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Volume 2. Issue I. June 2023
1
Journal of Social Sciences and Management
Electronic Businesses Development and its Associate
Cybercrimes: An Assessment of Financial Technology
Utilisation in Nigeria
CJSSM
ISSN 2518-8623
Volume 2. Issue I
pp. 1-19, June 2023
www.cavendish.ac.ug
email: secretarycjssm@cavendish.ac.ug
How to cite this article: Ashibi, J. E,
Ocheja, A & Ugwukwu, V. O. (2023).
Electronic Businesses Development
and its Associate Cybercrimes: An
Assessment of Financial Technology
Utilisation in Nigeria. Cavendish
Journal of Social Science and
Management, Vol 2.
Dr. J. E. ASHIBI
National Open University of Nigeria
Email: eashibi@noun.edu.ng
Dr. Akoji OCHEJA
National Open University of Nigeria
Email: : aocheja@noun.edu.ng
Dr. Vitalis Odinaka UGWUKWU
National Open University of Nigeria
Email: : vugwukwu@noun.edu.ng
Abstract
The proliferation of financial technologies has contributed immensely to the growth and
development of electronic businesses in Nigeria. However, many users are apprehensive due to
emerging trends of cybercrimes associated with the utilisation of financial technologies for business
transactions. The study examines electronic businesses and its associate cybercrimes in Nigeria. It
employs the quantitative design, utilising the questionnaire as the major instrument of data collection.
Twenty-three (23) electronic businesses and consumers of financial technologies were randomly
selected for the study. The snowball and purposive sampling techniques were also utilized in
administering the research instruments. Data obtained for the study were analysed using the
Statistical Package for the Social Sciences (SPSS) to determine commonalities and patterns in the
respondents' responses. Emerging cybercrimes were found to have adverse effects on the
development of electronic businesses. The study recommends awareness campaigns to up
consumers’ financial technology literacy; adequate policy formulation and enforcement to punish
and deter potential cybercriminals; and the Central Bank of Nigeria (CBN) should strive for policies
that will compel financial institutions to upgrade their financial gateways to incorporate Europay,
MasterCard and Visa (EMV) Chip and Near Field Communication (NFC) technologies to prevent
fraudulent transactions and boost consumers' confidence.
Key words: Electronic Business, Cybercrime, Financial fraud, financial technologies
Volume 2. Issue I. June 2023
2
Introduction
Before the 19th century, commercial enterprises or businesses in Nigeria were largely transacted in the
physical space, where both merchants and their customers converge, initiate a bargain and settle for
the exchange of goods and services. This physical approach to commerce was not only time-
consuming but also tasking due to its rigorous processes, especially for merchants and customers to
meet and settle for a common exchange. Merchants had no other option other than to move their
goods and services to designated areas commonly referred to as a Market places, where customers
must also physically visit to effect transactions.
Owing to the physical requirements that characterized conventional businesses before the 19th
century, crimes on businesses were also limited to the physical space. Hence, businesses were more
exposed to crimes such as physical theft, arson, armed robbery, counterfeiting and vandalism; which
most times resulted in loss of lives and properties. Consequently, businesses were protected
traditionally based on both physical and procedural security measures.
However, the advent of financial technologies in the mid-19th century has significantly reduced
physical crime opportunities in businesses, reduced commodity supply and demand related stress,
and improved business finance accountability. The impact of financial technologies on businesses
cannot be over-emphasized. For instance, the payments for goods and services have become
seamless irrespective of geographical locations and time differences. Generally, financial
technologies are considered indispensable in the implementation of the Central Bank of Nigeria's
cashless agenda.
As a result of the tremendous benefits associated with the utilisation of financial technologies, many
conventional businesses have long migrated to full fledge electronic businesses, utilising both virtual
and physical spaces for sales and payments purposes. Financial technologies have contributed in no
small measure in the creation of vast business opportunities via virtual markets. Products and services
are now made available for customers to seamlessly pay using financial technology without
necessarily carrying physical cash.
While the opportunities for physical financial crimes against businesses have been grossly reduced by
the advent of financial technologies, it has however opened up new criminal opportunities via the
utilization of the internet and electronic devices like the computer, smartphones, and other devices
for financial transactions. Electronic businesses and their customers have oftentimes been victimised
by criminals in the cyberspace.
