Determinants And Adoption Of Point Of Sales Of Selected Business Organisations

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Determinants And Adoption Of Point Of Sales Of Selected Business Organisations


Abstract


Nigerian payment systems are cash-driven because cash is the main mode of payments for several transactions. However, the Point of Sales (POS) Systems which is meant to encourage cashless economy as against the cash-centered operations is challenged with inadequate infrastructure such as network connectivity, lack of constant power supply systems, inadequate Internet, insufficient hardware and software needed to run POS, limited bandwidth for data passage, security issues, lack of trust, inadequate customer education and insufficient motivation to adopt POS. This study investigated determinants and adoption of Point of Sales of selected business organisations in the banking, Oil and Gas, retail and airline sectors of Lagos State.

The study adopted a cross-sectional survey research design. The population of the study consisted of individual SMEs who are users of POS in the selected sectors and business organisations in Lagos State with population figure of 11,663 and sample size of 2,059. The respondents were randomly sampled from the selected organisations where the data were collected. A validated questionnaire was used. A total of 2,059 copies of the questionnaire were administered, with a response rate of 77.1%. The Cronbach’s alpha coefficients for the constructs ranged from 0.719 to 0.810. The data were analysed using descriptive and inferential (Pearson Product Moment correlation and Regression) statistics.

The findings revealed that there was a significant relationship between availability of infrastructure and Adoption of POS (r=0.349; p < 0.01), POS security and Adoption of POS (r = .437; p < 0.01), Customer trust and Adoption of POS (r = 0.373; p < 0.01), Customer education and Adoption of POS (r = 0.477; p <0.01), and Customer Motivation and Adoption of POS (r = 0.399; p < 0.01), Model summary of the regression showed the effect of independent variable on adoption of POS. The value 0.733 (73.3%) obtained from R2 suggested that the variance obtained from the adoption of POS can be explained by the identified variables, which are availability of infrastructure, POS security, customer trust, customer education and customer motivation.

The study concluded that availability of infrastructure; POS security; customer trust; customer education and customer motivation had significant and positive relationship with adoption of POS in the selected business organisations who are SMEs in Lagos State Nigeria. The study thus recommended that stakeholders should ensure that infrastructure; POS security; Customer trust; Customer education; and Customer motivation are in place to enhance the adoption of POS in selected business organisations in Nigeria.


Chapter One


Introduction

Background to the Study

It is observed that following the global advancement in technological development, Nigeria is not left out of this advancement. Information and Communications Technology (ICT) has evolved and has become a vehicle for technological growth in the economy of many societies as it has unarguably made life easier (Indjikian, Rouben, Donald & Siegel, 2005; Okpaku, 2003; Paltridge, 2008; Zhen-wei, Pitt, & Ayers, 2004). The global acceptance of Information and Communications Technology as well as its usage have attracted and received the interest of researchers who are on regular basis out to proffer solutions for problems related to technology development for decades (Davis, 1989; 1993; Park, Yang, & Lehto, 2007; Shih, 2004; Venkatesh, 2000; Venkatesh, Thong, & Xin, 2012; Zhou, Lu, & Wang, 2010). This development had encouraged further research on the utilisation and benefits of ICT to several nations in order to improve their economic development (Indjikian, & Siegel, 2005; Venkatesh et al. 2012; Venkatesh, 2000).

In the work of Louho, Kallioja, and Oittinen (2006), technology acceptance is about how people accept and adopt some technology for use. The user acceptance of technology has further been explained as the willingness within a user group to employ IT for the tasks it is designed to support (Dillion, & Morris, 2001).

The problems arising from the use of several payments instruments have received the global attention and so also is the close monitoring of efficient payments instrument by various monetary authorities of the world (Adeoti, 2013). Omotayo and Dahunsi (2015) asserted that many nations of the world have developed an effective and efficient payments system whose transactions are required to guarantee and sustained their economic development.
Several countries of the world have adopted policies to accelerate the use of electronic channels and reduce the use of cash. The motivations for these policies vary from country to country but typically reducing the cost of banking, encouraging financial inclusion, increasing the amount of capital available for investments within the banking system, driving real economic growth and possibly reducing tax evasion (NIBSS, 2015).

