Web and Point-Of-Sale Fraud, Customer Literacy, and Commercial Bank Profitability in Nigeria: Panel Evidence from 2015-2024

Abstract

Web and point-of-sale (POS) fraud pose escalating threats to Nigerian commercial banks' profitability amid rapid digitalization and the Central Bank of Nigeria's (CBN) cashless policy. This study investigates the association between web/POS fraud and bank profitability (return on assets [ROA] and return on equity [ROE]), and tests whether customer literacy moderates this relationship. Using secondary panel data (2015–2024) from the CBN, NDIC, EFCC, NIBSS, and audited reports of Nigeria's five largest banks, fixed-effects regression and system generalized method of moments (GMM) estimation are applied. Grounded in Routine Activity Theory, results indicate a significant negative association between web/POS fraud and profitability (β = −0.33 to −0.41, p < 0.01). Customer literacy moderates this relationship: the negative association weakens by approximately 18–22% in higher-literacy contexts. Recommendations include CBN-mandated security protocols, targeted literacy campaigns, and strengthened inter-agency data sharing.