Overview of the Incident
Chinese-backed fintech giant OPay faced a significant challenge when a system glitch allowed customers to receive value for unsuccessful transactions. The glitch occurred between December 10, 2023, and March 4, 2024. As a result, OPay has received approval from a Federal High Court in Lagos to freeze customer bank accounts in thirty listed banks to recover ₦714 million.
Details of the Glitch
The system glitch was identified through OPay’s transaction monitoring processes. According to court documents obtained by TechCabal, the glitch allowed customers to retain funds from transactions that should have failed. These transactions were marked as pending, but the customers still received value, leading to an unintended retention of funds.
OPay’s Response
Upon discovering the glitch, OPay took immediate steps to contact the affected customers. The company reached out via emails and phone calls to those who had retained sums exceeding ₦500,000, requesting them to fund their accounts so the erroneously credited amounts could be debited.
Recovery Efforts
Despite these efforts, OPay was only able to recover 10% of the total erroneously retained amount. The company noted in its court filing that while some customers complied with the request, others either refused or neglected to fund their accounts, hindering the recovery process.
Court Order for Account Restrictions
Due to the insufficient recovery, OPay sought legal intervention. The fintech filed an affidavit of urgency alongside its application, requesting the court to freeze the customer accounts. On June 28, 2024, the Federal High Court in Lagos granted the orders, allowing OPay to ask thirty banks to restrict the affected customer accounts.
Technical Explanation
OPay provided a detailed technical explanation of the glitch in its court filing. Financial institutions typically use bank response codes to categorize transactions as successful, pending, or failed. For OPay, ‘RC 09’ is the code for a pending transaction that does not debit the customer’s account. However, during the glitch period, the switching company, Interswitch, inadvertently settled all ‘RC 09’ transactions as successful, causing customers to receive value for transactions that were supposed to be pending.
OPay’s Next Steps
With the court’s approval, OPay is now set to begin the process of asking the thirty listed banks to restrict the affected customer accounts. This measure is intended to facilitate the recovery of the erroneously retained funds.
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Conclusion
The ₦714 million glitch has posed a significant challenge for OPay, highlighting the importance of robust transaction monitoring and error management systems in fintech operations. OPay’s proactive approach and legal recourse demonstrate its commitment to resolving the issue and recovering the lost funds. However, the incident also underscores the need for continuous improvements in financial technology infrastructure to prevent similar occurrences in the future.
OPay has declined to comment further on the matter.