When a mobile money customer makes a keystroke error that results in money being transferred to the wrong person, it’s a big headache and often results in financial loss. Research confirms that fear of making a mistake and not being able to get the money back through a “reversal” or a “roll-back” process is an important reason that lower-income people rely on agents to transact on their behalf and resist moving to wallets.
Photo Credit: Ivan Small/IMTFI, Flickr
Safaricom recently launched an additional functionality “Hakikisha” on the M-Pesa Menu in Kenya, which will enable subscribers to confirm a recipient’s name before completing an M-Pesa transaction.
Hakikisha, which means “to ascertain, confirm, or verify” in Swahili, has been introduced to ensure customers no longer lose money as a result of erroneously entering the wrong numbers when transferring funds.
Previously, only the recipient’s number appeared before completion of the transaction and M-Pesa users were only able to see arecipient’s name in the confirmation message received after completion of the transaction. This prevented customers from detecting an error, and left them with the onerous task of either calling the recipient and pleading with them to return the funds, or calling the Safaricom call center to seek a reversal of the transaction, which takes time and is not always successful.
In most cases, by the time the customer was able to get through to customer service, the unintended recipient had either withdrawn the funds or transferred them to a third party. In this case, the only option for the customer who sent the funds was to report the matter to the local police and seek legal redress. This consumer risk was noted in CGAP and FSDKenya’s 2011 consumer protection diagnostic in Kenya. Mobile money providers in other markets put measures in place to reduce these errors and the need for payment reversal requests.
Hakikisha has been under pilot for the last month and will be rolled out in phases with a view to covering the entire 21.7 million M-PESA customer base by October 30th, 2015. Currently, about 14 million subscribers have been migrated to the new menu.
The feature will also apply when customers are making payments to Lipa Na M-PESA (Pay Bill and Buy Goods option), and agent withdrawals, and will complement ongoing plans to boost the number of cashless transactions in the country. M-PESA Agents will also benefit from the service when depositing funds to customer numbers.
How it Works
Hakikisha operates as a pop up feature during a payment or transfer of funds transaction and gives customers a fifteen-second window after putting in their PIN; to confirm the name of the intended recipient, which pops up on the screen. The function allows users to dial the number 1 to stop a transaction within fifteen seconds, at which point Safaricom automatically wires the money to the recipient. However, "Hakikisha" will be suspended if no transaction is completed after five consecutive attempts.
The immediate benefit will be a significant reduction of transaction reversal requests arising from erroneous transfers, which has in the past accounted for at least 60 – 70 % of the customer calls to Safaricom’s call center. According to Safaricom’s Director of Financial Services, Betty Mwangi: “On any given day we receive an average of 12,000 calls from our M-PESA customers seeking to have reversals done for transactions made to the wrong recipients. While a majority of these are resolved successfully, we appreciate that this is a major inconvenience for our customers,””
Pros of the Hakikisha Enahancement
From a customer perspective, this will translate to a better experience as customers will no longer have to endure the tedium of being kept on hold for lengthy periods of time as they wait for customer service, which can be very frustrating. In fact, this process accounts for a significant percentage of the complaints feedback received by the customer management team.
While an erroneous transfer is not fraud per se, it quickly can become fraud when a dishonest recipient refuses to return the funds. The Hakikisha enhancement will serve as an effective fraud prevention tool by minimizing the margin for error and reducing incidences where customers’ mobile money falls into the hands of unauthorized persons.
Cons of Hakikisha
One disadvantage of the new feature is that while it will stem fraud in one area, it may also create opportunities for other fraud types by making customer information available to third parties who can then use the information to defraud unsuspecting customers via SIM swaps, identity theft, social engineering texts and calls, or extortion texts.
This risk to the customer is further compounded by the fact that all subscribers are being automatically migrated to the new menu with the added functionality. This in turn can expose the provider to legal and reputational risk on account of data privacy considerations. Whereas providers have always made it clear that they are not responsible for customer loss arising from erroneous transfers, they may be hard pressed to defend a claim for breach of customer confidentiality arising from their own systems and processes.
Another disadvantage is the very narrow window given of 15 seconds to confirm the name before the money is sent by the system. Presumably, this is to deter fraudsters from abusing the service to obtain customer information through multiple attempts.
Mitigating the Risks
These risks have been addressed to some extent by giving the customer the opportunity to opt out of the Hakikisha function if they do not wish to have their information exposed to a third party, though this will mean that they will continue to carry the risk of loss to erroneous transfers.
Another control that has been put in place is the provision for suspension of the service after 5 consecutive aborted transactions, in which event the customer has to undergo a verification process before reinstatement of the service. This will deter the fraudsters who would wish to obtain customer information by making multiple attempts. Another key control which has been put in place is customer and agent sensitization about the service and how it works; and its benefits, which has already been launched in the media. However, the length and functionality of the confirmation window remains an unresolved issue.
Mobile money is in a constant state of innovation, which brings benefits but can also give rise to various risks. There is a clear need to balance controls with business expediency and the need for financial inclusion. Product risk assessments must therefore be incorporated in mobile money fraud and AML (anti-money laundering) Management programs in order to ensure all risks are identified and adequately mitigated against with appropriate controls.
However, there are circumstances where customer risks and experience may outweigh other considerations. Hakikisha appears to be such a case, given the large number of customers experiencing the problem and exposed to potential loss. Going forward, further controls to mitigate the fraud risks could also be put in place.
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