Economic factors influencing digital payment security in Africa

The rise of digital payments in Africa, notably in countries like Kenya, has brought about a surge in cyber fraud incidents, with a staggering 71 per cent of Kenyans experiencing fraud. This presents a significant challenge for financial institutions that must navigate the delicate balance between enhancing security measures and managing the costs associated with advanced technologies. CNBC Africa recently engaged in a discussion with Irene Auma, Head of Risk: Sub-Saharan Africa at Visa, to delve into the implications of economic factors influencing digital payment security in the region. In the realm of digital payments, the battle against fraud starts at the forefront of cybercrime. Irene emphasized the crucial role of technology in countering these threats, highlighting the need for financial institutions to proactively invest in robust security measures. By leveraging cutting-edge tools and technologies, institutions can predict the likelihood of fraud and make informed decisions to prevent financial losses. Additionally, the adoption of artificial intelligence (AI) and machine learning plays a pivotal role in combating increasingly sophisticated cyber threats, as threat actors continuously evolve their tactics to exploit vulnerabilities in the digital ecosystem. Education emerges as a key pillar in enhancing security awareness among consumers and staff members. Irene underlined the importance of continuous learning to stay abreast of evolving digital solutions and threat landscapes. By empowering individuals with the knowledge to identify and report potential security threats, financial institutions can fortify their defenses against cyber-attacks. Visa's substantial investments in advanced technologies, amounting to over $3 million dedicated to AI and Gen AI in the past decade, have yielded promising results. In the last 12 months alone, Visa successfully prevented over $10 billion in potential fraudulent transactions, underscoring the effectiveness of proactive security measures in safeguarding digital payment ecosystems. One of the critical considerations in the realm of digital payments is investor confidence. As fintech companies continue to drive economic growth, the specter of escalating fraud risks poses a significant threat to investor trust. Irene emphasized the necessity for fintechs to prioritize comprehensive security measures to instill confidence among investors and retain capital inflow in burgeoning markets like Kenya. By strategically deploying security solutions tailored to their scale and operational needs, fintechs can mitigate risks and cultivate a secure environment for financial transactions. The debate surrounding the financial costs of implementing advanced security measures remains paramount. While historically perceived as a cost center, investing in security solutions is increasingly recognized as a value-driven initiative. Irene highlighted the indispensable role of technology in combating evolving cyber threats, stressing the need for ongoing training and adaptation to stay ahead of malicious actors. By viewing security investments as vital assets in maintaining consumer trust and driving digital payment adoption, financial institutions can justify the expenses associated with bolstering their security frameworks. As the digital payment landscape in Africa continues to expand, the proactive integration of advanced security solutions emerges as a critical imperative for safeguarding financial ecosystems and fostering sustained growth in the region.