PesaLink ten-month fraud lessons forces cap on transaction amounts

Jeniffer Theuri,  Integrated Payment Services Limited? CEO and Habil Olaka KBA CEO addressing the media during the PesaLink launch at Nairobi's Intercontinental Hotel. PHOTO BY PATRICK ALUSHULA/STANDARD ON JUNE 9, 2017

A multi-million shillings internal fraud prompted PesaLink to cap inter-bank transfer amounts during the festive season, The Standard has learned.

According to sources who sought anonymity, the move by the bankers’ money transfer service PesaLink to cut the maximum amount of cash that can be transacted via mobile by a third was informed by two lenders who were hit by massive fraud during the 10 months the service has been in operation.

Lenders have been sending their customers notices informing them that they can no longer send just short of a million shillings as was initially the case.

“Dear customer, the maximum PesaLink amount per transaction has been reduced to Sh350,000,” Stanbic Bank wrote to a customer.

A customer service staff from another lender revealed that the notices which have not been withdrawn were informed by the fear that more fraud cases will hit lenders in the hype of the festivities.

With 30 lenders in tow, PesaLink which is owned by banks through Integrated Payment Services Limited (IPSL) had an advantage over money transfer by telcos capped at Sh140,000 per transaction. It also offered lower transaction charges in a bid to compete for market share.

However, PesaLink said the move to cap the amount was a precautionary measure during the festive season when cases of fraud surge.

“It was not about banks being hit, it was just a precautionary measure during the festive season which is usually a high fraud season. It was lowered over the Christmas season but will be lifted soon,” PesaLink Chief Information Officer Michael Mbuthia said.?

IT Risk and Internal Control Consultant at NetGuardians John Kiptum said fraud rises around the holidays, especially since banks operate on skeleton staff and the clients are in the rural areas - often out of range, so it is hard to detect.

“There is inadequate managerial oversight especially in the long holidays, so it takes days before fraud can be detected,” Kiptum said.

The IT expert said that 70 per cent of the fraud is usually internal where bank staff reset your pin number, do a sim swap so you no longer receive short message notifications and after that pick your account empty.

“It is especially worse when it moves to another country which has no holiday at the time and the money is withdrawn, it simply disappears,” he said.

Kenya’s vulnerability to mobile money transfer has increased with multiple payment and money transfer options that have come into the market.

Besides Pesalink, Safaricom’s M-Pesa leads the pack, transacting more than Sh1 trillion in three months.

Other mobile phone transfer services are; Airtel Money and Equity Bank’s Equitel.


The threat is even bigger in retrospect of the revelations that Kenyans moved Sh18.4 billion daily using their mobile phones in the three months to September 2017.

According to latest data from the Communications Authority of Kenya, this amounted to a massive Sh1.65 trillion transacted over the quarter, a growth of more than half compared to Sh1.08 trillion moved over a similar period in 2016.



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