How Can Uganda Strengthen Cybersecurity in Its Growing Cashless Economy?

A cashless economy is a financial system in which transactions are conducted electronically rather than through physical currency. This includes various methods such as credit and debit cards, mobile banking, digital wallets, online banking, mobile money, and other forms of electronic payment.

Patrick Ssonko, a Cyber Security Specialist at Fdss & LCA, elucidates the distinctions between cash and cashless economies.

“A cashless economy offers substantial advantages by enabling payments for goods and services without the necessity of leaving one’s location. In contrast to a cash economy, where transactions are executed with physical currency, a cashless system provides a greater degree of flexibility, allowing for transactions that were previously unattainable,” Ssonko explains.

In Uganda, there has been a significant rise in the use of mobile money as a primary payment method, leading to considerable expansion in the cashless economy.

According to the Uganda Communications Commission (UCC), the number of mobile money accounts surged to 32.3 million in 2022, reflecting an increase of 900,000 accounts from the previous year.

 

Cyber Security Specialist, Patrick Ssonko.

The transition to a cashless economy, particularly through mobile money, has significantly improved financial inclusion and provided considerable benefits to the average Ugandan. This is especially important given that many Ugandans struggle with financial literacy and have traditionally lacked access to personal banking services.

Mobile money has revolutionized the financial landscape by allowing Ugandans to conduct transactions digitally, eliminating the need for physical cash. This shift has facilitated a wide array of functionalities, including:

• Payment for goods and services
• Fund transfers across various networks and banks
• Bill payments
• Access to credit

The increasing acceptance of mobile money among businesses, particularly in the informal sector, has streamlined transaction processes. This transition not only simplifies transactions for individuals but also enhances efficiency and expedites payment processing for businesses.

The advent of the cashless economy has profoundly impacted the banking sector, ushering in a new era of financial transactions. Banks are increasingly embracing digital solutions, such as online banking platforms, mobile banking applications, and digital wallets. These technologies enable customers to manage their financial activities—such as transferring funds, paying bills, and overseeing accounts—directly from their smartphones or computers.

According to the UCC, mobile money accounts reached 32.3 million in 2022, marking a substantial increase of 900,000 accounts.

Furthermore, the cashless economy facilitates seamless transactions via credit and debit cards, allowing consumers to make purchases online and in physical stores without resorting to cash.

Cyber Threats

Despite the numerous advantages of a cashless economy, it introduces several significant risks, particularly in the realm of cybersecurity. As digital transactions become more ubiquitous, the risks of hacking, data breaches, and other cyber-attacks escalate, posing threats to personal and financial information.

The reliance on digital platforms for financial transactions heightens the vulnerability of both individuals and businesses to cybercrime. Such threats can lead to unauthorized access to sensitive data, identity theft, financial fraud, and other malicious activities.

Cybercriminals frequently target financial institutions and telecommunications companies, stealing money or sensitive information and demanding ransoms. Notable incidents include:

• In 2023, a hacking group infiltrated the systems of two major Ugandan banks, accessing customer data, including the account details of high-profile clients. The attackers obtained personal information such as names, identity numbers, and financial records, and demanded a ransom of USD 1 million. The banks opted not to pay and instead migrated to a backup data center managed by Raxio to secure the compromised data.
• In 2018, unauthorized access led to the theft of 2.6 billion shillings from Bionic Limited Systems, a company that operates a cloud-based mobile payment system. Other notable breaches include incidents involving MTN Uganda, dfcu Bank, and Centenary Bank, resulting in significant financial losses.
• In October 2022, Airtel was targeted by a cyber heist where hackers took control of a betting site, affecting 1,800 SIM cards and completing transactions through a scheme involving insiders.

These attacks have had severe repercussions on both the financial and telecommunications sectors, leading to substantial financial losses, data breaches, and reputational damage.

Enhancing Security

Ssonko asserts that, while a cashless economy is generally safer than a cash-based system, vigilance is essential.

“It is indeed much safer. The risk of theft and robbery is significantly reduced compared to dealing with physical cash,” he notes.

To enhance security in a cashless economy, Ssonko recommends the following measures:

• • Employ strong, unique passwords for all financial accounts.
  • Activate Two-Factor Authentication (2FA) wherever available.
  • Exercise caution regarding phishing scams by avoiding suspicious links and attachments.
  • Ensure that all software is updated with the latest security patches.
  • Stay informed about common cyber threats and learn to recognize and mitigate them.
  • Utilize screen locks and encryption on devices that access financial information.
  • Promptly report any suspected fraudulent activity to the relevant financial institutions and authorities.