The Impact Of Electronic Payments System On Nigeria National Development

Project and Seminar Topics with material for Banking and Finance

The Impact Of Electronic Payments System On Nigeria National Development


Abstract


The main objective of this research is to examine the impact of electronic payment systems on economic growth of Nigeria. The study further establish whether electronic payment has significant impact on Nigeria economic growth, examine how has electronic payment impacted on Nigeria economic growth, ascertained the challenges of electronic payment and determined if there is any causal relationship between electronic payment and notional development. Survey research design was employed for the study and with aid of convenient sampling seventy-seven (77) electronic payment user in Kano Metropolis was selected as the participant of the study. The sources of data collection was both primary and secondary with the application of questionnaires as an instrument to gather the necessary data. Data was analyzed using simple percentage in frequencies and table. Findings of the study concludes that 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, non reputability 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. The study recommends that banks must perform more education and advertisement on electronic payments so that the Nigerian population will appreciate and use electronic products available. More so, Applicable regulations including those for electronic approval processes, consumer protection and etransactions should be developed and standardized as needed.


Chapter One


Introduction

1.1 Background of Study

Payment systems have passed through a lot of ages. Prior to the 700bc, shells often were used in trade and barter and also cowries were introduced in Asia Minor. In Nigeria and other African countries, differently objects were used for payments. The objects were in form of cowries, coral beads, ivory, ornaments and bangles; and were used for payments. The early European traders mostly the Portuguese and Spaniards conveniently bought goods with cowries and manila. With the introduction of metal coins and notes in Greece and India between the tenth and sixth centuries Bc and thereafter dominated trade for 2000years, the era of cash as payment system emerged. In Nigeria, the central bank of Nigeria introduced the bank notes and coins in the year 1973. This was later followed by the use of cheque as written instructions to transfer precious metal coins from one holder to another .other written instructions such as credit transfer, standing orders, postal orders, bill of exchange, and travellers’ cheque have also been used. The next great age of payment system that followed paper instructions is electronic payments. Some payments are now being automated and absolute volumes of cash transaction have declined under the impact of electronic transaction brought about by the adoption of ICT to the payment system, especially in the developed countries.

The introduction of technology based payments has done a lot to increase the convenience of banks customers, staffs as well as the society at large (Kelvin, 2012). The Nigerian payments systems evolved from manually processed cash transaction’s to online and real time electronic payment system. This evolution is in response to growing commercial activities and the penetration and utilization of the cyber space and technology for commercial activities. Today paying and receiving money between buyers and sellers are not necessarily done through raw cash. Such payments can be made using e-payments channels such as automated teller machine (ATM), internet, and point of sales terminals (POS), mobile money solutions and so on and so forth.

Although, the use of these payment mechanisms are not totally free from problems often, customers experience delay in having timely access to the services provided through electronic channels (Olakah, 2012). One principal challenge in the use of electronic payments channels (EPC). Power problem is a monster threatening every business in Nigeria. A common ache in the use of e-payment device known as automated teller machine (ATM) is trapping cards for days by terminals thus preventing customers from making transactions until he or she is able to retrieve his/her card from the machine. Occasionally, the automated teller machine (ATM) may debit a customer’s account without dispensing cash to him/her, such case has to be reported or the customers accepts liability. Generally, in every electronic card based payment mechanisms, ” server down” is a usual slang, meaning that there is a network failure. When this occurs, the machine is temporarily unable to function properly or obey instruction given by the customers at the payments terminals.

The development of different electronic payment systems has helped to enhance the payment of cash in banks up to a limit of N500, 000 (Five Hundred Thousand Naira only) daily by individual customers and N 3,000,000 (Three Million Naira only) for corporate customers without attracting charges except withdrawal is above the limit stated. The payment has also promoted efficiency in the clearing of financial instruments between the banks and Central Bank of Nigeria (2010). Despite the challenges attributed to the use of electronic payments devices, the devices have indeed provide relieve and convenience to the banking public, thereby promoting trade and commerce and helping to grow the sectors of the economy.


1.2 Statement of the Problem

Electronic payment systems are pivotal to the digitalization of the financial system here in Nigeria, with numerous advantages ranging from financial inclusion, convenience in carrying out financial transactions to security of these transactions in a digital platform which would culminate to economic development of the economy. However, digital finance is not without it downsides, which constitute the problem this study seeks to resolve.