Although ICT has impacted businesses, organisations and institutions alike, it has, however, become a
breeding ground for cybercrime to thrive. Cybercriminals have become armed to steal users'
information and dispossess them of their financial holdings. The trend of electronic fraud associated
with the utilisation of financial technologies in electronic businesses in Nigeria has assumed a
worrisome dimension and if left unchecked, could worsen as it could crumble businesses, heighten
unemployment, increase the poverty rate and spike street criminality.
Despite efforts by the Central Bank of Nigeria to curtail the rate of electronic payment fraud, hardly
does a day go by without individuals losing their hard-earned monies to cyber-criminals who
strategically steal their financial information as they utilise electronic technologies for payments for
goods and services. According to the Central Bank of Nigeria (2021), financial stability report, Point of
Volume 2. Issue I. June 2023
3
Sales (POS) transactions alone recorded 21.55 percent of fraud incidences. This implies a 7% rise from
the previous year.
This rising electronic financial fraud does not only threaten electronic business development, it also
significantly threatens individual consumers of financial technologies who may not want to utilise
electronic payment channels for fear of being victimised by cyber-criminals. Consequently, the drive
to a cashless economy may be hindered as individuals who develop a phobia to utilise financial
technologies for transactions may still rely on physical cash.
The foregoing is a dangerous precedent not only to electronic business developments but also given
the apex Bank's efforts to drive a cashless Nigerian economy. Therefore, the study seeks to investigate
the specific types of cybercrimes born by the utilisation of financial technologies; how consumers of
financial technologies become victims of cybercrimes; and what can be done to ameliorate the
scourge of financial technology-related cybercrimes against electronic businesses.
Literature Review
Correlates of Electronic Business, Financial Technology and Cybercrime
The juxtaposition of the concepts of electronic business, financial technology and cybercrime is
pertinent to the comprehension of the impact of cybercrimes on electronic business development in
Nigeria. Contextually, the unfavourable criminal invention of the interplay of these three concepts
under review constitutes the thesis of this article.
Electronic businesses, commonly referred to as E-Businesses entail businesses that operate on
processes that are executed through any technology-mediated channel. According to the Gartner
Glossary on information technology (2023), the processes involve production, customer relations and
management. However, Pratt, Cole and Karjian (2022) classified electronic businesses as businesses
that are executed or conducted online using the web, internet, extranet, or a combination of all. The
range of activities performed in the processes of electronic businesses includes but not limited to the
buying and selling of goods and services, payment processing, production and supply chain
management, affiliate management, information sharing and employee services and recruitment.
According to Patrizio and Moore (2023), the term E-Business was first used by the International Business
Machine Corporation (IBM) in October, 1997 in her attempt to solve the confusion customers
experienced about internet-based businesses. The types of e-businesses range from business-to-
business model, business to customers model, customers-to-business model, and customers-to-
customers model. The term electronic business is used to describe all forms of businesses operated
with the aid of financial technologies as their standard of payment (Jain, Vipin & Malviya, Bindoo&
Arya, Satyendra, 2021).
Electronic businesses thrive on the altar of financial technologies. The term financial technology is
utilized to imply all technological devices and software that are employed for the facilitation of
business transactions about payment processing. The American Bureau of Labour Statistics (2021),
described financial technology as a combination of software, mobile applications and a host of
other technologies that are designed to improve and automate traditional forms of finance for
businesses and their customers. This definition explicitly captures the basic rudiments of financial
technology in this context.
Volume 2. Issue I. June 2023
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The range of financial technologies being utilised in the world includes internet banking, credit/debit
cards, and mobile money which has been proliferated with a considerably low adoption rate. For
instance, mobile money has been introduced to over 90 countries in the world. These technologies
aid consumers to save money, carry out transactions and have access to finance (Ligon, Malick,
Sheth, and Trachtman, 2019).
