Full Project – IMPACT OF E-NAIRA PAYMENT SYSTEM ON CONSUMER BUYING BEHAVIOUR

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CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

A E-Naira economy depicts an economic situation whereby transactions are done without the necessary movement of cash as a means of exchange or as a means of transaction but rather with the use of credit card or debit card payments (Taiwo, Oluwafemi, Evawere & Agwu, 2016). However, the E-Naira economy does not refer to an outright absence of cash transactions in the economic setting but one in which the amount of cash-based transactions are kept to the barest minimum. It is an economic system in which transactions are not done predominantly in exchange for actual cash.

It is based on the perception that the E-Naira payment system will easy transactional purpose, make customer buying of products easy in payment which is perceived to enhance customer buying behaviour that encourages the introduction of the E-Naira payment system in Nigeria (Taiwo, et al., 2016). The customer buying behaviour is defined as the behaviour that consumers display in searching for, purchasing, using, evaluating, and disposing of products, services, and ideas (Adeoti & Oshotimehin, 2011). It is further explained that consumer buying behaviour is about how individuals make decisions to spend their available resources (time, money, effort) on consumption-related items which includes the study of what, why, when, where and how often they purchase and how they use the purchased product. In addition, it encompasses all the behaviours that consumers display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs (Adeoti & Oshotimehin, 2011).

It is observed buying behaviour has a link with the E-Naira system development in the global advancement in technological development of E-Naira system (Paltridge, 2008). Nigeria is not left out of this advancement. Information and Communications Technology (ICT) has evolved and has become a vehicle for technological growth in the economy of many societies as it has unarguably made life easier especially through the casless system enablement (Okpaku & Joseph, 2003; Paltridge, 2008). The motivations for the E-Naira policy vary from country to country but typically reducing the cost of banking, encouraging financial inclusion, increasing the amount of capital available for investments within the banking system, driving real economic growth and possibly reducing tax evasion (CBN, 2015). In a recent study, evolution of technology for use in financial transactions poses a lot of challenges as questions arose regarding the stability of the instrument in guaranteeing the efficiency and effectiveness of monetary policies of nations worldwide (Odior & Banuso, 2012).

From history, different payment systems have being in use e.g. barter system was common, but incidences of double coincidence of want necessitated the use of money. However, technological development gave rise to the use of superior instruments as the technology developed (Odior & Banuso, 2012). A little over three decades ago, the use of cash in making purchases in the United States of America has declined, and increasingly adopts the use of electronic payments systems. However, developing economy like Nigeria are still at the introductory stage of the use of alternative payments platform introduced by the monetary policy maker of Nigeria, the Central Bank of Nigeria (CBN).

However, the E-Naira payment system which is perceived to enhance buying behaviour has some security risk which could adversely affect the use of E-Naira system (Adeoti & Oshotimehin, 2011). Some of the problems include network interconnectivity, poor bank internet servers and fraudulent practices. There might not be network at the time of payment when purchase is made, thus it becomes difficult to the E-Naira payment to be used. This then necessitates the establishment of companies involved in manufacturing of switches to facilitate interconnectivities of the various devices such as ATM, POS among others with financial transactions (Odior & Banuso, 2012).

Although Nigerian consumers largely depended on the use of cash to conduct transactions, the introduction of POS, ATM, credit transfer through phone and other E-Naira platforms in the country is expected to ease the carriage of large sum of money by consumers and also to enhance the customer buying behaviour (Adeoti & Oshotimehin, 2011). It has been observed that poor awareness of e-payment solutions especially the POS, inadequate campaign on its existence and what it can do, ignorance of the benefits to be derived from keeping money in the bank, or poor banking culture (customer education), lack of trust, illiteracy and the love for the status quo has contributed to low use of E-Naira system.

The rapid growth of electronic methods of payment in developed and developing countries are being propelled by the use of payment cards (Credit or Debit) or contactless payment cards in physical store (POS terminals) or on the web. In Nigeria, Verve cards, Visa and MasterCard are issued by all the banks which facilitate the E-Naira payment system (Okechi & Kepeghom, 2013). Similarly, the growing use of payment cards as the preferred means of payment between business-to-consumer and business-to-business transactions is synonymous to the advancement in technology, e.g. the recent proliferation of internet has led to the development of internet based POS terminals which allows for fast end-to-end transactions that supports always on connectivity and at the same time lowering the cost per transaction processing (Odlyzko, 2003).

The emergence of Global Systems for Mobile Communications (GSM) has also led to the emergence of a technology called NFC, Near Fields Communication which involves the use of Mobile phone as a wallet containing different cards (Debit and Credit), with this, a holder need not carry cards separate from the phone as the phone would have been made card ready. Therefore, the role-played by the Point-of-Sale (POS) terminals at the retailers’ location is of great importance, because such terminals provide the most efficient and often preferred way of paying by the customers using payment cards which in turn save merchants some of the cash that are often lost to sales staff at the employment of the organisation especially the low income bracket. Essentially, the POS ensures the processing of credit or debit cards transactions and other electronically submitted transactions in the retail environment and by doing this the POS deployment has contributed immensely to the growth of the world’s economy (Ebietomere & Ekuobase, 2014).

