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 , 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.
TABLE OF CONTENT
Table of content vi
to the Study 1
of the Problem 3
and objectives of the Study 3
Research Questions 4
of the Study 6
of the Study 6
of Terms 6
CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1 Preamble 10
Framework of the study 10
Framework of the study 14
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Preamble 31
3.2 Research Design 31
3.3 The Population of the study 31
3.4 The Sample, procedure and sample
3.5 Data Collection Instrument and
3.6 Method of Data Analysis 32
3.7 Limitation of Methodology 32
CHAPTER FOUR: DATA
ANALYSIS AND RESULT
4.1 Preamble 34
and Analysis of Data 34
of Hypotheses 39
of Findings 41
CHAPTER FIVE: SUMMARY OF FINDINGS DISCUSSION, AND RECCOMMENDATION
of Findings 42
5.3 Recommendation 43
5.4 Suggestion for
further Studies 45
TO THE STUDY
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
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.
STATEMENT OF THE PROBLEM
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.
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,
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.
1.3 AIM AND OBJECTIVES OF THE STUDY
The main aim of this study is to appraise
Electronic Payment systems in the Banking industry; A Study of First
objectives of the study are to:
Ascertain the effect of epileptic power supply on the
effectiveness of e-payment in First Bank.
Examine the relationship between e-payment and the
Nigerian business environment
Determine the level of security in the e-payment products
and platform of First Bank.
To Ascertain the level of acceptance and adoption of the
e-payment products of First Bank by the banking public
Highlight advantages of e-payment to First Bank
Find out the extent to which the deployment of e-payment
has enable First Bank to access new markets.
1.4 RELEVANT RESEARCH QUESTIONS
research questions will direct the study:
To what extent does epileptic power supply affect the
effectiveness of e-payment in First Bank?
Is there a significant
relationship between e-payment and the Nigeria business environment
How secure are the e-banking products and platform of
What is the level of acceptance and adoption of the
e-payment products of First Bank by the banking public?
What are the advantages of e-payment to the selected
Find out the extent to which the deployment of e-banking
has enables First Bank to access new markets?
1.5 RELEVANT RESEARCH HYPOTHESES
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
Ho: There is no significant relationship
between e-payment and the Nigerian business environment.
There is a significant relationship between e-payment and the Nigerian business
SIGNIFICANCE OF THE STUDY
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.
1.7 SCOPE OF THE STUDY
of this study is restricted to assessing the role of electronic
banking systems in the cashless economy; A Study of First Bank Plc.
1.8 DEFINITION OF
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
banking – This is commonly known as
e-banking, is the remote delivery of new and traditional banking
products and services through electronic delivery channels.
– 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
society – This is a society
where no one uses
being made by credit cards,
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.
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.
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