Emarketer.com (2023), observed that the growth of financial technologies and electronic business is
greatly challenged by the opportunities it creates for cybercriminals and financial fraudsters to
perpetrate scam activities on businesses and individuals. The introduction of Financial Technology
(FinTech) in the 1960s paved way for ease in various aspects of social and economic life in Nigeria.
According to Okonigene & Adekanle (2010), Financial Technology as an aspect of Information and
Communication Technology has facilitated connectivity, bridged physical gaps, integrated nations
and made the world a global village.
The advent of the internet in 1990 proliferated the utilisation of financial technologies in different
aspects of human lives, which include but are not limited to agriculture, telecommunication,
education, electronic commerce, health, transportation services, Banking and Finance, etc. The
financial sector is one of the most impacted as it has witnessed a significant revolution from analog to
digital or electronic systems of executing financial transactions.
Ekuobase & Olutayo (2016), opined that ICT in the 21st century is a strategic asset to businesses,
organisations and institutions; as it is used in the delivery of innovative services with commendable
speed and accuracy. Since the emergence of the internet and other information and
communication technologies, many businesses have migrated from cash payments to utilising
electronic mediated means of payments like the Point of Sale (POS) machines and other applications
and devices. This has precipitated a rise in the number of electronic businesses in Nigeria (Business
Day, 2019).
Broby (2021) examined financial technology and the future of banking; and illustrated how financial
institutions' intermediation will be impacted by innovative financial technology applications. The role
of financial technologies in customer acquisition, retention and the overall enhancement of
electronic business cannot be overemphasised as financial technology is best suited for intermediate
roles between businesses and their customers.
Technological innovations and advancements have continued to play vital roles in the society. It has
assumed an indispensable position in the affairs of man and his social existence. Emerging financial
technologies has greatly revitalised the traditional analog modus operandi of various types of
businesses. Financial technologies play vital roles in the handling, processing, storage, retrieval, and
dissemination of information via electronic devices (Adegbija and Daramola, 2007).
Neelam and Sonali (2022) reviewed extant literature to unravel the contributions of digital
technologies in financial inclusion and suggested viable directions to policymakers to further the
initiatives for financial inclusion. Digital technologies were considered the drivers of financial inclusion
and economic growth. This substantiates the reality of financial technologies in revolutionising
business operations in Nigeria and the world at large.
Electronic devices incorporate all types of electronic-powered technologies that facilitate the
financial operations and development of electronic businesses. These devices include technological
innovations handling online payment processing, electronic data exchange (EDI), inventory tracking
Volume 2. Issue I. June 2023
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systems, mobile commerce and automated data collection systems. Essentially, every device
connected to the internet has become a functional tool in the operationalisation of electronic
businesses according to its capacity.
The innovation of mobile phones accelerated the operationalisation of financial technologies. In the
views of Aker and Mabiti (2010), the use of mobile phones by both urban and rural households has
significantly expanded the number of consumers benefiting from the use of financial technologies,
thereby, propagating electronic businesses as more and more people continue to utilise emerging
financial technologies for electronic transactions.
Since the advent of financial technologies, the trend of cybercrime on electronic businesses has
assumed a troubling impact. Cybercrime is a term used to describe all illicit activities that are
perpetrated with the aid of internet-enabled electronic devices like the computer, smartphones and
other financial technologies. The United Nations Office on Drugs and Crime (UNODC, 2023), pointed
out that by way of technological abuse, cybercriminals have ruined businesses and even lives.
The World Bank (2017), disclosed that the basic threat to financial technology utilisation is the basis
that approximately 2.5 billion potential financial technology consumers do not hold financial
accounts. However, mobile payment is still one of the most widely utilised financial technologies for
digital payments and communications. Despite this, there is low patronage of financial technologies
due to cyber or electronic fraud (Broby, 2021).
Stijn (2006) observed that most countries do not give priority to policy formulations that support
universal access to financial services. Therefore, the need to facilitate access to financial services can
be achieved by strengthening institutional infrastructure, liberalizing markets, facilitating competition
and encouraging innovative utilisation of technological know-how. Additionally, policies must meet
the primary considerations of financial technology consumers, which include cost reduction,
convenience, and real-time data tracking for decision-making.
