Mobile money firms up controls as fraud rises

Growing fraud. The mobile money platform continues to register growth, however the growth is exposing users to massive fraud.

With the growth in mobile money transactions, fraud-related risks have increased thus requiring service providers to adjust their systems to ensure customer safety.

Huge sums of money are transacted through mobile money daily, making the platform the biggest channel of financial transactions compared to conventional banking.

Data from Bank of Uganda indicate that the number of mobile money transactions has been growing tremendously, reaching an estimated 84.7 million, with a total value of Shs3.75 trillion wired through the platform as of 2011.

In June 2012 alone, 19.2 million transfers were recorded through the platform, with an estimated value of Shs904 billion.
The unexpected growth has, however, exposed services providers and customers to fraud.

For instance MTN recently reported a fraud related case of Shs9.1 billion stolen from the company’s suspense account while related incidents in other telecoms have gone unreported, according to industry watchers.

Uganda Communications Commission executive director, Eng. Godfrey Mutabazi told this newspaper last week that the commission is receiving a rising number of complaints against telecom companies, with a number of agents reporting loss of money in accounts, which telecoms are allegedly refusing to refund.

To ensure security of customers’ money, however, Orange – the latest entrant in the mobile money market in Uganda – has put in place a number of gate keeping features to guard itself against falling victim of growing fraud.

Key among them is the multiple transaction rule which seeks to protect users from carrying out unintended transactions.
To ensure that its mobile money platform is not compromised, Airtel’s managing director; Mr VG Somasekhar said the company put in place strong controls and systems to provide the safest, robust and reliable service.

“We have a strong process where we apply all controls like a bank because the platform deals with people’s money,” Mr Somasekhar told Prosper.

Warid Telecom’s chief commercial officer, Mr Shailendra Naidu said Warid uses one of the strongest international financial platforms which is highly encrypted and offers the highest levels of security.
Although MTN had not yet responded to the questions emailed to them, the company’s chief executive officer, Mr Mazen Mroue was earlier quoted by Daily Monitor following internal fraud cases, saying the telecom had put safety controls to guard against further fraud.

While there is no readily available data about the magnitude of the crime in the market, it’s estimated that financial institutions and telecoms lose between 15-20 per cent of their annual revenue to fraudsters.

Mr Robert Nyamu, Director - Deloitte Forensic also told journalists during a fraud and anti-money laundering seminar last year that banks in East Africa lost approximately Shs126.6 billion between 2011 and August 2012.

fkulabako@ug.nationmedia.com