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BUSINESS AND SECURITY ISSUES INDIGITAL PAYMENT SYSTEMSPatrick Akinwuntan, FCAManaging Director & Regional ExecutiveEcobank Nigeria.
onDigital Payment Methods in NigeriaBenefits of Digital PaymentsRisks of Digital PaymentsRequirements of a Secure Digital Payments SystemSecurity Issues in Digital Payment SystemsNIBSS 2018 Fraud Landscape in NigeriaBusiness Issues in Digital Payment SystemsPotential Risk Mitigation InitiativesConclusion
INTRODUCTION
DEFINITIONA digital paymentsystem is an electronicmechanism of payingfor goods or servicesinstead of using cashor a cheque, in personor by mail.
DIGITAL PAYMENT METHODS IN NIGERIAVBanking cardsPoint of Sale (PoS)USSDInternet BankingMobile WalletsMobile BankingQR payment
BENEFITS OF DIGITAL PAYMENTSIncrease in EconomicDevelopmentFaster, easier and moreconvenientDeeper and BetterCustomer ExperienceEconomical with lowertransaction feesLower cost ofprocessing cashHelps keep black moneyunder controlWaivers, discounts andcashbacksOne stop solutionfor paying billsDigital record oftransactions Scale Efficiency Disruption
RISKS OF DIGITAL PAYMENTSCompliance/Legal RiskInternational laws, suspicious transactions ,cross border transactions and Risk ofchanging legislations & KYC issuesReputation RiskTheft of confidential information,failure to deliver due to servicedisruptions and disclosureStrategic RiskBank board and management mustunderstand the risk involved in e-bankingservices / digital payments systemsMarket RiskChanges in market price, interestrates and commodity price risk etc.Operations RiskFraud, processing errors, systemdistruptions, loss of trail,unanticipated events or disasters.Credit RiskRisk associated with lending activities,Liquidity and Interest Rates.
REQUIREMENTS OF A SECURE DIGITAL PAYMENTS SYSTEMAuthenticityThe client and server arewho each claims to bePrivacyCommunications and dataare kept privateIntegrityCommunications havenot been changedin transmissionRequirements ofa Secure DigitalPayment SystemTraceabilityThe data to be transferredwas, in fact, generated bythe signed authorAvailabilityThe payment system must beaccessible to users whenever they need it
SECURITY ISSUES IN DIGITAL PAYMENT SYSTEMSForecast for 20191 Digital Fraud SchemesFraud &ChargebackNon reliabilityof devices andIT infrastructureSecurity RisksInnovations inonline and webbased channels2 More Mobile, More FraudAttempts3 Rogue Apps and Softwareon Mobile
NIBSS 2018 FRAUD LANDSCAPE IN NIGERIA (1/2)A SUMMARY AND ANALYSIS OF E-PAYMENT FRAUDS IN NIGERIANumber of fraud transactionsMobileATM 55.1%38,852POSAcross the counterWeb25,043Internet e-CommerceOthers20172018Total18738,852
NIBSS 2018 FRAUD LANDSCAPE IN NIGERIA (2/2)A SUMMARY AND ANALYSIS OF E-PAYMENT FRAUDS IN NIGERIAActual loss value of fraud transactionsNaira millionsMobileATM 27.5%2,081POSAcross the counter1,632WebInternet rs2017599Total1032,081
POTENTIAL RISK MITIGATION INITIATIVES
BUSINESS ISSUES IN DIGITAL PAYMENT SYSTEMSPayment IntegrationLack of integration can hamper the smoothflow of services in a digital payments system.Clean DataMany organizations have old data stored indifferent formats and in silos. Constant needfor data scrubbing to facilitate better service,reporting and analytics.Entrance of Global PlayersGlobal technology companies such as PayPal, Facebook and Applehave made significant in-roads into the payments space and couldexclude other payment service providers from offering services ontheir platformsStandardsDigital payments system must have standardsthat can be implemented across variouscountries to facilitate cross border payments.Connectivity Issues with PaymentsFactors including poor network connection, double debits forpurchases, or faulty equipment can lead to transaction failures,creating reconciliation issues for merchants, consumers and banksalike.
ECOBANK IS COMMITTED TO BUILDING A STRONGDIGITAL PAYMENTS ECOSYSTEMOver 9.3 million registered, 2.4 billion processed126,000 merchants 47 million processed17,260 agents registered, 1,021 million processedEcobank POS 435 million processed in2018Over 220,000 downloads20,600 registered businesses 21.5 billion processed in 2018
IN CONCLUSION Consumers and businesses have benefited forthe evolution of digital payments The digital payments ecosystem is constantlyevolving with the influx of Fintech firms andglobal tech giants Regulators cannot afford to sit on the side-lines Key stakeholders need to ensure compliancewith global standards and collaboratefor success Overall, the future is bright for service providersand consumers – both locally and internationally
Thank You
Ecobank Nigeria. AGENDA 1. Introduction 2. Definition 3. Digital Payment Methods in Nigeria 4. Benefits of Digital Payments 5. Risks of Digital Payments 6. Requirements of a Secure Digital Payments System 7. Security Issues in Digital Payment Systems 8. NIBSS 2018 Fraud Landscape in Nigeria 9. Business Issues in Digital Payment Systems 10. Potential Risk Mitigation Initiatives 11. Conclusion .