Cybercrime and Electronic Business Development
The adoption and utilization of financial technologies in electronic businesses have gained significant
traction as it provides access to global markets, offer competitive advantages and increase the
effectiveness of businesses (Apau, Koranteng & Gyamfi, 2019). However, electronic businesses and
their customers have continued to suffer losses from the activities of cybercriminals who trail and prey
on electronic business activities and processes with the ultimate aim of attracting illicit financial
benefits.
Duah and Asirifi (2015), investigated the impact of cybercrime on the development of electronic
business in Ghana, and discovered that cyber-fraud had direct financial losses to consumers and
businesses because websites suffer spoofing and hijacking, payment systems can be compromised
and funds can be transferred at a speed of light. They observed that these electronic crimes result in
consumers' tremendous phobia of venturing into electronic financial transactions and have
heightened privacy concerns about public utilization of financial technologies. Therefore, the pace
of electronic business development is limited by consumers' fears of being victimized by
cybercriminals.
In another study conducted by Apau and Koranteng (2019) on the impact of cybercrimes and trust
on the use of e-commerce technologies, the lack of trust in internet media, subjective norms and
perceived external usability control are deterrents to the utilisation of financial technologies. The
Volume 2. Issue I. June 2023
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obvious lack of trust corroborates the fears exercised by consumers of financial technology, thereby,
necessitating the continuous internalisation of the conventional face-to-face economic life of
individuals. This further strengthens the position that if electronic businesses are to assume the normal
pace of development, then the issue of trust in the utilisation of financial technologies must be
addressed by implementing measures that will curb cybercrimes on electronic businesses.
Similarly, Jabar (2022) examined individuals' perception and the usage of e-commerce business
technology platforms in Lagos Metropolis, Nigeria and found that the utilisation of e-commerce
technologies was adversely affected by the negative perception of cybercrimes on e-businesses. This
underscores the need for comprehensive cyber law enactments and the deployment of adequate
cyber security systems to guarantee users' protection and safety.
Some Common Types of Financial Technology-Enabled Cybercrimes
The advent of ICT, particularly financial technologies, birthed criminal prospects that are bedevilling
the going concern of many electronic businesses (Ashibi, 2021). These criminal prospects are
perpetrated in diverse ways unknown to vendors and their consumers. Rafael (2023), outlined the
types of cybercrimes that are associated with electronic businesses including but not limited to the
followings:
a. Credit card fraud: This relates to all types of fraud that are committed with the aid of a credit
card. Credit cards are often stolen by the fraudster to transact electronically without the
approval of the actual owner. An instance of this is the purchase of credit cards in the dark
web or black market by cybercriminals and utilising such cards to purchase goods and
services electronically. Although, the cardholder may be debited in the long run, the
merchant who sold such goods or services will bear the burden of such loss as they have to
make refunds to the actual cardholder. According to Ashibi (2021), this type of electronic
financial fraud is associated with the utilisation of credit and debit cards financial
technologies.
b. Affiliate Fraud: This type of electronic fraud is common in affiliate marketing. Here, the
cybercriminals compromise the merchant’s online stores and defraud the merchant by
fraudulently generating sales activities with the ultimate aim of increasing the commission due
to them. It is common to find this type of electronic fraud particularly on electronic payment
gateways of merchants. Cybercriminals take advantage of payment gateway technologies
to actualize their criminal motives on electronic businesses.
c. Chargeback Fraud: This is a situation where a payment service provider demands a merchant
to make a refund for a transaction that is assumed fraudulent or disputed. Cybercriminals
take advantage of this window to request a financial refund from their merchants via the
payment service providers on the criminal claim that their orders were not successfully
delivered but were debited. Typically, the fraudster makes an online purchase, receives the
order(s), and deliberately waits for weeks or months before making a refund claim to their
bank on the basis that the transaction was fraudulent or unauthorised.
d. Phishing: This is the unauthorised access to customers’ financial accounts or wallets as may be
created by online merchants and financial institutions. Online fraudsters use phishing schemes
to hack into these accounts and carry out illicit transactions. Oftentimes, the actual account
owners are tricked by emails or phone calls to reveal their personal information which will aid
the fraudsters to gain access to their accounts. These personal information may include
usernames, passwords, Personal Identification Number (PIN), etc. Technologies such as the
internet, digital computers, mobile phones and technology-mediated communication
Volume 2. Issue I. June 2023
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channels (like emails, SMS, etc) are veritable tools in the hands of cybercriminals in
perpetrating phishing activities (Ashibi, 2021).
