How blockchain can address e-fraud trends

In the fast-growing landscape of e-commerce and online transactions in Nigeria, the alarming rise of electronic fraud is posing significant challenges for businesses and consumers alike. With fraudsters exploiting loopholes like chargebacks, the financial strain on merchants is becoming a pressing issue. To delve deeper into how this trend can be addressed, Wale Onawunmi, the Co-Founder and Chief Technology Officer of Zone, sheds light on the potential of blockchain technology in combating e-fraud. The increasing volume of transactions in Nigeria has paved the way for a surge in electronic fraud, with a staggering $20 million contribution in the past year alone. This figure is projected to continue increasing in the subsequent years, highlighting the urgent need for effective solutions. Chargeback disputes, where customers are debited for failed transactions, not only lead to a poor user experience but also deter the adoption of e-channels, forcing individuals to resort to traditional cash payments. The evolution of financial services in Nigeria has introduced new complexities that make the sector particularly susceptible to e-fraud. The prevalence of two types of chargebacks, namely legitimate transactions and chargeback fraud, underscores the need for a streamlined and secure payment ecosystem. While legitimate transactions often fall prey to payment system failures, chargeback fraud, including friendly and true fraud, thrives due to loopholes in the reporting and resolution processes. The manual nature of current processes, coupled with the time constraints set by regulatory bodies, creates opportunities for fraudulent activities to go unchecked. Blockchain technology emerges as a promising solution to the challenges posed by e-fraud in Nigeria's financial landscape. By decentralizing transaction data and ensuring transparency among all parties involved, blockchain facilitates real-time verification of transaction statuses, mitigating the risks associated with illegitimate chargebacks. The automation capabilities of blockchain streamline the resolution process, enabling swift and accurate responses to customer complaints. Implementations of blockchain systems have demonstrated the potential to expedite dispute resolutions from days or weeks to mere minutes, revolutionizing the efficiency and security of financial transactions. As the discussion with Wale Onawunmi highlights, the adoption of blockchain technology presents a transformative opportunity to combat e-fraud trends in Nigeria. By leveraging the decentralized nature of blockchain to establish trust and transparency in transactions, financial stakeholders can enhance the security and reliability of electronic payments. As the digital economy continues to expand, integrating blockchain solutions becomes imperative in safeguarding the integrity of financial transactions and restoring consumer confidence in e-channels.