POS fraud has become a major concern for businesses in Nigeria. As digital payment systems grow in popularity, so do the tactics fraudsters use to exploit them. Businesses are now not only focused on delivering excellent customer service but also on securing their operations and customers from financial fraud.

To help businesses mitigate these risks, we will explore the most common POS fraud tactics and provide practical solutions to prevent them.

The following are common POS frauds and solutions;

• Card Cloning (Skimming Fraud)

Fraudsters use a skimmer device to capture card details when customers swipe debit cards on a compromised POS machine. They later use the stolen data to create duplicate cards and make unauthorised transactions.

Solution

• Use POS machines with EMV chip technology instead of magnetic stripe-only systems.
• Inspect your POS terminal for external devices attached to it.
• Encourage customers to use contactless or mobile payments when possible.
• Train staff to recognise suspicious behaviour from customers attempting to tamper with the machine.

• Fake Bank Alerts (Deposit Fraud)

A fraudster can pretend to make a bank transfer for a purchase and show a fake SMS alert as proof of payment. You may then release goods only to discover no money has been received.

Solution

• Always confirm transactions via your bank’s mobile app, USSD, or online banking before processing orders.
• Set up real-time transaction notifications from your bank to verify payments.

• Chargeback Fraud (Friendly Fraud)

Sometimes, a customer may make a legitimate payment via a POS terminal and falsely claim that the transaction was fraudulent or unauthorised. The bank may reverse the transaction, causing your business to lose money and goods.

Solution

• Keep detailed transaction records, including receipts and CCTV footage, if possible.
• Use POS systems like PayCliq with customer verification features such as PIN confirmation.
• Report suspicious chargebacks to your payment provider and dispute them promptly.

• Employee Fraud

Some employees manipulate POS transactions by processing fake refunds to their accounts, overcharging customers and pocketing the difference, or using unauthorised manual transactions to steal money.

Solution

• Implement strict employee monitoring and reconcile transactions daily.
• Restrict refunds and void transaction access for trusted staff only.
• Use POS systems with admin approval for refunds and reversals.
• Install CCTV cameras at payment points to deter internal fraud.

• Stolen or Lost POS Terminal

If your POS machine falls into the wrong hands, fraudsters can use it to carry out unauthorised transactions or manipulate payments.

Solution

• Always secure your POS device when not in use.
• Set up password protection or biometric authentication for access.
• Report a lost or stolen POS machine to your service provider immediately.

• Unauthorised Third-Party Transactions

A fraudster may use a stolen or unauthorised bank card to pay for goods. Later, the rightful owner may report the fraud, leading to chargebacks that result in financial losses for your business.

Solution

• Request ID verification for large transactions.
• Train staff to match cardholder names with customer IDs when necessary.
• Use POS machines that support multi-step authentication for extra security.

Our Take

POS fraud is a serious threat to businesses in Nigeria, but with proper precautions, businesses can safeguard their revenue and customers. Business owners should stay alert, verify transactions, and use secure POS systems like PayCliq to reduce fraud risks and operate safely.