Electronic Payment System In Nigeria: Implementation, Constraints And Solutions
The study investigates the Federal Government of Nigeria electronic payment system implementation and the constraints confronting it with a view to providing solutions to the constraints so identified. The study is motivated by the apparent low level of satisfaction with the level of e-payment system in Nigeria. A total of 200 respondents sampled through convenient sampling method and the analysis is based principally on the primary data collected from the respondents. The survey identified constraints that are bedeviling the system and also suggested recommendations for effective implementation of the system. The success of electronic payment systems is largely depended on consumer preferences, ease of use, cost, industry, agreement, authorization, security, nonreputability and acceptability. Despite the numerous benefits that electronic payments bring to the nation, banks and individuals, it also has its challenges. The CBN should develop a mechanism to address the development of a payment system in electronic mode and interoperability of various cards in use for making payments. There is the need to create more awareness to entice the unbanked people into the banking system.
Since the overcoming of barter in the history of mankind, trade usually involve the exchange of goods and services and an equivalent abstract value such as money. (Sadeghi & Schneider, 2001). Ever since money was invented as an abstract way of representing value, system for making payments have been in place. In the course of ime, new and increasingly abstract representations of value were introduced. A corresponding progression of value transfer systems, starting from barter, through bank notes, payment orders, cheques and later credit cards, has finally culminated in electronic payment systems. As the transition to electronic payment systems take place, the stock of currency held outside the banking system which constitutes a potential source of unproductive economic resources because they are not available for credit expansion is integrated into it thereby expanding the deposit base of the monetary system. Nigeria payment system has been predominantly cash-based for both positive and negative reasons: positive because of its instant convertibility to other forms of value without intermediation of any financial institution and negative because of its anonymity and un-traceability in unethical transactions. Electronic payment was introduced because government was inundated with allegations of corruption in the Federal Civil Service. The Federal Government through its treasury circular reference No TRY/A8 & B8/2008 of 22ndOctober, 2008 directed that payments from all funds from it be made electronically as from 1stJanuary, 2009.
The policy has been condemned by all and sundry for lack of planning, inefficiencies and delay in the payment for goods and services, hence this article extends and contributes to the body of knowledge to assess the implementation and constraints of the system with a view to proffering solutions to them. Statement of the Problem With the rapid growth of Information and Communication Technology (ICT), electronic commerce is now acting as a means of carrying out business transactions through electronic means such as internet connections (Anik and Pathan, 2002). E-commerce is the most recent step in the evolution of business transactions as it replaces or augments the swapping of money or goods with the exchange of electronic payment system in Nigeria. The study investigates the Federal Government of Nigeria electronic payment system implementation and the constraints confronting it with a view to providing solutions to the constraints so identified. The study is motivated by the apparent low level of satisfaction with the level of e-payment system in Nigeria. In carrying out the study, government agencies, contractors and the banks formed the population witha total of 200 respondents sampled through convenient sampling method and the analysis is based principally on the primary data collected from the respondents. The study identified constraints that are bedeviling the system and also suggested recommendations for effective implementation of the system.
Though, e-commerce sounds like a great opportunity, it greatly needs new payment systems that will support its further development (Abrazhevich, 2002).A critical challenge for many economies is drawing more people and their capital into the banking system. The question for policy maker is: how do we get people into the big economic tent?. According to the research conducted by Global Insight Inc., and VISA in 2003, e-payment reduces the amount of currency outside the banking system for the advent of a more effective monetary policy management that will bring about stability in prices and interest rates. The research further stated that e-payment products can act as gateways into the banking system for the unbanked segments which makes up as much as seventy percent of the world‟s population, this undoubtly creates a potentially powerful engine for growth –drawing cash into bank accounts where it can provide low-cost funds for lending and investment (VISA, 2003).
The introduction of e-payment in Nigeria was done initially to eliminate the un-acceptable delay in the paymentof government contractors by minimizing interaction between contractors and government officials who have role to play in the payment system but was later extended to cover all payments from any government fund effective 1stJanuary, 2009. Concerns have been raised on the payment system implementation and concerns. The paper will therefore identify the constraints in the payment system and proffer solutions to same.
Objectives of the Study
The study specifically identified the following objectives:
- Assess the effectiveness of the implementation of e-payment system in Nigeria
- Identify the constraints in the implementation of the system
- Proffer solutions to the identified constraints in the implementation of the system
The research questions are as follows:
- How effective is the implementation of e-payment system in Nigeria?
- What are the constraints bedeviling the implementation of the system in Nigeria?
- What are the solutions to the constraints so identified?
Significance of the Study
This study will be of immense benefit to other researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. This study contributes to knowledge and could serve as a guide for other study.
Limitations of the Study
The demanding schedule of respondents at work made it very difficult getting the respondents to participate in the survey. As a result, retrieving copies of questionnaire in timely fashion was very challenging. Also, the researcher is a student and therefore has limited time as well as resources in covering extensive literature available in conducting this research. Information provided by the researcher may not hold true for all businesses or organizations but is restricted to the selected organization used as a study in this research especially in the locality where this study is being conducted. Finally, the researcher is restricted only to the evidence provided by the participants in the research and therefore cannot determine the reliability and accuracy of the information provided.
Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.
Conclusion and Recommenation
Technology has unarguably made our lives easier. It has cut across distance, space and even time. One of the technological innovations in banking, finance and commerce is the electronic payments. Electronic payments provides greater freedom to individual in paying their taxes, licences, fees, bills, fines and purchase at unconventional locations and at whichever time of the day. The success of e-commerce payment systems is largely depended on consumer preferences, ease of use, cost, industry, agreement, authorization, security, nonreputability and acceptability.
Despite the numerous benefits that electronic payments bring to the nation, banks and individuals, it also has its challenges. The challenges as discussed in the study can be categorized into four main groups that is, security, infrastructures, legal and regulatory issues as well as socio-cultural issues (Ayo, 2011; Delali, 2010).
- There is the need to create more awareness to entice the unbanked people into the banking system.
- The banks must perform more education and advertisement on electronic payments so that the Nigerian population will appreciate and use electronic products available. The use of cash comes with its own disadvantages and problems that electronic payment can eliminate. Cash and cheques must go through several processes which increases their risk of being lost or stolen. Such processes include transportation and counting. Most Nigerians are not aware of the benefits of e-payments are therefore slow to adopt it. The banks must also be educated to promote e-payments; training programme for senior management of the banks will assist in achieving this.
- The government of Nigeria should provide the much needed leadership and support for electronic payments.
- Applicable regulations including those for electronic approval processes, consumer protection and etransactions should be developed and standardized as needed.
- Government and private organizations should systematically expand the necessary infrastructure by promoting the development of necessary technologies, recruiting experts and expanding high speed information network as this will foster a strong foundation for e-payment.
- In order to be appreciative of the benefits emanating from the use of the new payment regime (EPS) there should be steady power supply in the country.
- Security to CDs/flash drive-measures should be taken to ensure that storage media be jealously guarded and delivered as intended.
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