e. Intercept fraud: This involves the tactics of utilizing stolen credit cards to initiate electronic
transactions, and make payments but intercepts the delivery before the products or services
are delivered to the address identified on the credit card. A good example of this in Nigeria is
a situation where a cybercriminal places an order on Jumia, but after the order, calls the
company to change the delivery address. This diversion is what is termed intercept fraud.
f. Triangulation fraud: This is a complex type of financial fraud where the cybercriminal considers
three steps. Summarily, the fraudster squat under popular brand names to create online stores
with the ultimate aim of stealing credit card details. The stolen credit card details are used to
order products or services without authorisation from the actual owner of the card.
Theoretical Framework
Given the fast pace of the internet revolution which is sweeping across the globe with a juxtaposition
of its concomitant impetus to an array of financial technologies, traditional ways of doing business
and mode of payments have been significantly altered. Consequently, businesses and individuals are
increasingly adapting to the digital or electronic culture of utilising electronic devices and internet
technologies in carrying out daily transactions.
The space transaction theory is employed to expressly elucidate how the transition from the physical
or manual ways of doing business to the contemporary digital culture of electronic business operation
has impacted crime and criminal victimization. The internet evolved with new forms of deviance,
crime and social control measures. These new realities in the cyberspace have become immediate
threats to electronic businesses.
The space transition theory was developed by Jaishankar K. in 2008. It is a theory of cybercrime which
expresses how the cyberspace has emerged as a fertile ground for criminal activities to thrive. This
theory explains the conforming and non-conforming behavioural differences of people in the
physical space and when they transit to the cyberspace (Jaishankar, 2008). The theory holds that
individuals who ordinarily would not venture into criminality in the physical space because of their
social status and position may do so in the cyberspace because of its potential for anonymity. This is
because the cyberspace has identity flexibility, dissociative anonymity and a lack of deterrence
factors. Besides, cybercrime thrives on the virtue that criminals can escape easily because
cyberspace location can be seamlessly changed as the offender can move from one space to
another.
This theory is relevant to the extent that it explains how electronic crimes are exacerbated by the
anonymity and flexibility embedded in the cyberspace. Therefore, the cyberspace has become the
new "Heaven" for criminals in the physical space to migrate their illicit tendencies. It further portrays
the fact that individuals who because of their social statuses in the society would not want to commit
crime in the physical space, now have an opportunity in the cyberspace to take advantage of the
elements of flexibility and anonymity of the cyberspace to commit electronic or cybercrimes. This
theory adequately accounts for the proliferation of cybercrimes in electronic businesses today.
Volume 2. Issue I. June 2023
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Methodology
The Research Design
The case study approach was adopted to critically examine the behavioural pattern of financial
technology utilisation by electronic businesses and their consumers. Essentially, data for the study
were elicited from the respondents using a well-structured questionnaire as the main instrument of
data collection. Data collated from the questionnaires were analysed with the aid of the Statistical
Package for the Social Sciences (SPSS) to identify and establish prominent patterns among consumers
of financial technology and electronic businesses.
The case study design is a highly practicable research method as it is of immense help in contributing
to exposing the common types of financial fraud associated with electronic businesses in Nigeria.
However, the need to triangulate with the descriptive research design was found to be appropriate
in the collation, analysis and presentation of the quantitative research data. This gave room for us to
provide insight into answering the questions of the "why" and "how" of cybercrimes on electronic
businesses via financial technologies in Nigeria.
Sampling Techniques
The probability and non-probability sampling techniques were adopted in selecting the required
respondents for the study. The probability sampling method that was employed is the stratified and
simple random sampling techniques, while the purposive and snowball sampling techniques were the
non-probability sampling methods. Ikeja Local Government Area of Lagos State was delineated
according to its 12 districts or communities (Anifowose, Oregun, Ojodu, Opebi, Akiode, Alausa,
Agidingbi, Ogba, Magodo, Maryland, Onigbongbo and the Government Reserve Area). Each district
was stratified based on major electronic business locations. To avoid bias in the selection process, the
simple random sampling technique was utilised to draw samples from the various strata in such a way
that the different units in the population of the study had equal chances of being selected. Finally,
the purposive and snowball sampling techniques were deployed to identify and administer the
research instruments to the respondents.
