The Rise of Fraud in Africa’s Digital Payments Market: A Growing Concern

Like a bee that seems small but delivers a painful sting, fraud and compliance risks may appear minor until they strike, inflicting significant financial and reputational damage. 

In its latest campaign, Sumsub highlights how overlooked threats can escalate, costing businesses far more than they anticipate.

Africa’s digital payments market, valued at $1.2 trillion, faces a significant challenge: a surge in fraudulent activity. According to Sumsub’s 2024 Identity Fraud Report, fraudulent activity in the region increased by 167% year-over-year, outpacing other parts of the world.

Countries like Nigeria and Kenya are experiencing high fraud rates, with Nigeria’s average fraud rate standing at 6% and Kenya’s rate growing from 2.75% to over 4% in just three years. This trend is alarming, especially considering that 19% of African businesses still rely on manual verification, which can lead to lower pass rates and heightened fraud risks.

The consequences of inadequate verification processes can be severe. “Smart verification isn’t an expense, it’s a value multiplier,” notes Hannes Bezuidenhout, VP of Sales for Africa at Sumsub. “Robust systems more than pay for themselves through fraud prevention, operational efficiency gains, and enhanced customer lifetime value.”

Sumsub’s State of the Crypto Industry 2025 report https://sumsub.com/lp/crypto-report/ highlights similar trends in the crypto sector, with fraud rates surging by 48% globally. Document forgery, phishing, and money mulling are the top fraud types, affecting 31%, 20%, and 15% of surveyed companies, respectively. Nigeria recorded the highest rate of fraud in the crypto sector, with 8.3% of verification attempts flagged as fraudulent.

Key Findings from Sumsub’s Report

• Fraud Types: Document forgery, phishing, and money mulling are the most common types of fraud in the crypto industry.
• Regional Fraud Rates: Nigeria has the highest rate of fraud in the crypto sector, at 8.3%, while the Middle East has seen significant fraud rates in countries like Iraq (5.7%) and Yemen (3.4%).
• Verification Trends: Biometric checks, AI-backed automation, and document-free verification have improved onboarding success rates to 93.39% and reduced verification times by 46%.

As the digital payments market continues to grow, it’s essential for businesses to prioritize effective verification processes to mitigate the risks associated with fraud. This can be achieved by implementing advanced verification solutions, such as AI-powered systems, which can help reduce errors and improve pass rates.

Addressing fraud risks in Africa’s digital payments market cannot be overstated. By investing in robust verification processes, businesses can protect themselves from financial losses and reputational damage, ultimately contributing to a safer and more secure digital payments ecosystem.

By adopting innovative technologies like AI-driven biometric checks and document-free verification systems, businesses can improve customer onboarding while reducing drop-off cases. Regulation is also a key theme, with many African countries tightening crypto regulations to prevent financial crimes.

Sumsub, is a full-cycle verification platform that secures the whole user journey. With Sumsub’s customizable KYC, KYB, Transaction Monitoring, and Fraud Prevention solutions, you can orchestrate your verification process, welcome more customers worldwide, meet compliance requirements, reduce costs, and protect your business. Sumsub has over 4,000 clients across the fintech, crypto, transportation, trading, edtech, e-commerce, and gaming industries.