Country Manager, Visa Nigeria, Mr. Andrew Uaboi, speaks on new initiatives to address fraud in financial transactions, and how contactless payment will further increase speed of payment transactions and reduce fraud, when approved by the Nigerian regulatory authority. Emma Okonji presents the excerpts:
The effect of COVID-19 has forced many businesses and organisations to go online, thereby increasing online transactions. How are financial institutions coping with the new shift to online transaction and what impact is it creating on businesses?
With COVID-19, we saw a lot of shifts to digital forms of payment, which accelerated the digital payment in Nigeria and globally. We have seen significant number of businesses coming online as a result of the effect of COVID, which was because people’s movement was restricted and businesses have to take advantage of the situation to take their business online where they could meet willing buyers who were restricted from physical movement because of the wide spread of COVID at that time. What that did for businesses was to compel small businesses going online as well as consumers going online also. In the global economy and in Nigeria, the shift to online transactions created new jobs by opening up a new ecosystem where people from different parts of the country, meet online to transact one form of business or the other.
From Sokoto in the northern part of Nigeria to Umuahia in the eastern part of Nigeria, including those from the six geopolitical parts of Nigeria, people converge online to communicate and trade. So it opened up new channels of businesses where people have to think about logistics, which is a new form of business. With the logistics business, we saw the springing up of dispatch riders who do logistics business by delivering goods that were bought online, directly to the doorsteps of consumers. Beyond the logistics business, we also saw the growth of packaging business. So online payment has expanded opportunities for Nigeria and other countries to bring more people into the payment ecosystem. So payment remains a strong focus for Visa, and it is the reason we are looking into the future to see how we can continue to evolve it and bring more people into the financial ecosystem.
Hacking of data and individual bank accounts are on the rise. What are the measures put in place by Visa to protect the accounts of individuals and organisations?
From inception, security has been a major focus of the Visa business, because we believe that without security, there will be no trust and without trust, people will not be confident to patronise certain goods and services. Visa takes deliberate and conscious effort to ensure that the payment infrastructure is secured and that we have products and solutions that guarantee the right security.
For instance, Visa has a solution called the EMV 3-D Secure, which is a solution for next generation authentication, and it is a two-factor authentication that has now been made mandatory for use of payment by the Nigerian payment authority. It helps to authenticate transaction before a particular transaction is completed.
EMV 3-D Secure is a world-class authentication solution with rich data at its core. The industry-wide messaging standard allows merchants and issuing banks to verify consumer identity before a transaction is sent for authorisation, helping them to detect and prevent fraud while benefitting consumers with a smooth, consistent user experience across multiple payment channels, including mobile web, in-app and digital wallet payments. It can also eliminate the need for consumers to type in passwords to complete their online purchases, meaning fewer steps and fewer false declines at online checkout. Additionally, EMV 3-D Secure allows issuers to leverage advanced data models and intelligent rules to make data-driven authentication decisions and reduce friction at checkout. These are some of the initiatives we have put in place to safeguard consumers from becoming victims of fraudsters. There is however, a lot of work to do by working with our partners to educate and help the average consumers recognise the vulnerability that they may be exposed to and the benefits of the security solutions that Visa has introduced.
So how far is Visa getting along with consumers in its enlightenment programme that is designed to educate the consumers?
The enlightenment programme is ongoing and it is something we constantly do with our partners to educate consumers, through our various platforms and channels. We have been on it for several years and we will continue to carry out the sensitisation and enlightenment programme as long as technology continues to evolve.
How will you react to situations where financial institutions under-report hacking of their network infrastructure, and what could be the implication on financial institutions and the Nigerian economy?
From our perspective, financial institutions and other organisations should be courageous enough to always report attacks on their systems and networks by hackers. It is only by reporting that the proper modus operandi can be identified to trace those that are involved in any attack and to also come up with the best safeguards to prevent future occurrence that may follow that same pattern of attack. So we typically will encourage our partners to always report attacks, because through reporting, lessons can be learnt in order to prevent future occurrence.
How will you describe the strength and resilience of the network architecture of financial institutions in Nigeria and what is the plan of Visa to protect the financial ecosystem in Nigeria and Africa?
Nigeria has one of the best evolving financial ecosystems in the world and Visa has a very proactive and engaging regulator. Before EMV 3-DS was deployed world-wide, we already had our regulators thinking about how to strengthen networks and protect consumers online. Our regulator had always mandated institutions to have strong solutions in place that will protect not only the consumers, but also the banks as well. So I will say Nigeria has advanced architecture, which can be improved upon and Nigeria has a regulator that is vast and in-tune with the evolution in the financial payment ecosystem. From the Visa standpoint, we will continue to invest in new solutions and technologies that will further create that sense of safety and comfort for both consumers and merchants. Visa is a global player that operates in multiple markets within Africa, and we are able to bring expertise, insight and knowledge to bear, not only to our partners within those countries, but also to our partners from a regulator’s standpoint in those markets. We bring them up to speed on what they can do and should be doing to manage fraud and grow the enabling environment for the payment ecosystem in their countries.