Volume 2. Issue I. June 2023
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Figure 1: Sampling procedure from population to sample
Source: Developed by the researchers, 2023.
Cronbach's Alpha Reliability of the Research Instruments:
Population to Sample
Stratified and Simple Random
Population: All
electronic businesses
Financial Technology
Related Crimes:
• Only Electronic
Businesses to participate
• Participants are staff of
electronic businesses or
consumers of financial
technologies.
Target Population:
Electronic businesses
utilizing financial
Technology
Stratify and List
electronic businesses
that utilizes financial
technologies
Primary sample:
All know electronic
businesses with active
financial technologies
Contact Managers and
request permission to
use staff and customers
as respondents.
Distribute questionnaires
and administer interview
Subjects:
23 electronic businesses
No further
action
taken
Yes
No
Volume 2. Issue I. June 2023
10
Table 1: Cronbach's Alpha for measurement of scale reliability for the Research Instruments
Instrument sub-focus
Cronbach's alpha
No of Items
Types of electronic businesses
.876
4
Characteristics of electronic businesses
.821
3
Staff
.732
63
Managers
.895
23
Customers
.865
93
Use of financial technologies
.829
23
Financial technology service providers
.764
6
Fraud on electronic businesses
.983
12
Types of electronic business fraud
.854
6
Causes of electronic business fraud
.833
9
Impact of electronic business fraud
.822
6
Confidence on electronic business
.867
4
Solutions to electronic business fraud
.726
6
Source: Fieldwork, 2023.
Findings and analysis
Findings are presented thematically based on the research objectives that were addressed by the
relevant sections of the research questionnaire and interview guide that were administered to the
respondents of the study. Simple statistical tables were employed for the presentation of the
quantitative data elicited from the respondents.
Volume 2. Issue I. June 2023
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Table 2: Financial Technology Utilization Preferences
Fintech. Service Providers
Yes
No
Neutral
Total
Flutterwave
8
(35%)
13
(56%)
2
(9%)
23 (100%)
Paystack
14
(61%)
8
(35%)
1
(4%)
23
(100%)
Accelerex
9
(39%)
3
(13%)
11
(48%)
23
(100%)
PiggyVest
7
(30%)
2
(9%)
14
(61%)
23
(100%)
Paga
11
(48%)
4
(17%)
8
(35%)
23
(100%)
Interswitch
12
(52%)
5
(22%)
6
(26%)
23
(100%)
E-transact
11
(48%)
8
(35%)
4
(17%)
23
(100%)
Carbon Paylater
6
(26%)
2
(9%)
15
(65%)
23
(100%)
Remita
15
(65%)
2
(9%)
6
(26%)
23
(100%)
Kuda
9
(39%)
3
(13%)
11
(48%)
23
(100%)
Source: Fieldwork, 2023.
Table 2 above indicates the utilisation preference of some major financial technology service
providers in the study area. The table revealed that most consumers utilising financial technologies
prefer Remita (65%), Paystack (61%) and Interswitch (52%) over other payment service providers.
However, Paga (48%), E-transact (48%), Accelerex (39%), and Flutterwave (35%) were considered the
most viable alternatives. Hence, consumers' preference for these payment service providers is
assumed to be based on transaction transparency, swift dispute resolution, and low-cost processing
fees.
Volume 2. Issue I. June 2023
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Table 3: Challenges Facing Financial Technology Utilisation
Legend - 1 = Very Severe 2 = Severe 3 = Neutral 4 = Less severe 5 = Not severe
Variables
1
2
3
4
5
Mean
Rank
High transaction service cost
32.1
16.4
-
-
-
3.65
7th
Electronic financial fraud
73.5
25.9
-
-
-
4.95
1st
Service/Network downtime
45.2
17.2
-
-
-
4.65
3rd
Delays in credit/debit
65.8
21.6
-
-
-
3.99
5th
Lack of financial privacy
50.6
18.2
-
-
-
3.87
6th
Lack of transparency
25.9
12.3
22.5
-
-
4.60
4th
Harmful manipulation
73.1
25.9
-
-
-
4.88
2nd
Others
-
-
-
-
-
-
-
Source: Fieldwork, 2023.