In a recent study, evolution of technology for use in financial transactions poses a lot of challenges as questions arose regarding the stability of the instrument in guaranteeing the efficiency and effectiveness of monetary policies of nations worldwide (Odior & Banuso, 2012). From history, different payment systems have being in use e.g. barter system was common, but incidences of double coincidence of want necessitated the use of money. However, technological development gave rise to the use of superior instruments as the technology developed (Odior & Banuso, 2012). A little over three decades ago, the use of cash in making purchases in the United States of America has declined, and increasingly adopts the use of electronic payments systems. However, developing economy like Nigeria are still at the introductory stage of the use of alternative payments platform as recently introduced by the monetary policy maker of Nigeria, the CBN (Humphery, 2004).

According to Laudon and Laudon (1991), business organisations in similar industries especially the banking industry attempts to competitively outdo one another, this is done by embracing Information and Communications Technology (ICT), hence ICT becomes the absorber to provide the cooling effect of the competition, this also means that any banking industry who aspired to remain competitively relevant and continue in business in local or global arena must embraced ICT.


Statement of the Problem

In spite of the achievements recorded so far in the implementation of the cashless policy of Federal Government of Nigeria, it is observed that to sustain customer usage of e-payments platform especially POS has been difficult. This is in reference to data obtained from CBN releases e-payments statistics for the period 2012 – 2016 (CBN, 2016) which indicates that despite the introduction of cashless economy with its attendant benefits the following data representing low penetration of POS compaired to ATM was given:

Table 1.1: Volume of transactions for selected e-payments platform

Payment ChannelTransactions Volume
1. ATM470,894,452
2. Cheques9,764,546
3. Web10,499,911
4. POS47,743,919

Source: CBN, 2016

Reasons as given by CBN for low adoption of POS include connectivity and network challenges, inadequate enlightenment, security and trust issues. This observation also indicated that many buyers of goods and services still do that by cash, this brings about enormous risk and high cost of cash management it also brings about inefficiency and corruption (Omotayo & Dahunsi, 2015).

Similarly, as reported in Adeoti and Oshotimehin (2012), the general increase in the adoption rate of electronic payments instruments and the rate of growth of adoption of POS are still low, among the factors identified as responsible for this low adoption of POS in Lagos state is low level of consumer education stating the benefits of using POS, lack of adequate infrastructure required to run POS, low level internet penetration, intermittent failure of network connectivity, absence of open standards or trust among banks and providers, frequent power outage, insufficient number of POS available per merchant store and security of network communications (Ayo & Babajide, 2006).


Objective of the Study

The main objective of the research is to examine the determinants and adoption of POS of selected business organisations in Lagos state (Lagos). The specific objectives are to:

  1. Evaluate the relationship between availability of infrastructure and the adoption of POS of selected business organisations in Lagos;
  2. Determine the relationship between POS security and adoption of POS of selected business organisations in Lagos;
  3. Investigate the relationship between customer trust and the adoption of POS of selected business organisations in Lagos;
  4. Assess the relationship between customer education and the adoption of POS of selected business organisations in Lagos; and
  5. Investigate the relationship between customer motivation and the adoption of POS of selected business organisations in Lagos.

Research Questions

In order to achieve the objectives of the study, the following research questions have become imperative.

  1. How does availability of infrastructure relate with the adoption of POS of selected business organisations in Lagos?
  2. What is the relationship between POS security and the adoption of POS of selected business organisations in Lagos?
  3. What is the relationship between customer trust and the adoption of POS of selected business organisations in Lagos?
  4. How does customer education relate with the adoption of POS of selected business organisations in Lagos?
  5. What is the relationship between customer motivation and the adoption of POS of selected business organisations in Lagos?

Hypotheses

In an attempt to come up with acceptable conclusions the research tested the following null hypothesis from the stated research questions:

H01: There is no significant relationship between availability of infrastructure and adoption of POS of selected business organisations in Lagos.

H02: POS security does not have significant relationship with adoption of POS of selected business organisations in Lagos.

H03: Customer trust does not have significant relationship with adoption of POS of selected business organisations in Lagos.

H04: Customer education does not have significant relationship with adoption of POS of selected business organisations in Lagos.

H05: Customer motivation does not significantly relate with adoption of POS of selected business organisations in Lagos.


