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Product Code: 00001409

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 The study appraise Electronic Payment systems in the Banking industry; A Study of First Bank Plc. The main objectives of the study are to ascertain the effect of epileptic power supply on the effectiveness of e-payment in First Bank and to determine the level of security in the e-payment products and platform of First Bank. In carrying out the study, survey design was employed. The population of the study comprises the entire two thousand five hundred staff of First Bank Plc in Lagos. While the sample size considered for this study was one hundred and forty five [145], represents the number of those that properly filled-out and returns the questionnaire on the spot out of the one hundred and fifty administered and the method of drawing the sample convenience sampling technique. The study found that Epileptic power supply to a large extent affects the effectiveness of e-payment in First Bank  and that E-banking products and platform of First Bank is secure and that acceptance. It was recommended based on the findings of the research that Central Bank of Nigeria should ensure that the cashless policy is extended to other states in the country so as to extend  e-payment to all state in the country.  Also, the CBN need to consolidate on its achievements by introducing more beneficial policies and sanctions where necessary.











Title Page                                                                                                                                 i         

Certification                                                                                                                             ii        

Dedication                                                                                                                                iii       

Acknowledgement                                                                                                                  iv        

Abstract                                                                                                                                               v

Table of content                                                                                                                       vi       



1.1              Background to the Study                                                                                             1

1.2              Statement of the Problem                                                                                             3

1.3              Aim and objectives of the Study                                                                                              3

1.4              Relevant Research Questions                                                                                       4

1.5              Research Hypotheses                                                                                                     5

1.6       Significance of the Study                                                                                             6

1.7       Scope of the Study                                                                                                      6

1.8       Definition of Terms                                                                                                     6

References                                                                                                                   8


CHAPTER TWO: REVIEW OF RELATED LITERATURE                                             

2.1       Preamble                                                                                                                      10

2.2       Theoretical Framework of the study                                                                            10

2.3.      Empirical Framework of the study                                                                               14

References                                                                                                                   26



3.1 Preamble                                                                                                                            31       

3.2 Research Design                                                                                                                31

3.3 The Population of the study                                                                                               31

3.4 The Sample, procedure and sample size                                                                            31

3.5 Data Collection Instrument and Validity                                                                            31

3.6 Method of Data Analysis                                                                                                   32

3.7 Limitation of Methodology                                                                                                            32

      References                                                                                                                         33



4.1       Preamble                                                                                                                     34

4.2                   Presentation and Analysis of Data                                                                               34

4.3       Test of Hypotheses                                                                                                      39

4.4      Discussion of Findings                                                                                                41



5.1       Summary of Findings                                                                                                  42

5.2       Conclusions                                                                                                                 43

5.3       Recommendation                                                                                                        43

5.4       Suggestion for further Studies                                                                                      45  

Bibliography                                                                                                                 44        

Appendix                                                                                                                                 49















Nigeria is predominantly a cash-based economy with a lot of cash in circulation. Analysts opined that the cash based nature of payments in the country is responsible for the abysmally low level of participation in e-commerce where the acceptable medium of settling transactions is e-payment (Ojo, 2004; Ayo, 2007; Ovia, 2002). The Governor of the Central Bank of Nigeria embarked on bank recapitalization exercise as a strategic move to save the Nigerian banking sector from incessant failure and collapse (Nwanchukwu, 2005; Gbolahan, 2005). The result of the exercise brought about a reduction of the 89 banks to 25 solid and strong banks through mergers, acquisition and recapitalization of asset base. As reported by Ayo et al. (2007), virtually all the 25 banks in Nigeria that survived the recapitalization exercise engaged the use of ICT for efficient service delivery. All the banks have one form of e-payment system or the other.


The Nigerian cashless system of payment has been evolving in line with the global payments evolution. Cashless system of payments and instruments are significant contributors to the broader effectiveness and stability of the financial system. Innovations in technology and business models have implications for the efficiency and safety of cashless system of payments. Cashless system of payment is defined as a society where transactions is functioning, operated, or performed without using coins or banknotes for money transactions but instead using credit cards or electronic transfer of funds. New technology and new participants in the cashless system payments, for example non-bank providers will support the wider financial inclusion agenda (Sprague and McNurlin, 2003).


Alao (2009) reported that though the most prominent form of e-payment system in Nigeria is the Automated Teller Machine (ATM) card. It remained dominant over the years both in volume and value but there is a colossal amount of money lost in Nigeria due to ATM fraud through ATM card cloning, Personal Identification Number (PIN) theft among others and government had resorted to removing ATM from public places as well as installing security cameras at the ATM locations to track the activities of fraudsters. However, the level of ICT usage notwithstanding, the level of adoption of e-payment by the citizen is still very low (Sprague and McNurlin, 2009).


According to Ayo and Ukpere (2010), e-payment systems refer to the automated processes of exchanging monetary value among parties in business transactions and transmitting this value over the information and communication technology (ICT) networks. The common e-payment channels include the payment cards (debit or credit), online web portals, point of sales (POS) terminals, automated teller machines (ATM), mobile phones, automated clearing house (ACH), direct debit/deposit and real time gross settlement (RTGS) system (Nnaka, 2009).