Could you highlight Visa’s investments in emerging technologies that are tilted towards enhancing security in the payment ecosystem?
We see emerging technologies largely driven by contactless payments, which are frictionless payments carried out by tapping the card on a Point of Sales (PoS) device or any other electronic device. It is a technology that is fast driven by the COVID-19 pandemic. We saw about 40 per cent growth in contactless payments globally, within one year after the spread of COVID-19. We have also seen that in the United Stares, one in six people testified that they did their first contactless payment transaction during the period of COVID-19. Contactless payment provides a more hygienic and secured way of payment and it is the most convenient way of payment. We are working with our partners to ensure that the ecosystem is ripe and ready for launch. We believe that Nigeria will soon launch its contactless payment system. With contactless payments, there will be new used cases that will evolve, which probably have not even been thought about.
How do you see Nigeria adopting contactless payment solution and what impact will it create on individuals and organisations?
Currently the Nigerian payment market is waiting for regulatory approval for the use of contactless payment. At the stage we are in, we are not seeing a lot of contactless transactions taking place in the country. However, banks have issued cards to customers and the cards can perform contactless transactions. For many of the Visa card holders, when they travel abroad, they are able to use their Visa cards to tap on devices at train stations, bus stations and malls. At the stage that we are in now in Nigeria, we are just waiting for the framework to be finalised to begin the process in Nigeria and open up the ecosystem. From a technology standpoint, the Nigerian market is willing and ready for contactless payment.
How convenient and secured is contactless transaction in safeguarding the future of money
Contactless transactions are as safe as a regular card transaction, because the cards come with embedded security to ensure that transactions are secured at any given time. When the time comes for contactless transactions to get approval in Nigeria, we will see further growth in the payment ecosystem because it will help to facilitate faster payment, reduce queues and onboard more consumers. In markets where contactless payment has been approved, payment transactions have significantly increased, and fraud drastically reduced.
Nigeria is at the forefront in driving financial inclusion to reduce physical cash handling. To what extent has it been achieved and what is the role of Visa in enhancing financial inclusion in Nigeria?
Financial inclusion is one area that Visa plays strong. In Nigeria, Visa is providing the right infrastructure for financial inclusion to thrive in the country. Today there is proliferation of PoS devices in the market, being used by supper agents to drive financial inclusion in Nigeria. In the past people used to travel to the bank and even queue in banking halls just to withdraw or transfer money, but that is fast changing with the presence of supper agents almost on every street, using PoS to carry out payment transactions, and many bank customers make use of them, rather than going to the bank to get cash. PoS devices are getting into remote areas to serve the needs of the people. The PoS is one of the channels through which Visa is helping to drive financial inclusion in Nigeria. We are also using our expertise to pull in more people into the financial space, through different programmes where we help to educate the public about the opportunities around financial inclusion.
What are the foreseeable payment and security trends that will shape the future?
As payment experts continue to rollout new and convenient solutions like contactless payment solution and other digital forms of payment, we also recognise the fact that fraudsters are also looking for new ways to take undue advantage of the emerging and trending digital solutions. At Visa, we are resolute in our mandate to ensure that payment transactions are secured. Before we release new solution for the consumer, we always ensure that the solution is tested and certified safe and good for consumers.
Studies have shown that there is so much money in the Nigerian Informal sector than the formal sector, resulting in huge physical cash handling in the informal sector. How will Visa help Nigerian government to reverse the trend?
There are multiple approaches to address the issue you just raised. The Central Bank of Nigeria (CBN) is doing a great job in that area by issuing licences to Payment Service Banks (PSB). So leveraging on the PSB licence, Visa is partnering PSP licensees to ensure that they are deploying best-in-class solutions, irrespective of the fact that their target audience are people that are not in the immediate urban areas. We ensure that the channels through which the PSB licensees carry out their transactions, are safe and secured.
What are the best-in-class security practices that will change the game in the fight against online fraudsters?
As digital payment transactions continue to grow, we expect that fraudsters will want to hack into the system to defraud organisations and consumers. So in all of these, consumer awareness and sensitisation are key factors that will help implement best-in-class security practices that will make people more knowledgeable not to fall victims to online fraudsters. So we are committed to investing in communication and the technology that will ensure that the average person on the street, understands what to do and what not to do, whenever they are online carrying out any forms of transaction.
Despite the security measures put in place by Visa and other technology companies to curb fraudulent activities, insider fraud remains a big threat. What is your take on this?
In order to minimise and mitigate insider fraud, institutions need to have best-in-class policies and strict security measures put in place. Banks and other financial institutions need to have policies and programmes that essentially ensure checks and balances in all financial transactions. Without checks and balances, institutions could be exposed to insider fraud.