Aliyu Shittu sends fund to her wife with the Unstructured Supplementary Service Data [USSD] code. She gets instant fund. Friday, an engineer friend, pays his on-site workers with the same code. It is fast. It is easy. It is convenient. The reason many Nigerian banks are marketing the code.
This code is one of the few payment innovations that have transformed the lifestyles of Nigerians in the urban and rural areas. If you cannot connect with the code, does *737# sound familiar? Without thinking, most bank customers use the code for funds transfer to friends, families and customers. It is sometimes referred to as quick codes.
The code is session-based. Once a session expires, you must initiate a fresh session. However, it is one of the technologies approved by the Central bank of Nigeria [CBN] for mobile money transaction. Other technologies are the SMS, SIM Tool Kit [STK] and IVR.
On the flip side, Kenya with over 20 million M-PESA customers, does not use USSD. STK is favoured. But M-PESA in Tanzania, which was launched in 2008, relies on USSD. It is suitable for complex transactions. In Ghana, Airtel Money uses USSD. It supports the use of nicknames. You have to create your nickname. Your nickname is your mobile number. It indicates the recipient of a transaction.
Besides privacy and security, the nickname is similar to a business name. It is memorable. On another side, STK technology helps to break down a transaction. It follows logical steps. It ensures that the user does not have to remember complex keywords or sequences.
CBN mobile money guide
However, the CBN in its mobile money guide stated that the technology implemented “shall have accessibility to funds on completion of the transaction process, real-time transfer of value, prompt reporting of fraud cases, errors and complaints, and ensure proper confirmation of transaction details and recipients’ mobile phone numbers at all times before authorizing transactions”. This code and STK are approved channels.
Available data showed that mobile money platforms are compatible with a variety of different access channels such as Virtual Imaging Platform (VIP), Wireless Application Protocol (WAP) and mobile apps. This versatility has helped to broaden how users interact with mobile money services.
The smartphone brings a broader range
So, for mobile money operators, smartphones open access to a larger customer base. Smartphones enable operators to offer an enhanced user experience. The smartphone brings a broader range of financial products and services. Based on the pattern in other regions of the world, higher smartphone adoption increases the transactions performed. This is done through smartphone apps instead of the code. The smartphone app is used in over 90 per cent of mobile money transactions in Africa.
But there is a snag. Let us go there. For you to register for a mobile money account, you need to appear at the agent’s location. You must complete the registration process. This involves completing a form. It is the contractual relationship between you and the agent. You need an identification document. But, this is where the snag becomes obvious. In most African countries the identification form is a sham.
Identifications in Africa
Research has shown that in Angola, Botswana, Egypt and Tunisia, a customer’s registration requirement extends beyond a form of identification and a mobile number. It includes additional identification elements. National identities are the norm in the vast majority of countries. Nigeria, Ethiopia, Lesotho, Malawi, Morocco, Uganda and Tanzania accept documents beyond government-issued identity as minimum requirements. Some countries accept employment identity. A letter from a village head will also suffice.
This has raised some concerns about the trustworthiness of customers’ identification processes. In Gambia and Mozambique, for instance, the regulation allows provider’s discretion in verifying identity for the purposes of accessing mobile money services. This is subject to some regulatory review or approval.
In Ghana, another mobile money hub in West Africa, the Communications Minister spoke on the occasion of the 2018 National Cyber Security Awareness Month. He said that only 10 per cent of reported mobile money fraud cases were investigated and prosecuted. This is due to the use of fake identities used to register the SIM cards. That is the result of having a weak identity system.
Recently, over 40 mobile money fraudsters were arrested in Ghana. According to Mobile Money Limited, the arrests happened with the collaboration of the local police. The company then harped on the need for a centralised identification system. This will aid in easy detection and apprehension of mobile money fraudsters.
According to a study by the World Bank on the State of Identification in Africa published in 2017, the national identity registration rate of the population of 15 years old and above in Ghana was of only two per cent. It can reasonably be assumed that low national identity coverage rate is conducive to the use of fake identity by criminals.
As mobile money services grow in Nigeria, Ethiopia and Egypt, challenges of terrorism are recurring. Terrorist organizations are exploiting opportunities from mobile money services. The European Union (EU) funded project on Enhancing Africa’s response to transnational organized crime [ENACT] reports risks of money laundering and terrorist financing in mobile money operations.
With fake identity, it is difficult to verify the authenticity of mobile money customers. As a result of this, criminal organizations will continue to utilize mobile money services. Why? Mobile money service is becoming popular across Africa. This has enabled criminals to exploit the weaknesses in regulations, identification systems and a lack of experience and resources in law enforcement.
The leadership of Godwin Emefiele, governor of the CBN, need to examine the operation of the mobile money agents and ensure they are not aiding organised criminals to perpetrate money laundering and terrorism financing.
However, if this is not controlled by the law enforcement agencies, it will increase the level of harm organised criminals can inflict on members of the society. This may also debar the likes of Aliyu Shittu from utilizing the mobile money payment channels.