Payments infrastructure giant Interswitch is facing a major financial setback after losing ₦30 billion (~$40 million) to a chargeback fraud scheme that exploited vulnerabilities in the company’s system.
The scheme involved a group of former and current Interswitch employees who allegedly used their knowledge of the company’s systems to fraudulently file and receive chargebacks from merchants. Chargebacks are reversals of payments that are made when a customer disputes a transaction.
The fraud dates back several years, and the perpetrators are believed to have used a variety of methods to exploit the vulnerabilities in Interswitch’s system. For example, they may have used stolen merchant credentials to file fraudulent chargebacks, or they may have manipulated the system to make it appear that legitimate transactions were fraudulent.
Interswitch has filed a motion at the courts on the suspected bank accounts involved in the fraud, and it has requested that 54 banks place restrictions on hundreds of suspected bank accounts until the investigation and recovery process is complete. So far, Interswitch has recovered a little over ₦10 billion.
Interswitch is currently investigating the fraud and taking steps to recover the lost funds. The company has also implemented additional security measures to prevent similar incidents from happening in the future.