Table 3 above represents an analysis of the respondents' responses on the various limitations on the
utilisation of financial technologies. Results from the analysis revealed that most respondents
(represented by a mean value of 3.65) are apprehensive about utilising financial technologies due to
their susceptibility to electronic fraud. From the result, the issue of financial fraud is considered very
severe as it has become a major impediment for most consumers of financial technologies to utilise
the option as a means of carrying out financial transactions. Besides, the majority of the respondents
further allured to the position that transactions carried out via financial technologies are prone to
harmful manipulations (represented by a mean value of 4.88). This challenge is considered severe.
However, the challenge of lack of transparency in transactions via financial technologies was
downplayed by most of the respondents as they chose to remain neutral (represented by a mean
value of 4.68). Whereas, delays in credit/debit (3.99), lack of financial privacy (4.60) and high
transaction service cost (3.65) were not considered severe impediments to the use of financial
technologies.
Volume 2. Issue I. June 2023
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Table 4: Types of cybercrimes/fraud associated with financial technologies
Legend: SA=Strongly Agreed; A=Agreed; UD=Undecided; D=Disagreed; SD=Strongly Disagreed
S/N
Fraud types
% Rating
Mean
STD
SA A UD D SD
1.
Triangulation fraud
43.9
42.3
1.5
3.8
3.4
4.24
1.050
2.
Identity theft
41.9
45.2
2.7
6.6
4.6
4.11
0.958
3.
Credit card fraud
39.2
38.1
0.5
5.3
7.5
4.15
1.166
4.
Affiliate fraud
32.8
34.9
6.2
13.5
12.6
3.62
0.898
5.
Phishing
37.6
45.9
0.7
2.3
3.7
4.31
1.386
6.
Intercept fraud
43.4
39.0
3.2
10.7
13.7
3.68
1.020
7.
Chargeback fraud
42.2
42.9
3.7
3.4
5.0
4.19
1.388
Source: Fieldwork, 2023.
Findings from the field with regard to the types of cybercrimes or electronic fraud associated with
financial technologies are presented in Table 4 above. The respondents' ratings on the most
prevalent types of electronic financial fraud reveal triangulation fraud, identity theft, credit card
fraud, affiliate fraud, phishing, intercept fraud and chargeback as the most common types of
electronic fraud associated with financial technologies.
The respondents' ratings on the types of electronic fraud reveal a statistically significant correlative
pattern on triangulation fraud, identity theft, credit card fraud, phishing, and chargeback with mean
scores of 4.24, 4.11, 4.15, 4.31 and 4.19 respectively. These frauds are tagged as the most prevalent
types of fraud in the study area. However, other types of electronic fraud like intercept and affiliate
frauds are also present in financial technologies but their impacts are not felt significantly yet.
Discussion
The advent of financial technologies has established a fertile ground for electronic financial fraud to
thrive. Hence, this study set out to examine the types of cybercrimes/electronic fraud that are
associated with financial technologies and their effects on the utilization of financial technologies for
electronic transactions. Therefore, the findings from the study are discussed thematically as follows:
As indicated in Table 2, the study revealed that Remita (65%), Paystack (61%) and Interswitch (52%)
are the most preferred financial technologies utilised by consumers. This result is largely based on
transparency, dispute resolution and cost of processing fees. It entails that users' preference for
financial technologies is a reflection of their direct experience or on the shared experiences of others
about convenience and other benefits. This corroborates the position of Stijn (2006), who stated that
the primary considerations of financial technology consumers include cost reduction, convenience,
and real-time data tracking for decision-making.