Providers of digital finance services are profit-seeking corporations that use digital finance to maximise their profitability or to maximise the profitable opportunities of businesses affiliated with digital finance providers namely banks, financial and non-financial institutions. Corporate providers of digital finance services can discriminately use a more aggressive marketing tactic to persuade high-and middle income customers to use a new or existing digital finance platform or infrastructure and use a less-aggressive marketing tactic to persuade low-income and poor customers to use new or existing digital platforms or infrastructure if they believe the latter cannot afford the associated fees, thereby leading to lower financial inclusion for poor and low-income customers since the net monetary pay-off to digital finance providers is higher with high-and- middle income customers than with low-income and poor customers.

Also, bias in the provision of digital finance can be geographical because digital finance providers, based on their own internal risk assessment which may change from time to time, can choose to withdraw or discontinue the provision of specific digital finance services to high-risk rural areas or communities that do not have the supporting infrastructure to sustain specific digital finance services, thereby leading to lower financial inclusion. Some supporting infrastructure needed to make digital finance work efficiently may include mobile phones that have modern (and up-to- date) operating software systems and applications that support digital finance services.

Another dimension is that educational bias can be introduced in the provision of digital financial services. If the net monetary value of providing digital finance to poor communities is very negligible, digital finance providers, based on their profitability assessment, can choose to focus less on the delivery of digital finance to poor and uneducated communities that do not have the basic financial literacy to use and understand digital finance.

From the foregoing, it therefore becomes imperative to investigate the impact of digital finance on economic growth in Nigeria, employing digital finance variables and empirically analyzing them against economic growth variable in order to establish the impact one has on the other


1.3 Objectives of the Study

The main objective of this research is to examine the impact of electronic payment systems on economic growth of Nigeria, while the specific objectives are:

  1. To establish whether electronic payment has significant impact on Nigeria economic growth.
  2. To examine how has electronic payment impacted on Nigeria economic growth.
  3. To ascertain the challenges of electronic payment.
  4. To determine if there is any causal relationship between electronic paymentand ntional development.

1.4 Research Questions

  1. Doesr electronic payment has significant impact on Nigeria economic growth?
  2. Is there any causal relationship between electronic paymentand ntional development?
  3. How has electronic payment impacted on national development ?
  4. What are the challenges of full implementation of electronic payment in Nigeria?

1.6 Significance of the Study

This study will be of immense benefit to the intending and present customers of the banks as it will open their eyes to the great advantages of the usage of electronic banking and also to the bank, as the introduction and selling of this product will bring about increase in the bank customers base, increase in deposit and as tools for favorable competitions in the industry. The research is equally significant because it would provide answers to factors militating against the implementation of electronic banking in the financial industry as a whole and also valuable tool for students, academician, institutions and individuals that wants to know more about electronic banking system.


1.7 Limitation of the Study

Like in every human endeavour, the researchers encountered slight constraints while carrying out the study. The significant constraint was the scanty literature on the subject owing that it is a new discourse thus the researcher incurred more financial expenses and much time was required in sourcing for the relevant materials, literature, or information and in the process of data collection, which is why the researcher resorted to a limited choice of sample size. Additionally, the researcher will simultaneously engage in this study with other academic work. However in spite of the constraint all these constraint were downplayed to give the best.


Chapter Five


Summary, Conclusion and Recommendation

5.1 Summary

The main objective of this research is to examine the impact of electronic payment systems on economic growth of Nigeria. The study further establish whether electronic payment has significant impact on Nigeria economic growth, examine how has electronic payment impacted on Nigeria economic growth, ascertained the challenges of electronic payment and determined if there is any causal relationship between electronic paymentand ntional development.Survey research design was employed for the study and with aid of convenient sampling seventy-seven (77) electronic payment user in Kano Metropolis was selected as the participant of the study. The sources of data collection was both primary and secondary with the application of questionnaires as an instrument to gather the necessary data. The questionnaires were properly completed as well returned by only 60 respondent after being administered and this was a basis by which the primary data were collected. Textbooks, journals, articles, law reports, newspapers publications, were collected as secondary data, and also limitations to the study were indicated. Data was analyzed using simple percentage in frequencies and table.


5.2 Conclusion

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. Findings of the study concludes that 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.


5.3 Recommendations

  1. There is the need to create more awareness to entice the unbanked people into the banking system.
  2. 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.
  3. The government of Nigeria should provide the much needed leadership and support for electronic payments.
  4. Applicable regulations including those for electronic approval processes, consumer protection and etransactions should be developed and standardized as needed.
  5. 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.
  6. 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.
  7. 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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