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Electronic fund transfer (EFT) is crucial to banking, and bank errors happen for human and technological reasons. A glitch is an example of a tech error.


A bank cashier or teller as we know it in Nigeria may post a debit contrary to a customer’s instruction. Bank errors include debits on a bank customer’s account to a beneficiary because of the wrong account number, wrong amount, duplication or duplicate transaction, lack of interoperability of payment system or banking application, language error of payment software, and all forms of glitches.

As fintech lawyers, we insist that glitches are limitless, although preventable if banks and Fintech were more open to sharing experiences and data on glitches in Nigeria’s payment industry.

Wiwa, a leading payment solution, suffered glitches when French-speaking consumers in Nigeria began to serve the French-speaking communities using French as the POS device’s language.

Although Wiwa modelled the payment app in English, figure 100 returned 1,000 as value, and 1,000 converted to 10,000 in a similar progression. Wiwa lost hundreds of millions of Naira in a few days.

Although a bank or Fintech must report fraud-related losses to the Central Bank of Nigeria (CBN), CBN has yet to promote a fraud-related-data experience sharing in the payment ecosystem most intentionally.

Nigerian banks and Fintech suffer a near mindless phobia against information its corporate communication team and management perceive as negative news.

CBN Regulation on Instant (Inter-Bank) Electronic Funds Transfer Services in Nigeria 2018 is the industry-specific regulation on bank errors in inter-bank instant EFT.

Banks and Fintech readily manage errors arising from intra-bank electronic fund transfers.

Bank Errors occur when a Sending Entity – the customer’s bank or Fintech – erroneously sends value contrary to a customer’s instructions due to a wrong account number, amount, duplication, or glitch to a Receiving Entity’s customer.

Like Wiwa, Zaza Pay aggregates payments for high-risk merchants in a consumer-friendly manner. Zaza Pay partnered with commercial banks to deepen its footprint in Nigeria’s high-risk merchant segment.

High-risk merchants include providers of adult content, gambling, betting, and liquor. Zaza Pay lost millions of Naira when its settlement bank reversed consumers’ payments for various high-risk products and services after each consumer received them.

The settlement bank reversed the payment, but its payment processing solution did not communicate with Zaza Pay’s infrastructure. The settlement bank is still struggling to recover the funds from the consumers.

Recall Process for Bank Error

Whether the bank error results from personnel or glitches, the Sending Entity – a Bank or Fintech – must request fund reversal in writing from the Receiving Entity within fourteen days of the transaction.

Where funds are in the Beneficiary’s account, the Receiving Entity debits the account within one business day without recourse to its customer. In such a situation, the Sending Entity indemnifies the Receiving Entity against any liabilities.

Instructively, the recall process for bank errors is complicated when the beneficiaries’ account is not funded. Where funds are unavailable, the Receiving Entity must promptly notify the customer and provide proof of such notification to the Sending Entity.

The Receiving Entity’s notice to the customer will state the consequences of not funding the account within twenty-four hours, which includes watch listing in the banking industry, Credit Bureau, and reporting to law enforcement agencies.

Our fintech litigation team knows that some beneficiaries cash out such unsolicited funds and close their bank accounts. Federal High Court Judges justly expedite the hearing of the interim application for restrictive (post-no-debit) orders on the Beneficiary’s account.

Yet, law enforcement agents have not significantly improved on asset tracing of funds received due to bank errors.

Should the Beneficiary fail to fund its account within seven days, the Receiving Entity must watch-list the customer.

Nigerian Inter-Bank Settlement System (NIBSS) Plc operates and manages the BVN (Bank Verification Number) Database under the Revised Regulatory Framework for Bank Verification Number (BVN) Operations and Watch-list for the Nigerian Banking Industry 2021. A Receiving Entity will have recourse to NIBSS to implement a watch list.

Although an indemnity favours the Receiving Entity, Banks and Fintech’s internal audit teams are generally impatient when a Sending Entity delays in providing a Court Order to perpetuate an administrative lien (post-no-debit) on a beneficiary’s account.

CBN Regulation on Instant (Inter-Bank) Electronic Funds Transfer Services in Nigeria 2018 requires a Receiving Entity to debit and reverse the transaction as soon as the Beneficiary’s account is funded.

Indeed, a Receiving Entity shall not use the wrong credit to settle the Beneficiary’s outstanding indebtedness to it and shall not consider such credit as the Beneficiary’s property.

Exceptions Complaint Handling

Banks’ Dispute Resolution System (DRS) must provide for exception handling where the status of a transaction between the Sending and Receiving Entities is indeterminate.

For example, when the customer’s account is debited, but there is no credit in the Beneficiary’s account in the receiving bank,


Our fintech lawyers explained a Bank’s recall process due to customers’ errors here. Notably, the banking industry thrives on trust, integrity, and honesty among operators, regulators, and customers.

A customer must not consider unsolicited payments a bonanza. Banks and Fintech in Nigeria must cooperate to improve consumer trust and reduce fraud arising from bank errors and glitches.

CBN should revise the Regulation on Instant (Inter-Bank) Electronic Funds Transfer Services in Nigeria 2018 to provide applications for fund reversal to the Federal High Court by ex-parte originating summons, and originating summons.

Banks must implement watch-list procedures for beneficiaries whose accounts are not funded.

Above all, Banks and Fintech must apply the recall process under the Regulation on Instant (Inter-Bank) Electronic Funds Transfer Services in Nigeria 2018 to ensure a safe payment system.

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