with the objective of protecting consumers. It established consumer protection desks in order to promptly respond to a series of complaints it receives against banks and other financial institutions on a daily basis.
The NDIC established the ‘Fintech and Innovations Unit’ in 2020. The unit is expected to enable the corporation to identify disruptions and associated risks of Fintech and Innovations on deposit insurance.
The NDIC website has a list of names of mobile money operators and payment services banks that are registered, insured, and regulated by them.
Corporate Affairs Commission (CAC)
The functions of the CAC include the regulation and supervision of the formation, incorporation, management, and winding up of companies including banks and financial services.
It also arranges and conducts an investigation into the affairs of any company where the interests of the shareholders and the public so demand
Federal Inland Revenue Service (FIRS)
The FIRS is the body in charge of federal tax payments and fintech is expected to remit value-added tax to the body.
Securities and Exchange Commission (SEC)
Financial services institutions that offer activities such as asset management and securities trading are required to be registered with the SEC.
Other key regulators are the National Insurance Commission, the National Office for Technology Acquisition and Promotion, and the Federal Competition and Consumer Protection Commission.
Some of the regulatory bodies mentioned above have the names of companies registered with them on their websites.