OPay, one of the leading fintech companies in Nigeria, has gotten an approval from a Federal High Court in Lagos to freeze customer bank accounts in thirty listed banks. This move is part of an effort to recover ₦714 million that customers received during a system glitch.
The glitch occurred from December 10, 2023, to March 4, 2024, and allowed customers to receive value for unsuccessful transactions, according to court documents seen by TechCabal.
After becoming aware of the issue, OPay contacted customers who had received sums above ₦500,000 via emails and phone calls. They requested these customers to fund their accounts so the retained funds could be debited immediately. This proactive step aimed to mitigate the financial impact of the glitch.
Despite these efforts, the fintech was able to recover only 10% of the total amount from those customers. OPay stated in a court filing, “While some customers responded positively to the Applicant’s request and cooperated with the Applicant in respect of the recovery of the Erroneously Retained Credits, some customers have refused, failed, and/or neglected to fund their accounts to enable the Applicant to deduct the value of the Erroneously Retained Credits from their respective accounts.”
Faced with this resistance, OPay sought legal intervention. The fintech asked the court to freeze the customer accounts and filed an affidavit of urgency alongside its application. The Federal High Court granted the orders on June 28, 2024, allowing OPay to begin the process of asking thirty banks to restrict the affected customer accounts.
This court order marks a significant step for OPay in addressing the financial anomaly caused by the system glitch. The fintech company's decision to take legal action highlights the challenges faced in recouping funds from customers who benefited from the error.
OPay has declined to respond to comments regarding the court's decision and the subsequent actions they will take to recover the remaining funds.
How it happened
Financial institutions rely on bank response codes to categorize transactions as successful, pending, or failed. For OPay, 'RC 09' is the code for a pending transaction, which means the company does not debit its customer.
However, starting December 10, 2023, several cardholders made payments for pending transactions without being debited.
During this period, the Switching Company (Interswitch), which facilitated these card transactions, mistakenly settled all 'RC 09' transactions as successful. This error led to customers receiving value for transactions that were meant to be pending.
OPay detailed this issue in its court filing, highlighting the impact of the glitch and the need for corrective measures. The fintech giant emphasized the role of Interswitch in the erroneous settlement, which inadvertently caused the financial discrepancy.
As a result of this glitch, OPay faced significant challenges in managing the unintended credits to customer accounts. The company took legal steps to address the situation and recover the funds mistakenly credited to its customers.