Cybercriminals are the leading source of user distrust on the internet around the globe and in Kenya, mobile money is a target.
In a survey of internet users by CIGI, IPSOS, Internet Society and UNCTAD, social media companies Facebook, Twitter and others come only second to cyber fraudsters.
While Safaricom says that mobile money losses in Kenya have decreased, there still remains a big challenge to ensure transactions are safe and secure.
Safeguarding M-Pesa transactions
Kenya’s giant telco, Safaricom, has introduced an option to reverse M-Pesa transactions. This is one of the ways to ensure that customers have faith in the system.
The Safaricom M-Pesa customer care is moving more towards self-care making it a reality that mobile money is making Africa ‘bankable’.
With Safaricom taking the lion’s share of the almost KShs2 Trillion Kenyans transacted every 3 months on mobile phones in 2018, the company has launched a fraud intelligence solution for financial institutions in the country.
The service will help banks, micro-finance institutions and insurance firms reduce fraud incidences targeting their customers.
This service provides the institutions with a tool that helps determine the authenticity of a financial transaction.
In addition to authentication, the solution will also provide financial firms with capabilities to better design their lending propositions, enhance the registration and on-boarding of new customers.
It will also help in managing phone numbers linked to a customer’s accounts but which may no longer be in use.
“Through the years, we have developed in-house capabilities that have helped us cut down on attempted fraud incidences targeting our customers by more than 75 per cent,” said Sitoyo Lopokoiyit, Chief Financial Services Officer, Safaricom.
He added, “We are launching a solution that will provide these world-class capabilities to our enterprise customers in the financial sector, empowering them to make more informed decisions when interacting with their customers in the digital space.”
Internet banking and smartphone apps
Safaricom’s new solution works across the three channels including USSD, internet banking and smartphone apps.
Such banking channels have been on the rise in the country corresponding with increasing internet and smartphone usage.
Financial institutions will access the service through an API provided as part of the Daraja M-Pesa APIs.
Daraja is a faster and more private cashless payments solution available at over 2,500 Lipa Na M-Pesa merchants.
The service benefits more than 21 million monthly active M-Pesa customers with faster transactions and increased privacy.
For the new anti-fraud solution, once a customer attempts to log in through any of the channels, the institution will then run the customer’s phone number through the service to check against such parameters such as if a customer’s number has been recently swapped.
Institutions can then factor in the result of the check to complement internal fraud rules and to make a decision whether to allow the transaction or if to further authenticate the customer through other methods.
Adoption of the solution is expected to benefit the country through increased usage of mobile and internet banking due to increased confidence both from the financial sector and customers.
Today, more than 3.5 million Kenyans use mobile and internet banking services in the country every month.
Online shopping fraudsters in Kenya
In September last year, the Communications Authority (CA) asked Kenyans to be cautious when shopping online.
CA warned that fraudsters had created fake e-commerce websites and mobile applications which look like the real ones to steal from unsuspecting shoppers.
In a statement, the regulator said, “The online shopping criminals entice unsuspecting buyers through deals via email, SMS, social media pages and telephone. They also request a registration fee for goods or services.”
“Watch out for unavailable physical addresses, customer care helplines, suspicious telephone numbers, email addresses and websites,” cautioned the statement.
CA asked shoppers to always verify information before making any payments for online shopping.
In 2017, fraudsters acquired goods worth over KShs62 million from Jumia using electronic cards.
Online fraud for Jumia was also in “phantom” transactions where sellers engaged in fictitious sales with themselves or with collaborators to artificially build their reputation, inflate their own ratings on its platform and search results rankings.
Jumia said that some consumers in Kenya fraudulently used electronic payment suppliers to acquire goods worth approximately €550,000 (KSh62.3million) in December 2017.
“Consumer fraud may harm seller confidence in the integrity of our marketplace and the certainty of payment,” Jumia said in a prospectus seeking to raise KShs10 billion by selling shares to international investors.