Interswitch Struggles With ₦30bn Chargeback Fraud

In a shocking turn of events, Interswitch, the prominent African payments and infrastructure giant, has incurred massive losses amounting to ₦30 billion due to a chargeback fraud. The unfolding saga, which has come to light through court documents seen by TechCabal and insights from individuals with direct knowledge of the situation, underscores the dire need for enhanced security measures in the world of electronic payments.

The company, now thrust into action, is diligently pursuing a legal path to recoup the substantial losses, having also reported the fraudulent activities to Nigeria’s anti-money laundering agency, the Economic and Financial Crimes Commission (EFCC).

As of the latest update, Interswitch has successfully retrieved a fraction of the pilfered funds, totaling just over ₦10 billion.

Court documents divulge that Interswitch filed a motion in court to address the suspected bank accounts linked to the fraudulent activities. Additionally, the payments giant has petitioned 54 banks to place restrictions on numerous suspicious bank accounts pending the completion of the ongoing investigation and recovery process. A legal expert from a leading Nigerian law firm confirmed these developments.

The chargeback fraud, sources reveal, stretches back over several years, though precise details of its inception remain undisclosed. However, the most recent incident directly implicates both former and current employees of Interswitch, who are suspected to have exploited vulnerabilities within the company’s system. While the exact timeline remains shrouded in secrecy, at least one person has been apprehended in connection to the fraudulent activities.

Nigeria’s financial services sector has experienced an alarming surge in fraudulent activities over the past four years, as reported by the Financial Institutions Training Centre (FITC).

Shockingly, Nigerian financial institutions have reported losses totaling ₦159 billion ($201.5 million) due to fraudulent cases since 2020. This escalating trend has not only jolted financial institutions but also raised concerns among the general populace.

Interswitch’s determined efforts to recover the ₦30 billion loss and the comprehensive legal actions undertaken highlight the importance of bolstering security measures within the financial sector. As the investigation unfolds and the legal proceedings progress, industry stakeholders and consumers alike will be closely watching the outcome, with the hope that it leads to enhanced security and resilience against fraudulent activities in the future.

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