By Peter Omopo
The House of Representatives has expressed deep concern over a sharp rise in fraudulent activities associated with Point-of-Sale (POS) operations across the country, warning that weaknesses in regulation and security are exposing Nigerians to alarming financial and national security risks.
The concerns were raised on Monday during a resumed investigative hearing with fintech stakeholders at the National Assembly Complex. The session was convened by the House Ad-hoc Committee on the Economic, Regulatory and Security Implications of Cryptocurrency Adoption and POS Operations in Nigeria.
Chairman of the Committee, Hon. Olufemi Bamisile, said the panel had received troubling reports of cloned terminals, unregistered agents, anonymous transactions, and widespread weak Know-Your-Customer (KYC) compliance within the sector.
“We are concerned about the growing rise in fraud associated with POS operations,” Bamisile said. “Unprofiled agents, cloned terminals, and weak KYC practices continue to expose citizens to preventable dangers. There are allegations that some POS operators now engage in crypto-related services for which they are not licensed.”
He cautioned that these trends raise major red flags concerning anti-money laundering compliance, terrorism financing risks, data integrity, and the misuse of POS platforms originally designed for simple payment services.
Fake Companies, Identity Theft, and Foreign Data Storage
The lawmaker further disclosed that the Committee had uncovered schemes in which fraudulent companies were registered at the Corporate Affairs Commission using the National Identification Numbers and Bank Verification Numbers of unsuspecting citizens. The accounts created under these stolen identities were allegedly used to launder illicit funds through unverified POS channels.
“This highlights weak verification mechanisms and underscores the urgent need for a coordinated oversight framework,” Bamisile stated.
He also flagged the practice of storing sensitive financial data on foreign servers by some major fintech companies, warning that such practices undermine the ability of Nigerian regulators and security agencies to carry out effective audits or trace suspicious transactions.
“This has direct national security implications, especially in a sector connected to terrorism financing risks and cyber-enabled crimes,” he said.
Despite the troubling findings, Bamisile assured industry operators that the committee’s interventions were not a “witch-hunt” but an effort to strengthen the sector.
“Our mandate is clear: to recommend legislation that will deliver a harmonised regulatory framework, stronger security safeguards, improved consumer protection, and an environment where innovation and investment can flourish responsibly,” he said.
POS Fraud Reaches Crisis Level — Industry Leader
National President of the Association of Digital Payment and POS Operators of Nigeria (ADPPON), Paul Okafor, told lawmakers that the POS ecosystem had reached a crisis point, with fraud now posing a direct national security threat.
He noted that while POS operators surged from 50,000 in 2017 to over 2.3 million in 2025, regulatory capacity increased by “less than 10 per cent,” creating what he described as a dangerous imbalance.
Quoting data from the Nigeria Inter-Bank Settlement System (NIBSS), Okafor said digital-payment channels recorded N17.67 billion in fraud losses in 2023, affecting more than 80,000 customers. Losses escalated dramatically to N52.26 billion in 2024.
“More than 38,000 POS fraud cases were officially reported in one year. Unofficially, over 70,000 cases go unreported because victims give up,” he said.
He added that security agencies, in some states, report that “nearly 40 per cent of kidnap ransom payments pass through informal POS cash-out channels,” describing the situation as a threat that extends beyond fintech.
Operators Demand Immediate Reforms
Okafor urged the committee to compel the Central Bank of Nigeria to introduce emergency reforms to stabilise the POS ecosystem.
“If we fail to act, fraud will escalate, kidnappers will continue to exploit the system, Nigerians will lose more money, financial inclusion will collapse, and trust in the financial system will be destroyed,” he warned.
ADPPON proposed three immediate measures for restoring order:
- Mandatory Nigeria Police Force–NCCC Cybercrime Clearance Certificates for all POS operators.
- Mandatory Corporate Affairs Commission (CAC) registration for all POS businesses.
- Mandatory membership of recognised POS trade associations to enforce training, discipline, and self-regulation.
Okafor said these measures align with global best practices, citing examples from India, Brazil, Kenya, South Africa, and the United Kingdom.
“In Brazil, agent fraud dropped by over 60 per cent after mandatory police vetting. India maintains low fraud rates because verification is non-negotiable. No country leaves its financial system open to millions of operators without strict controls. Nigeria must not be the exception,” he said.
The Committee is expected to continue its engagements with regulators, security agencies, and industry stakeholders before submitting recommendations to the House for legislative action.
