Cyber fraud and digital payment systems in Nigeria: causes and control measures

Abstract

The rapid growth of digital payment systems has transformed Nigeria's financial sector by promoting financial inclusion, improving transaction efficiency, and supporting economic growth. However, this transformation has also resulted in a corresponding increase in cyber fraud, threatening consumer confidence and the sustainability of digital financial services. This study examines the causes of cyber fraud in Nigeria's digital payment ecosystem and evaluates control measures for mitigating cybercrime. The study adopts a descriptive research design based on both primary and secondary data obtained from concern stakeholders, scholarly journals, reports of the Central Bank of Nigeria, Nigeria Inter-Bank Settlement System, and Nigeria Deposit Insurance Corporation. The findings reveal that inadequate cybersecurity infrastructure, weak authentication mechanisms, insider abuse, low cybersecurity awareness, identity theft, phishing attacks, malware, SIM swap fraud, and poor regulatory compliance constitute the major causes of cyber fraud. The study further identifies multi-factor authentication, artificial intelligence-based fraud detection, biometric verification, stronger regulatory frameworks, public awareness campaigns, inter-agency collaboration, and continuous staff training as effective control measures. The study concludes that combating cyber fraud requires collaborative efforts among financial institutions, regulatory agencies, telecommunication companies, technology providers, and digital payment users. It recommends increased investment in cybersecurity infrastructure, stricter enforcement of cybercrime laws, improved digital literacy, and enhanced collaboration among stakeholders.