When ‘Network Failure’ Becomes Strategy to Defraud Businesses

Obinna Chima, Editor, THISDAY Saturday EDGY OPTIMIST BY Obinna Chima Nigeria’s transition to a cash-less economy has been one of the country’s most remarkable financial success stories. From cash reduction, ease of payment, financial inclusion, improving the effectiveness of monetary policy in managing inflation, supporting economic growth, convenience, efficiency, among several others, the benefits of a cash-less society far outweigh its demerits. That is why as part of efforts to sustain its gains, successive leadership of the Central Bank of Nigeria (CBN) have made efforts to ensure that policies around Nigeria’s payment system vision remain formidable. Today, electronic transfers remain the preferred means of payment for millions of Nigerians when they go into supermarkets, restaurants, hospitals, pharmacies, filling stations and when they deal with artisans. The country is one of Africa’s largest digital payments ecosystems, with electronic payment transactions running into over N3 quadrillion annually, billions of instant payment transactions processed every year, and one of the continent’s fastest-growing fintech industries. However, hidden beneath this success story is an emerging form of internal fraud that deserves urgent attention from business owners, regulators and customers alike. Today, there are reported cases whereby when a customer arrives at a store in Lagos and some other cities in Nigeria, to purchase an item, when it is time to make payment, the cashier brings out a point-of-sale (PoS) terminal, pretends as if he or she is attempting to process the payment and suddenly announces that the company’s account is experiencing “network failure.” Before the customer even suggests to transfer the money or decides to make transfer to the account, the cashier quickly brings out a personal account number and assures you that the money will be transferred to the company later. Pressed for time and anxious to leave, many customers comply. The transaction is completed and the customer walks away. From petrol stations and supermarkets to pharmacies, hotels, restaurants, cinemas, hospitals, courier companies, beauty salons, electronics stores and even some private schools, this practice is becoming disturbingly common. What many customers perceive as a genuine network glitch in some instances is an avenue to divert the company’s revenue into personal accounts. A friend who attended Kennyblaq’s concert at Eko Hotels last month was shocked when he arrived at the venue and was made to make payment into someone’s account all in the name of “network failure,” and because he arrived for the concert late, he quickly responded and went in. For some businesses, this practice goes unnoticed until stock begins to disappear without corresponding sales receipts and their revenue begins to drop. As customers, we should be concerned when an employee substitutes the organisation’s official account with a personal account without proper authorisation. Once money enters into a personal account, the customer has no guarantee that it will ever reach the organisation. Ironically, this practice thrives because some dishonest employees exploit the weakness within Nigeria’s digital payment infrastructure. Network disruptions remain an unfortunate reality. Banking applications occasionally fail and at times, payment transfers are delayed. Interestingly, this was the focus of a recent policy report launched by The Bridgforte Centre for Global Impact titled, ‘Trust Architecture in Platform-led Finance,’ which highlights that Nigeria’s cash-less policy depends on public confidence in electronic payments. The further report further argues that trust in transactions is shaped by how institutions respond when payments fail, disputes arise and customers seek redress. It reveals that for every successful transfer completed in seconds, there is another customer waiting days for a failed transaction to be reversed. For every digital lending platform expanding access to credit, there are growing concerns over data privacy, algorithmic decision-making and consumer protection. Fraud continues to evolve alongside innovation, while customer confidence is often tested not by the sophistication of technology but by how institutions respond when things go wrong. Former Deputy Governor of the Central Bank of Nigeria (CBN) and Founder of Bridgeforte, Aishah Ahmad, stressed the need to strengthen trust in the payment system while allowing innovation to flourish. Rather than focusing on expanding access, the new report argues that the next frontier of financial inclusion should be to enhance confidence—confidence that digital platforms will work reliably, institutions will resolve disputes fairly, regulators will protect consumers and technology will operate transparently. However, the need to strengthen public confidence was recently acknowledged by the CBN Governor, Olayemi Cardoso, who noted that, “people must have confidence that they are dealing with a safe, reliable payments system.” Unfortunately, genuine network problems have now become convenient cover for dishonest employees. The phrase “network is down” has become the perfect excuse. History shows that many major financial frauds begin with seemingly harmless shortcuts. The Centre for the Promotion of Private Enterprise (CPPE) recently estimated that MSMEs in the country lose between N5 trillion and N10 trillion annually to employee corruption and occupational fraud. Chief Executive Officer of CPPE, Dr. Muda Yusuf, in a policy brief, stated that beyond the visible pressures of inflation, weak purchasing power, high operating costs, infrastructure deficits, and constrained access to finance, employee corruption and occupational fraud within the MSME ecosystem remained a less visible but deeply corrosive threat. He said addressing this challenge is not only an ethical or managerial concern but a strategic economic priority for the country. “These losses silently destroy profitability, suppress investment, eliminate jobs, weaken government revenue and slow inclusive growth. Fraud prevention, governance strengthening, and digital transparency must become central pillars of enterprise policy and business practice in order for Nigeria’s MSME sector to realise its full potential as an engine of growth,” he added. He advocated that reducing occupational fraud in MSMEs would require coordinated public-sector support, including “a national MSME internal-control framework linked to credit and government programmes, accelerated digital financial inclusion for small businesses, stronger legal enforcement and asset-recovery mechanisms, expanded governance education.” To ensure that they remain as going concerns, every organisation must establish a non-negotiable policy that customers must never pay money into employees’ personal accounts and the company’s account details should be prominently displayed at payment points. Receipts should clearly identify the beneficiary organisation. Alternative official payment channels should be available whenever network challenges arise. Additionally, they must carry out daily reconciliation of electronic payments and random transaction reviews should be conducted. For customers, whenever an employee requests payment into a personal account, you can politely ask whether the arrangement has been authorised by management. If there is doubt, insist on paying through the organisation’s official account or request to speak with a supervisor. Nigeria’s digital payment revolution has brought enormous convenience and expanded financial inclusion and must not be undermined by avoidable internal fraud disguised as temporary “network failure.”