Scope of the Study

The study examined the determinants and adoption of POS of selected business organisations in Lagos state. While previous studies have examined different topics related to this study, this study concentrated on determinants of POS which is the independent variable with five factors which are availability of infrastructure, POS security, customer trust, customer education and customer motivation (independent sub-variables) and their relationship with adoption of POS (dependent variable).


Significance of the Study

A system that involved reduction in the use of cash by introducing alternative platform for payments in business transactions reduced the danger inherent in carrying cash in Lagos. The role and relevance of efficient payments systems have been closely monitored and promoted by various monetary agencies of the world and including Nigeria. There is a gap between the use of cash for payments and efficient electronic payment systems which the study attempted to fill.

The Nigeria payment system is basically cash driven and does not guarantee the much needed efficient and effective transactions required for a sustainable economic development. Among some of the challenges identified are armed robberies, fraud, use of counterfeit bank notes, inconveniences of carrying large notes, long period of waiting in banking hall and frequent visit to banks (Nnanna & Ajayi, 2005). The research when implemented would address some of these challenges enumerated above and improving the social-economic life of individual, and the nation.
With the growing popularity of e-commerce, there is a global trend which involves the use of electronic payments system particularly; there is the need for a study such as this to contribute to the technological development of the state with payments system in focus. However, the empirical studies that relates to the use of debit card as payment instrument are foreign researches conducted in advanced economy (Adeoti, 2013), this study may therefore becomes a reference point in Lagos hence significant.

As the world moves further and faster into a thriving technological age, so must the way businesses are conducted. POS systems are fast becoming the technology of choice and here’s why. No matter what type of retailer you are, adopting a POS (point of sale) system can turn your business around by providing an all-in-one solution to a multitude of everyday issues this explained the significance of this study. This will certainly reduced the volume of cash carrying by merchants, customers and even the financial regulator – Central Bank of Nigeria. Foreigners will then be encouraged to do business much more in Lagos as the fear of attack by robbers will be reduced.

The knowledge gained will help the owners, the marketers and the managers to appreciate the competitive advantage that accrued to the organisations with the promotion of POS among their customers. In addition, the knowledge would inform the customers, who traditionally carry large cash to avoid carrying cash and get protected from criminals.


Chapter Five


Summary, Conclusion and Recommendations

Summary

The study began with chapter one which attempted to describe the background to the study, it was identified that the adoption of POS which is an alternative to cash payments in Lagos state has a lot of merits, some of which are to reduce carrying cash and the attendant risks involved, reduction in cash management by financial regulatory agency, efficiency of operational activities by organisations adopting the device. Because of hazards in carrying huge amount of cash, this thesis has drawn the attention of policy makers in Nigeria as to how to reduce these menace, hence alternative platform to cash based transactions was proposed, and it was in the light of this that the five variables that was used to measure the adoption of POS in an organisation was identified. The variables are availability of infrastructures, POS security, customer trust, customer education, customer motivation and the adoption of POS in selected business organisations in Lagos state, this was captured under Research Objectives, Research Questions and Research Hypotheses, this chapter also covers the rationale for the tested hypotheses, and some operational terms were defined for clarity.

In chapter two is the review of the existing literature which is relevant to the subject matter and undertaken based on the six identified variables, how it affected other nations of the world and Lagos where the study was undertaken.

This review is done under three main headings:

Conceptual review of the variables identified; Theoretical review of the identified variables; and Empirical review of the identified variables.

Under the conceptual review an in-depth definition of the various constructs was examined


Conclusion

The result of the analysis of this thesis shows the importance of the adoption of POS of selected business organisations in Lagos. Aside stressing the importance of adequacy in infrastructure which was identified to be required for adoption of POS of selected business organisations in Lagos state, there are other known variables that contributed positively to the adoption of POS in Lagos state; this includes POS security, customer trust, customer education, and customer motivation. It has been identified that the adoption of POS in an organisation was prompted by the quest for the use of an alternative mode of payments to the use of cash, as it is the main medium of exchange for goods and services in Lagos state. The choice of POS which is a device for electronic payments systems was also to reduce the risk involved in carrying cash and the attendant consequence having known that this device is used basically for processing payments. The adoption of POS in Lagos state will also reduce the volume of cash to be printed by the agency responsible for the printing; this will reduce the amount of money spent in cash management which can be channeled to other uses.