Furthermore, findings from the study as presented in Table 3 revealed the major challenges facing
financial technology utilisation. Among these challenges are high transaction service cost(7th),
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14
electronic financial fraud(1st), service/network downtime(3rd), delays in credit/debit(5th), lack of
financial privacy(6th), lack of transparency(4th) and harmful manipulation(2nd). These challenges
possess as impediments to the utilisation of financial technologies for electronic transactions.
However, electronic financial fraud was identified as the most severe challenge hampering financial
technology consumers from utilising financial technologies in electronic transactions. This finding
clearly explains why most persons chose to transact with physical cash even when they were issued
instruments of financial technologies like credit/debit cards, online financial applications, etc. This
finding is supplemented by the views of Apau and Koranteng (2019) on the lack of trust in the
utilisation of financial technologies. Individuals or financial technology consumers are apprehensive
because they or others have at one point or another suffered financial loss(es) as a result of utilising
financial technologies.
Finally, Table 4 indicates the respondents’ responses on the types of cybercrimes/fraud associated
with financial technologies. Although, it was gathered that triangulation fraud, identity theft, credit
card fraud, affiliate fraud, phishing, intercept fraud and chargeback are all evident in financial
technologies, however, triangulation, phishing, identity theft and credit card fraud were identified as
the most prevalent types of cybercrime or electronic fraud associated with financial technology
utilisation in the study area. By implication, these electronic financial frauds are the major threats to
financial technology utilisation by consumers. This finding is in line with the views of Broby (2021) who
posited that there is low patronage of financial technologies due to cyber or electronic fraud
inherent in financial technology loopholes that have been taken advantage of by cybercriminals.
Therefore, to up users’ utilisation, concerted efforts must be made by stakeholders of digital financial
technologies to close the loopholes to curb these electronic frauds, especially given the Apex Bank’s
(Central Bank of Nigeria) economic decision to migrate to a full-fledged cashless economy.
Conclusion and Recommendations
Because of the fast-transitioning pace of Nigeria’s digital economy, it is imperative to examine the
utilisation of financial technologies with the primary aim of unravelling its basic threats and proffering
feasible measures to curb such threats. Financial technology has continued to remain indispensable
in the electronic commerce industry. For instance, major electronic commerce players in Nigeria like
Jumia International, Zikel Cosmetics, Soso Games, SLOT Systems Limited, and other electronic
businesses, utilises financial technologies through financial technology service providers like Paystack,
Remita, E-transact, Paga, Interswitch, etc for basic financial operations or transactions. Therefore, the
advent of financial technology has revolutionised the physical marketplace into a virtual global
market with ease of transaction and communication between vendors and clients.
Converse to the successes of financial technologies in electronic commerce, cybercriminals have
found it a fertile terrain to defraud unsuspecting users and dispossess them of their financial worth and
valuables. This criminal aim of financial fraudsters is perpetrated via acts of triangulation fraud,
identity theft, credit card fraud, affiliate fraud, phishing, intercept fraud, chargeback and other
means of electronic financial fraud.
Consequently, this study examines financial technology utilisation in electronic businesses with the
primary aim to determine such factors responsible for low patronage from individuals and businesses.
Based on the findings of the study, the following recommendations are made to curb the trend of
financial fraud exacerbated by financial technology and to encourage its utilisation by individuals
and businesses.
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15
i. As the apex bank, the Central Bank of Nigeria should exercise deliberate and decisive efforts
in promoting awareness to up consumers’ financial technology literacy to boost its utilisation
and avoid victimisation by cyber criminals.
ii. Government should criminalise all acts of financial fraud including the intent or attempts to
do so. This can be achieved by adequate policy formulation and enforcement to punish and
deter potential cyber-criminals.
iii. Law enforcement agents should be empowered appropriately to investigate and arrest the
litany of financial fraudsters who utilise traceable technology-mediated communication
channels (like mobile phones, emails, etc) to perpetrate the crimes.
iv. Relevant financial regulatory bodies and authorities like the Central Bank of Nigeria, should
strive for policies that will compel financial institutions to upgrade their financial technologies
to incorporate Europay, MasterCard and Visa (EMV) Chip and Near Field Communication
(NFC) technologies. These are globally recognised technological components with high-level
security to protect the users.
Volume 2. Issue I. June 2023
16
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