You've probably ever wondered why your bank app asks for a PIN when you want to send money even after you logged in. Or why buying something online sometimes brings you to a different page asking for a text message code? Let's break this down simply.
Why Your Bank App Has Two Different "Passwords"
Think of your bank account as your house. You possess a key to access your house (that's your login password), but you might also have a safe inside which has another combination (that's your transaction PIN).
Your login password is the first key to entering the banking app - you can view your balance, your transaction history, basically "browse around your house." But if you're going to do something serious like transfer money to someone, the bank insists that you must enter your transaction PIN. This is similar to cracking open that safe and removing your goodies.
Why This Double Protection Exists
Let's say your friend holds your phone when you're still connected to your bank app. They'll be aware of how much money you have, but they won't be able to transfer your money anywhere as they don't have your transaction PIN. Sharp, right?
This also protects you in case someone is able to obtain your login details. Maybe they overheard you entering your password, or maybe hackers gained entry into the database of the bank and got login details. Even then, they cannot steal your money without that extra transaction PIN. That transaction PIN cannot be changed without knowing the old one. Guess why.
Now, Let's Talk About Shopping Online
When you buy something online using debit/credit card, you typically have to enter:
- Your card number (the long 16-digit one)
- Expiry date
- CVV (3-digit number in the back)
- Your name
But for Nigerian cards, something else is done which will shock foreign visitors.
The Nigerian Way: Extra Security
After you've entered the card details of your Nigeria issued card, two extra things happen:
- PIN Request: The page asks for your card PIN - the same 4-digit number that you use at cash machines
- OTP (One-Time Password): You get a text message with a code that you must enter to complete the purchase
This means that in order to buy something online with your Nigerian, you need:
- Your card number (which could be stolen from the internet)
- Your PIN (which is only supposed to be known to you)
- Your phone (to receive the text message)
Why Nigeria and some other countries do this
This is where it is interesting. If you have ever shopped on American or European websites, you would have known you just have to provide your card number - no PIN, no text message code. Card number, expiry date, CVV, and away you go. The risk here is that stolen card can be used for online payment easily. But that risk is mitigated with the ease of reporting stolen card and getting your money back,
The Problem Nigerian Merchants Face
Suppose a person in Nigeria has an online shop that sells clothing. A "customer" orders clothes using an Australian credit card, but the shipping address is in Nigeria. Something doesn't smell right - why would someone in Australia purchase from a little Nigerian shop and have it shipped to Nigeria?
What probably transpired: A thief has stolen the credit card information of an Australian and is shopping with it. Because some Australian cards do not use PINs or text messages as codes to verify purchases on the internet, the thief can shop freely.
Worst of all: If the actual Australian card owner sees the purchase and reports it as not authorized, or if the thief themselves contacts the bank reporting that the purchase was unauthorized, the Nigerian store owner loses thrice:
- They forfeit the money from the sale
- They forfeit the shipped clothes they had already sent
- The bank charges them a "chargeback" (dispute) fee
What's a Chargeback?
A chargeback is like a refund, but the bank forces you to do it. When you see that there's some charge on your card for which you didn't spend any money, you can call your bank and say "I didn't buy this." The bank will get the money back from the merchant and refund it to you. This is quite easy to do in most countries - sometimes you just need to press a button on your banking app.
The system exists to protect customers, and that's a positive. But it also makes it easy to abuse by fraudsters.
Why Nigerian Banks Make It Hard to Process Chargebacks
Unlike other countries where you can simply dispute charges with clicks of a button, most Nigerian banks prefer for you to physically go to the bank in order to process a chargeback. That makes it harder for honest customers as well as scammers to dispute charges.
This may be a hassle, but it keeps Nigerian businesses safe from fraudulent chargeback claims.
The Solution: Why Those Extra Steps Matter
Recall the extra steps when making online purchases in Nigeria - the PIN and text message code? They eliminate the fraud issue entirely.
Even if a thief obtains your card information, they won't be able to make a purchase because:
- They don't know your PIN
- They don't possess your phone to get the text message code
This is why it's common among most Nigerian payment processors (like Paystack) to have the "disable international payments" feature. They're essentially allowing the merchant to decide whether to accept payment from international non-nigerian cards with added risk, or refuse to accept those kind of payments.
What This Means for You
You are actually safer when you shop online with your Nigerian debit card than consumers in most other countries. Yes, entering your PIN and waiting for a text message is annoying, but it means:
- Your funds are so much safer should an intruder steal your card details
- Nigerian online stores can buy and sell with confidence
- You're less likely to fall victim to card fraud
The next time your banking app asks for that transaction PIN, or an online store asks for a text message code, remember: it's not red tape - it's a highly sophisticated security system protecting your funds.
The Global Picture
Other nations tip the balance between convenience and security in different directions. Some prefer speedy, easy purchases and accept that fraud will inevitably happen. Others, like Nigeria, prefer security even if it makes transactions take longer.
Neither is wrong - it's all about what each culture desires most. But being aware of these differences helps to explain why online shopping is viewed differently in different countries, and why Nigerian sellers sometimes don't want to have foreign buyers.
Finance is more complex than it appears, but once you have the correct information, you will learn to comprehend it and protect yourself from it.
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