The literature reviewed by the researcher shows that there have been no research done by known author in the reviewed literature in this study that combined all the identified variables in this study, thereby filling an important gap in the literature. Literature reviewed only covers fractions of the variables. Though challenges to the adoption of POS were identified to include unauthorized charges to payment cards, cards related frauds, failure to properly execute funds transfer instructions, unauthorized use of stolen cards among others but these challenges are seen not able to negate its adoption. This study has shown that one important determinants of adoption of POS is potential users awareness creation (customer education), the analysis in data presentation confirms the importance of this variable, that to encourage a would be adopter of POS there must be adequate customer education which can also be referred to as enlightenment campaign as prior knowledge of the device will encourage its adoption, its importance and easy adaptation to the operation of an organisation, among others.

It is pertinent to state that the adoption of POS in an organisation can increase its operational effectiveness which could also aid the attainment of major organisational objectives in the organisation. Such objectives includes its profitability, increase in customer base, expansion in the operation of organisation, new product discoveries, reduction in cost of doing business, etc…

Prior knowledge of similar products such as ATM with its failure rate which include cash dispensing error, fraud etc., has the potential of discouraging the adoption of POS, this explained the role of trust, security and customer education and motivation in the adoption of POS in Lagos state.


Recommendations

Based on the findings of this study, the following recommendations, categorised into four, are pertinent.

It is recommended to various stakeholders in Lagos State in particular and in other States in the country in general that:

There is need for all and sundry to support measures to be put in place for adoption of POS in Lagos state in particular and Nigeria in general, this measure was discussed in this thesis as factors required for the adoption, this is to ensure the use of POS which is alternative to the use of cash in business transactions and saving the individual the hazards involved in carrying cash. Findings in this study indicated that there is positive relationship between availability of infrastructure and adoption of POS in selected business organisations in Lagos state, individuals are to ensure the sustenance of these infrastructures when in place, especially the supply of power, adequate bandwidth, network connectivity, hardware and software required to drive the device. It is recommended that based on the findings in this study, individual should avail itself of awareness creation programs as customer education was found to have a positive and significant relationship with adoption of POS, from this program, benefits and the uses of POS will be stated and this will then be beneficial to individuals in particular and the nation in general.
Similarly, findings indicate that customer motivation has a positive and significant relationship with adoption of POS and also that price reduction is an important factor in motivating customers to adopt POS, individuals are therefore encouraged to avail itself the opportunity of government efforts at reducing the cost of usage of POS in Lagos state.

The telecoms industries have been deregulated therefore based on the findings in this study, it is recommended to operators in this sector to ensure adequate provision of infrastructure which is key to the adoption of POS in Lagos state, for example provision of adequate network connectivity, hardware and software that drives it, adequate bandwidth for data flow, to ensure adequate supply of power systems and adequate internet connectivity.

Operators are encouraged based on the findings in this study to ensure the security of POS as this is found to have a positive and significant relationship with adoption of POS by ensuring that POS security from logging into the device to actual transactions are good, they are also to ensure data generation and reports are free of doubts that is trusted, as customer trust also have significant relationship with adoption of POS in this study.

Adequate customer education should be done to educate the public on the use and benefits of the adoption of POS in an organisation, findings also indicate the importance of awareness creation (customer education), customer education has significant relationship with adoption of POS, operators are to ensure its commitment in awareness creation exercise for public education on the benefits and uses of POS.

It is recommended that based on the findings in this study that operators should ensure there is adequate motivation for customers to be encouraged to adopt POS, this can be done by ensuring that the prices placed on the device is fair, ensure the device can be easily recognized, customers should see the need for the adoption of POS, and also that it can be easily operated, all these would motivate customers adoption of POS in Lagos state.

Operators based on the findings in this study are to ensure that transactions from the device are not deniable, that highly trusted.

As a major stakeholders in the drive to ensure the successful implementation of this project, that is the adoption of POS of selected business organisations in Lagos state on one hand and Nigeria in general, based on the findings in this study, it is recommended that government should provide the enabling legislation to ensure adequate provisions of infrastructures, such as uninterruptible power supply systems, better data bandwidth to increase the speed of operations, internet connectivity for global access by all users, adequate hardware and software required to drive and support the operations of POS, infrastructure from the findings in this study is positive and significant to the adoption of POS in Lagos state.


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