Electronic payment systems and fraud management in Nigerian banks

This study examined electronic payment systems and fraud management practices within Nigerian commercial banks, focusing on the interplay among technological capabilities, organizational conduct, and the overall effectiveness of fraud control measures. A mixed-methods research design was adopted, through which seventy-five fraud management professionals drawn from fifteen Nigerian banks were surveyed, yielding a response rate of 90.7%. The investigation covered payment system deployment patterns, the typology of prevalent fraud schemes, fraud detection and prevention mechanisms, the effectiveness of current fraud management strategies, and the organizational and technological factors that shape fraud prevention outcomes across the study period of 2010 to 2024. The findings revealed near-universal deployment of conventional payment channels, including ATM services (93.3%) and POS terminals (86.7%), whereas advanced fraud detection technologies such as machine learning (40.0%) and biometric authentication (33.3%) remained largely confined to larger institutions with greater resource capacity. Account takeover fraud (28.5%) and card fraud (24.3%) were identified as the most frequently occurring fraud categories. Overall fraud management effectiveness was rated at a moderate level (M = 3.39 on a five-point scale), with management commitment (M = 4.32), technology investment (M = 4.18), and staff training and competency (M = 4.09) emerging as the most significant determinants of fraud management success. A pronounced disparity in fraud loss rates was observed across institutional size categories, with smaller banks recording rates of 0.42%, more than double the 0.18% recorded by large banks, underscoring the resource-based vulnerabilities that place smaller institutions at a considerable disadvantage. On the basis of these findings, the study recommends accelerated adoption of advanced fraud detection technologies, systematic investment in human capital development, the establishment of formal industry-wide fraud intelligence sharing mechanisms, and the design of targeted support programs for smaller banking institutions that cannot access sophisticated fraud management capabilities through their individual resources alone. These contributions deepen understanding of fraud management dynamics in developing economy contexts and provide empirical grounding for policy initiatives aimed at strengthening electronic payment security within the Nigerian banking sector.