Safaricom introduces SIM Swap API to help banks counter fraud

Safaricom is introducing a way for Banks to verify customer SIM ownerships. This is through a new API that allows banks to query potential swap on a customer SIM. This is part of the telco (and banks’) way of dealing with cases of people losing access to their SIMs and then losing cash from linked bank accounts.

A common story whenever someone loses their SIM card or Phone, is to be told that they also lost cash from their bank accounts. How it happens is simple: you have your SIM number registered with your bank account. Once you lose your phone, or your SIM is swapped, a thief can reset your accounts and authenticate new access using SMS codes sent to the phone number they now control.

With the new service, Safaricom will issue banks with a free monthly quota that allows them to check potential customer SIM Swaps before authenticating transactions. If the banks bypass their quotas, there is a premium tier where they pay Safaricom for additional checks.

The assesment, Safaricom argues, will help banks be able to make decisions on certain transactions before authenticating them. This will work on reducing reports of customers losing their cash to illegal SIM Swappers.

In addition to the API, Safaricom is also introducing ATM Vicinity Check, which is being provided at no cost. This will ensure that if a customer is withdrawing an amount at an ATM, then they need to be in the same location as the ATM. It is still not clear how this will be implemented.

Last year, Safaricom introduced a way for customers to completely block SIM Swaps at agents’ shops unless you visit a Safaricom Shop. The new addition for a SIM Swap API – which will be exclusive to Banks – may once and for all counter the issues we’ve been seeing online.

The challenges I can think the new solution will bring are as follows:

1. Some banks are lazy – so they will automatically cancel all transactions whenever API has issues, or when it is a genuine SIM Swap.
2. Bad players access – the new tool if accessed by bad players may really bring about bigger fraud problems.

The conversation around fraud with SIMs, Phones and banks – plus your whole digital persona – is one that’s happening across many parts of the world, and not just Kenya. It will be interesting to see what sort of solutions are fronted and what works in the end. What’s important to note is whenever we make advancements in tech, fraud also advances.