Avoiding fraud in digital pay

Uganda is moving towards a cashless society as consumer behaviour shifts to digital channels such as card payments that offer speed, convenience and a seamless experience. 

The Bank of Uganda’s Financial Stability Report shows this trend clearly with the number of active cards and the value of payments through debit cards increasing by 22 percent and 23.5 percent, respectively, while the amount of money transferred through credit cards has grown by 60.7 percent, and the number of transactions processed through point-of-sale (POS) terminals has risen  by 10.4 percent.  
However, amid the countless gains, a familiar adversary remains. Fraudsters are increasingly refining their techniques. 

Reports from the Uganda Bankers Association, an umbrella organisation for  at least 34 supervised financial institutions, indicate that a significant 31.9 percent of fraud is related to the increased use of digital payments, with fraudsters often using social engineering tactics to deceive consumers and gain access to personal information or financial data.  

The social engineering tactics, include pre-texting, where scammers create elaborate stories based on users’ information collected from various social media channels. This treasure trove provides scammers with a lot of data – from personal preferences to answers to common security questions, allowing them to customise their scams. Another technique is phishing, where fraudsters send fake emails or text messages about compromised account details, persuading users to reveal vital information through links, such as card numbers and CVV codes. 

Without consumers’ knowledge, these fraudulent activities may involve installing malware on their devices, enabling identity theft and other cybercrimes.  The Uganda Bankers Association, therefore, asserts that its member institutions are collectively spending close to Shs1 billion daily to counter cyber threats by regularly upgrading security systems. 

On the regulatory front, the government took a proactive step by passing the National Payment Systems Act in 2020. This legislation not only ensures the safety and efficiency of payment systems but also defines the Central Bank’s role in overseeing and regulating these systems.  However, technology can only provide a partial solution. The simplest yet essential solution lies in closing the crucial knowledge gaps among consumers on how to protect themselves and their digital transactions. 

Insights from a recent Visa Stay Secure Study, involving 5,800 individuals across Central and Eastern Europe, the Middle East, and Africa (CEMEA), reveal a stark reality. While more than half of consumers claim to be smart enough to notice scams, 90 percent, however, admit they would likely ignore signs.  To address this, constant consumer awareness and education are vital. This is why we have partnered with the Uganda Bankers Association to help in spotting signs and catching scammers in action. 

The first step for consumers is to avoid immediate reactions. They should take a moment to verify the credibility of the email or message.   Similarly, consumers must be extra careful about phrases that create urgency, like “act now,” or messages with a positive hook, such as “free gift,” “you have been selected,” or “you’re a winner.” Clicking on links without prior knowledge should be avoided, as these could be trojan horses stealing personal information. 

Additionally, regularly checking the validity of purchase and activity alerts and contacting financial institutions in case of any gaps in information can ensure the verification of all possible activity within their accounts and financial wallets.  While these actions may not be new, regularly emphasising and broadcasting them to the general public can help maintain the human quality of questioning and curiosity. This can be crucial in empowering consumers with knowledge and actionable steps to counter the new approaches and persuasive tactics that scammers use to trick unsuspecting consumers. 

Ultimately, these actions also foster trust, safety, and confidence in the digital economy and contribute to Uganda’s progress towards a cashless society.

The author, Ms Salma Ingabiree is the Visa Country Director for Uganda, Rwanda, Burundi and Tanzania