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Buy Now Pay Later Companies Record Increased Fraud Cases

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Buy Now Pay Later Companies Record Increased Fraud Cases

Kenn Abuya by Kenn Abuya
August 17, 2022
in News
Reading Time: 3 mins read
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Online fraud attempts increased by 30% in the first half of 2022. This is according to Smile Identity, a pan-African identity verification provider that has since published its first report named State if KYC Report H1 2022.

The “Know Your Customer” (KYC) process is a requirement that helps businesses identify their users and verify their credentials.

KYC allows companies to identify risks associated with individual customers before they happen.

Central banks often require KYC checks to prevent financial crimes like money laundering. For fintechs, online payments companies, and e-commerce, KYC can prevent fraud.

As the continent continues to develop, it is becoming increasingly digital. Key drivers of this advancement are increased Internet and mobile phone penetration, and a young population. With a median age of 19.7 years, many Africans are digital natives, just now entering the workforce.

It has also been revealed that half of the biometric fraud cases were related to identity theft, the other half includes more sophisticated spoofing attacks

A new type of fraud that is emerging and has already reached ~10% levels is Duplication Fraud

Also, countries with lower adoption of biometric IDs may notice fluctuations in fraud as fewer modern systems provide more avenues for attack

Moreover, ID database outages have averaged 9% of the time, disrupting the ability to verify people and businesses to scale.

Buy Now Pay Later (BNPL) companies are seeing high rates of fraudulent attempts as fraudsters try to get away with more opportunistic crimes.

On the other hand, crypto companies in Africa are noting lower fraudulent attacks than expected.

Several African countries are updating their digital identity infrastructure. Nigeria and South Africa are encouraging their citizens to enroll in more secure IDs that centralize and standardize information. Kenya, on the other hand, is still seeking judicial approval for the use of its new Huduma Namba ID.

Overall, most of the fraud attempts that have been seen are of low sophistication, that is, attempting to open an account with a stolen or invalid ID. But as the value at risk increases, fraudsters are attempting complicated hacks like poisoning of identity databases with fake names and faces.

“We have seen fraud attempts consistently grow over time, in the last year it has grown to 26% of all KYC checks alone. Businesses across the continent are becoming more aware of their vulnerabilities and turning to partners like us for assistance in preventing and detecting fraud on their platforms. Our technology, which was specifically designed for Africa, provides immense value to our clients, and we are constantly evolving and improving our systems to easily detect newer types of fraud at all levels of sophistication. “ Navid Scheybani, Chief Growth Officer, Smile Identity

Tags: Fraud
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Kenn Abuya

Kenn Abuya

Kenn Abuya is a friend of technology, with bias in enterprise and mobile tech. Share your thoughts, tips and hate mail at [email protected]

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