FACTORS AFFECTING ADOPTION OF POS TERMINALS BY BUSINESS ORGANISATIONS IN NIGERIA
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FACTORS AFFECTING ADOPTION OF POS TERMINALS BY BUSINESS ORGANISATIONS IN NIGERIA
CHAPITER 1
INTRODUCTION
BACKGROUND OF THE STUDY
Since the development of a nation’s economy depends on promoting a secure, convenient, and affordable payment system, monetary authorities in every country on earth have carefully supervised and encouraged the value of dependable and productive payment systems.
Many countries have had trouble making their payment systems safe, practical, and economical. Therefore, nations have developed reliable and efficient payment systems that ensure successful economic growth for the required transactions.
Nigeria is rumoured to have a cash-based payment system, nevertheless. Ajayi and Ojo (2006) noted that cash is the most widely used form of payment in Nigeria and that a sizable portion of the populace lacks access to banking services in Yaqub, Bello, Adenuga, and Ogundeji (2013).
Most people keep cash on hand at home, which exposes them to security threats. Since the business also relies heavily on physical currency for financial transactions, this is still the case in the majority of developed African nations. The nations are hence heavily cash-based.
Since money is frequently helpful for completing and terminating a transaction, allows anonymity if given, and is regarded by its users as a public utility, cash-based exchange has several advantages (Yaqub et al., 2013). But the cash economy is risky, inefficient, and unsafe for a national economy.
This is due to the fact that bank-not-controlled money cannot be governed or operationally controlled (Adeoti 2013). Additionally, it was discovered that industrialised countries’ cash is what is delaying their economies’ progress.
Robberies and other cash-related crimes, income losses from excessive handling of cash, ineffective management of cash owing to the nature of the business, etc. are some difficulties presented by large cash flow. currency is simple, but taxes are more complicated, and it costs money to distribute, handle, manage, and process currency.
The high cost for commercial banks to deposit and move cash between locations is another issue. Concerns include the price of cash transportation, its security, and the safety of bank employees. The rise of corrupt practises in the nation is another result of excessive cash circulation.
Additionally, having an abundance of cash around encourages people to steal money since they do not want to be questioned about where they got it. Nigeria’s financial sector is facing expensive and rising cash costs, as NGN 50 billion naira was very close in 2008. (CBN, 2011; Central Bank of Nigeria).
An overview of the CBN’s cash management procedures reveals that Nigeria’s financial sector is expanding and rising. Direct cash costs were at NGN 192 billion at the end of 2012.
These costs result from the routine printing of bills, money sorting, cash flow, vast cash holding, and police costs to manage large numbers of burglaries and stolen goods. However, this means that the Nigerian government must use cash as a form of payment.
As a result, these dangers must be decreased. The amount of currency in circulation, the dangers of carrying cash, and efforts to encourage the use of non-cash payment methods like electronic payments. Additionally, according to CBN (2012), as of December 2011, cash-based activities accounted for more than 99 percent of its consumer activity in Nigerian banks.
Total cash transactions through the traditional five payment networks were estimated to be 215 015 003, of which 51.20% were ATM withdrawals over the counter, 33.55% were made with checks, and 13.50% were.
POS and web channels each contributed 0.49% and 1.26% of the total. This shows how dependent on cash the Nigerian economy is, making it necessary to find a way to lessen the amount of currency in circulation.
STATEMENT OF THE PROBLEM
The cash strategy implementation pilot programme in Lagos State began in January 2012. The CBN assessed specific fees based on its cash operations as of March 2012 in an effort to deter consumers from using cash. According to the strategy, six States (Rivers, Anambra, Abia, Kano, Ogun, and the Federal Capital Territory) were implemented.
The cash programme was put into effect in the remaining 30 federal states on July 1, 2014. However, observation has shown that a large number of consumers already make significant purchases and pay in money for goods and services.
High cash expenses, high cash risks, high cash subsidies, the informal sector, inefficiency, and corruption are the results. Despite the general growth in the rate of adoption of e-payment instruments in Nigeria, Adeoti and Oshotimehin (2012) noted that the rate of adoption and use of POS is low in comparison to the rest of the e-payment system.
The low adoption of POS in Nigeria has been attributed to a number of factors, including poor awareness of the advantages of using POS, a lack of appropriate structures, low Internet penetration, an inability to network, the absence of open standards or confidence in banks and providers, and awareness of POS availability.
When available, frequent power outages, low POS counts per merchant location, a preference for cash, and network connection protection have all been reported (Ayo & Babajide, 2006; Adeoti, 2013, NIBSS, 2015).
Financial Derivatives Company (FDC), Ltd. conducted a survey of Nigeria Inter-bank Settlement System Plc (NIBSS) in 2012 and found that even though POS terminals, electronic funds transfers, and payment checks are available, many retailers still take cash above the POS level.
Investigations into why the merchant accepted electronic cash through the POS terminals revealed that the deployment of the POS was unintentional because the banks had done it without the merchants’ consent. Another reason for non-use is the time it takes to retrieve monies after POS purchases.
Another issue cited as a POS concern was poor connectivity. Additionally, while study has been done on the implementation of electronic payment systems like ATMs and internet banking, it has been shown that there has been a dearth of publication of POS variables in Nigeria in particular.
PURPOSE OF STUDY
The main goal of this investigation is;
To investigate the POS adoption determinants in Delta State commercial organisations.
To look into the connection between customer trust and the POS implementation in a particular company organisation in the delta state.
RESEARCH QUESTIONS
What are the motivating elements for corporate organisations in Delta State to embrace POS?
What connection exists between client trust and the decision to use POS in a particular company organisation in Delta State?
IMPORTANCE OF THE STUDY
Different monetary organisations around the world, including Nigeria, have actively monitored and advocated the importance of effective payment systems. The way business is done must change as the globe enters a vibrant technological age faster and faster.
The knowledge acquired will benefit business organisation owners, marketers, and managers. Additionally, clients who typically carry big amounts of cash would be informed on how to avoid doing so and stay safe from thieves.
SCOPE OF THE STUDY
The purpose of this study is to evaluate the variables influencing commercial organisations’ adoption of point-of-sale systems. This study will mostly focus on delta state.
LIMITATIONS TO THE STUDY
The researcher faced significant obstacles while doing this study, including financial difficulties for general research work, material shortages, and time restraints.
DEFINITION OF TERMS
POS: A retail transaction is completed at the point of sale. The merchant determines the amount the consumer owes, displays it at the point of sale, may issue an invoice to the customer, and displays a payment option.
Business organisation refers to how a company is set up and how that arrangement enables it to achieve its objectives.
Businesses are often built to concentrate on either making a profit or helping society. The three main types of business entities are a corporation, a partnership, and a sole proprietorship.
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