Investigating the extent to which Mobile Money Fraud contributes to the Performance of Small Medium Enterprises in Lusaka, Zambia

Abstract

This study investigated the extent to which mobile money fraud contributes to the performance of SMEs in Lusaka, Zambia. The main objectives of the study were to; assess the prevalence of mobile money fraud among SMEs in Lusaka; investigate the type of mobile money fraud SMEs encounter while using mobile money services for their business operations, analyse how mobile money fraud contributes to SME performance in Lusaka and evaluate the effectiveness of existing fraud prevention measures used by SMEs in Lusaka. A mixed methods approach was adopted for this study and it targeted SMEs from 10 different markets in Lusaka with less than 10 employees, a gross monthly revenue below twenty-five thousand Kwacha and less than 5 years in operation. The main data collection tools for quantitative data were collected using questionnaires and the qualitative data extracted from the open-ended questions in the questionnaires. Descriptive and inferential statistics was adopted to analyze the quantitative data and thematic analysis for the collected qualitative data. In addition, the survey questionnaires were purposely distributed among 191 SMEs. The major research findings revealed a notable prevalence of mobile money fraud with 60% of SMEs in Lusaka experiencing mobile money fraud. Among the SME employees and owners, 40% reported false transactions as most prevalent mobile money fraud type. These findings suggest a weakness in mobile money systems. SME fraud frequency ranged from 35% being affected by fraud at least once to 25% being affected at least once a month, noting real threats and a call for more preventive strategies. The study further quantified financial losses as the most severe effect of mobile money fraud with 50% respondents experiencing a hindrance in business expansion. Other effects were an increase in operation costs at 30% and decreased customer trust at 20%. Measures suggested were transaction monitoring (60%) and fraud risk education for employees (40%). Regulatory recommendations included setting new measures to implement severe punishment for fraudsters, establishment of central agencies for reporting fraud cases and compulsory checking of mobile money providers because the current fraud prevention and management strategies did not align with the SMEs experiences. Therefore, the findings of the study underscored that mobile money fraud is a significant issue among SMEs in Lusaka, Zambia, with varying levels of intensity across different SMEs depending on the types of mobile money fraud experienced or frequency of mobile money fraud. It was found that mobile money fraud had a substantial impact on the performance of businesses and highlights the need for tailored fraud prevention strategies. These strategies should include transaction monitoring and fraud risk training of employees and SME owners. By implementing these recommended strategies, SMEs in Zambia can potentially improve their business performance and profitability which could contribute positively to business success and economic growth. These findings align with the study’s general and specific objectives of examining the prevalence, types, impact and management of mobile money fraud in businesses. Keywords: Mobile Money Services, Small and Medium Enterprises, SME performance, Fraud, Vishing/ Smishing, Advance fee scams, Reversal requests, False transactions.