An Electronic Payment System (EPS) is a form of inter-organizational information system (IOS) for monetary exchange, linking many organizations and individual users. This may require complex interactions between the stakeholders, the technology and the environment. The unique characteristics of EPS/IOS also differentiate it from traditional internal based information systems; it is more complex and multifaceted technologically, organizationally and relationally (Kumar and Crook, 2009), highlighting the importance of collaboration and the need to bring all the facets together. EPS transcends organizational boundaries, thus the collaboration of the stakeholders and sharing of resources  and how it interacts and affect the elements of the payment system may also be key issues in the development of EPS (Briggs and Brooks, 2011).


Furthermore, EPS encompasses the total payment processes, which include all the mechanisms, technological systems, institutions, procedures, rules, laws etc. that come into play from the moment a payment instruction is issued by an end-user. Different kinds of rules, regulations, mechanisms, technology and arrangements have therefore been put in place by trading partners, markets and governments (stakeholders involved in EPS development) in all countries and throughout time to develop effective infrastructure of monetary exchange, commonly referred to as payments systems (Bossone and Massimo, 2001).


Additionally, Alao (2009) reiterated that the other media such as the internet payment, POS and mobile payments are still at their infancies. The level of involvement of these instruments of payment presents a clearer picture of the low level of involvement of Nigeria in e-commerce, knowing fully well that ATM cards are not suitable for international settlement of transactions. However, the nation’s quest of migrating from cash to cashless economy has been on the front burner. Boonstra and de Vries, (2005) posited that to meet the target of becoming one of the leading world economies by the year 2020, efforts must be made to embrace electronic payment system in its entirety. It was in this consciousness that the Central Bank of Nigeria (CBN), the apex regulatory body of the banking sector, came up with a reform policy to check the increasing dominance of cash in the banking sector in order to enhance e-payment system in the economic landscape. It is on this background that this study sets to appraise the role of electronic banking systems in the cashless economy.



The move to a cashless society has been a topic of discussion for a long time. First, in the 1970s and 1980s plastic debit and credit cards were expected to take the place of cash. And then in the 1990s and 2000s the implementation of chip cards and, e-money was to replace cash. But still, cash remains popular and its market share has fallen only gradually over the years. However, there are lot of problems associated with a cash-based economy such as money laundering, insecurity of cash, delayed banking payments, and slow development in the country’s economy. To improve these problems, the Central Bank of Nigeria has championed the introduction of cashless economy as a result of the rapid growth in 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.

However, one of the greatest threats to e-payment in Nigeria today is the increasing trends of identity theft. This remains a major challenge to the internet age. Customers using the e-banking services are not adequately protected as cases of fraudsters hacking into people’s accounts through their passwords and other account information is very rampant (Helmbrecht, 2008).


Another major issue with e-banking is the problem of internet network failure. This remains a major issue affecting the effectiveness of cashless system. Similarly, some  members of the public are averse toward using the e-banking system and platforms, especially the Automated teller Machine (ATM) because they believe rather than reduce the rate of carrying cash, it increases the same , because with an ATM card , they have access to cash anywhere, moreover, many believe it indulges them into engaging in extravagant spending. These among other are some of the problems this study sets out to investigate.



The main aim of this study is to appraise Electronic Payment systems in the Banking industry; A Study of First Bank Plc.

The specific objectives of the study are to:

1.     Ascertain the effect of epileptic power supply on the effectiveness of e-payment in First Bank.

2.     Examine the relationship between e-payment and the Nigerian business environment

3.     Determine the level of security in the e-payment products and platform of First Bank.

4.     To Ascertain the level of acceptance and adoption of the e-payment products of First Bank by the banking public 

5.     Highlight advantages of e-payment to First Bank

6.     Find out the extent to which the deployment of e-payment has enable First Bank to access new markets.


The following research questions will direct the study:

1.     To what extent does epileptic power supply affect the effectiveness of e-payment in First Bank?

2.     Is there a significant  relationship between e-payment and the Nigeria business environment

3.     How secure are the e-banking products and platform of First Bank?

4.     What is the level of acceptance and adoption of the e-payment products of First Bank by the banking public? 

5.     What are the advantages of e-payment to the selected banks?

6.     Find out the extent to which the deployment of e-banking has enables First Bank to access new markets?


Hypothesis I

Ho: Power supply does not have a positive effect on the effectiveness of e-payment on First Bank

HI: Power supply has a positive effect on the effectiveness of e-paymenton the First Bank


Hypothesis II

Ho: There is no significant relationship between e-payment and the Nigerian business environment.

HI: There is a significant relationship between e-payment and the Nigerian business environment.


The significance of this study is that primarily it will stimulate an academic incursion in to the status, adoption and deployment of e-payment in Nigeria. The study will be of great importance to banks as it highlights the importance of deploying e-banking strategies in their operations to make business easy and help retain their customers. The study will also be useful to the customer of the banks because it highlight the conveniences in e-banking. The study will give an insight to how customer can bank with ease.

The study will also serve as a reference to student carrying out study in the research domain. The study will also be of importance to the general public on the economy as a whole because with e-banking people no longer have to go about with cash on them; they will make use of electronic purse (debit and. credit cards). It gives them the ability to have access to their money at every point in time irrespective of holidays and weekends. The study will also highlight other added service they can enjoy without getting into the banking halls.



The investigation of this study is restricted to assessing the role of electronic banking systems in the cashless economy; A Study of First Bank Plc.



In other to remove ambiguity and give clearer understanding of this study, the following concepts are defined:


Electronic payment systems (EPS) – This refer to those where the processing of payment instructions is carried out by the banking system electronically.


Electronic banking – This is commonly known as e-banking, is the remote delivery of new and traditional banking products and services through electronic delivery channels.


Electronic commerce – This is commonly known as e-commerce, is a type of industry where buying and selling of product or service is conducted over electronic systems such as the Internet and other computer networks.

Cashless society – This is a society where no one uses cash, all purchases being made by credit cards, charge cards, cheques or direct transfer from one account to another. In other word, it is a society in which consumers pay using credit or debit cards, electronic funds transfer, or shop online instead of paying by cash or bank cheques.


Cashless system – This is a (Cashless Systems) include any payment systems that allow a machine, such as a vending machine, to accept payment in a form other than cash.


Automated Teller Machine (ATM) - This is a computerized telecommunications device that enables the clients of a financial institution to perform financial transactions without the need for a cashier, human clerk or bank teller. ATMs are known by various other names including ATM machine, automated banking machine, "cash machine".


Credit card – This is a payment card issued to users as a system of payment. It allows the cardholder to pay for goods and services based on the holder's promise to pay for them.


Debit card – This is a plastic payment card that provides the cardholder electronic access to his or her bank account(s) at a financial institution. Some cards have a stored value with which a payment is made, while most relay a message to the cardholder's bank to withdraw funds from a payee's designated bank account. The card, where accepted, can be used instead of cash when making purchases. In some cases, the primary account number is assigned exclusively for use on the Internet and there is no physical card.

Challenges – These are the constraints that affect smooth operations of business activities.


Prospects – This is an apparent probability of advancement, an anticipation or expectation of success or profits etc the outlook for the future.


Policy – A plan of action agreed or chosen by government.






Alao, S. (2009). Information Systems in Developing Countries: A Critical Research Review, Journal of Information Technology, 23, 133-146.


Ayo, C. K. (2009). “Information Systems and Technologies”. McKay Educational Series, p. 649.


Ayo, C. K. and Ukpere, W. I.  (2010). Design of a secure unified e-payment system in Nigeria: A case study, African Journal of Business Management Vol. 4(9), pp. 1753-1760,


Ayo, C. K., Uyinomen O, E., Fatudimu, I. T., and Adebiyi, A.  A. (2007). M-Commerce Implementation in Nigeria: Trends and Issues, J. Internet. Bank. Commer., Available at: http://www.arraydev.com/commerce/JIBC/2007- 08/Ayo_final_PDF%20Ready.pdf. pp. 2-12.

Boonstra, A. and de Vries, J. (2005) Analyzing Inter-Organizational Systems from a Power and Interest Perspective, International Journal of Information Management, 25, 485-501.


Bossone, B. and Massimo, C. (2001) The Oversight of the Payments Systems: A Framework for the Development and Governance of Payment Systems in Emerging Economies. 1. CEMLA/WORLD BANK.


Briggs, A. and Brooks, L. (2011). Electronic Payment Systems Development in a  Developing Country: The Role of Institutional Arrangements, The Electronic Journal on Information Systems in Developing Countries, 49, 3, 1-16


Gbolahan, D. (2005). Banking Sector Consolidation – Integration of IT applications is key, Fin. Standard., 6: 11-24.


Helmbrecht, U. (2008). The electronic identity card – A safe tool for unambiguous identification on the Internet, Acess date: Sept. 2009, Available at: https://www.bsi.bund.de/cae/servlet/contentblob/486520/publicationFile/31152/231008ANTS_VOE_pdf.pdf


Kumar, K., Van Dissel, H.G. and Bielli, P. (1998) The Merchant of Prato-Revisited: Toward a Third Rationality of Information Systems, MIS Quarterly, 22, 2, 199-225.


Nnaka, P. (2009). “Electronic Payment Systems- Accountability Guidance”, Accessed Date: June 2009, Available at: www.oced.org/dataoced/29/27/31663096.pdf.


Nwachukwo, C. (2005). Recapitalization: Bank Workers endorse categorization, access date: Available at: http://allafrica.com/stories/200504010318.htm.


Ojo, A T. (2004). “Enhancing the efficiency of the payment system: Conceptual Framework”, A paper presented at the 9th CBN Monetary Policy Forum, Abuja, May.


Ovia, J. (2002). “Payment System and Financial Innovations”, A paper presented at the Annual Policy Conference, Nov.


Sprague, R.H. and McNurlin, B.C. (Eds) (1993) Information Systems Management in Practice. Englewood Cliffs: Prentice Hall.








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