To reduce the volume of cash in circulation, the risk involved with carrying it, and the cost of time lost in carrying out cash payment transactions such delay in counting, possible error in counting among others. It is perceived that the adoption of E-Naira payment system such as POS terminal which is mainly concerned with payment of fast moving consumer goods will help to curtail the challenges associated with cash payment transactions.

However, despite the relevance of the use of E-Naira payment system, adequate attention has not been given to enhance its development for its use in the payment of smaller retail transactions especially in the payment of fast moving consumer goods (FMCGs) especially to enhance buying behaviour. Adequate researches have not been carried out in this area of research, this creates a research gap, hence this study focuses on impact of E-Naira payment system on consumer buying behaviour of fast moving consumer goods.

1.2 STATEMENT OF THE PROBLEM

In spite of the achievements recorded so far in the implementation of the E-Naira policy of Federal Government of Nigeria, it is observed that to sustain customer usage of E-Naira system especially POS has been difficult. This is in reference to data obtained from CBN releases e-payments statistics for the period 2012 – 2016 (CBN, 2016) which indicates that despite the introduction of E-Naira economy with its attendant benefits the following data representing low penetration of use of the E-Naira platforms, especially the POS which is mainly applied in payment of FMCGs. It revealed that the volume of transactions for selected e-payments platforms are: ATM = 470,894,452; Cheques, 9,764,546 Web = 10,499,911 and POS = 47,743,919 (CBN, 2016).

Reasons given by CBN for low adoption of POS include connectivity and network challenges, inadequate enlightenment, security and trust issues. This observation also indicated that many buyers of goods and services still make payment by cash, which may not enhance purchases of customers (Omotayo & Dahunsi, 2015).

1.3 OBJECTIVES OF THE STUDY

The main objective of the research is to examine the impact of E-Naira payment system on consumer buying behaviour of fast moving consumer goods in Cadbury Nigeria Plc and Nestle Nigeria Plc in Lagos State. The specific objectives are to:

determine the impact of POS on customer buying behaviour of FMCGs in Cadbury Nigeria Plc and Nestle Nigeria Plc Pin Lagos State..
examine the impact of ATM on customer buying behaviour of FMCGs in Cadbury Nigeria Plc and Nestle Nigeria Plc in Lagos State.
determine the impact of E-Naira system infrastructural facilities on customer buying behaviour of FMCGs in Cadbury Nigeria Plc and Nestle Nigeria Plc in Lagos State.
investigate the impact of telephone E-Naira system on customer buying behaviour of FMCGs in Cadbury Nigeria Plc and Nestle Nigeria Plc in Lagos State.

1.4 RESEARCH QUESTIONS

In order to achieve the objectives of the study, the following research questions were raised:

What is the impact of POS on customer buying behaviour of FMCGs in Cadbury Nigeria Plc and Nestle Nigeria Plc in Lagos State?
What is the Impact of ATM on customer buying behaviour of FMCGs Cadbury Nigeria Plc and Nestle Nigeria Plc in Lagos State?
What is the impact of E-Naira system infrastructural facilities (regular electricity and Internet servers) on customer buying behaviour of FMCGs in Cadbury Nigeria Plc and Nestle Nigeria Plc in Lagos State?
What is the impact of telephone E-Naira payment system on customer buying behaviour of FMCGs in Cadbury Nigeria Plc and Nestle Nigeria Plc in Lagos State?

1.5 HYPOTHESES

The following hypotheses were stated for this study:

Hypothesis One

H₀: POS has no significant impact on customer buying behaviour of FMCGs in Cadbury Nigeria Plc and Nestle Nigeria Plc in Lagos State.

Hypothesis Two

H₀: ATM has no significant impacts customer buying behaviour of FMCGs in Cadbury Nigeria Plc and Nestle Nigeria Plc in Lagos State.

Hypothesis Three

H₀: E-Naira system infrastructural facilities (Regular electricity and Internet servers) have no significant impact on customer buying behaviour of FMCGs in Cadbury Nigeria Plc and Nestle Nigeria Plc.

Hypothesis Four

H₀: Telephone E-Naira payment system has no significant impact on customer buying behaviour of FMCGs in Cadbury Nigeria Plc and Nestle Nigeria Plc.

1.6 SIGNIFICANCE OF THE STUDY

This study will be of benefit to many consumers of FMCGs, the producers or sellers of FMCGs, the management Cadbury Nigeria Plc and researchers.

This study will be of benefit to customers as it will improve their payment for goods and service by making it easy to pay through POS, or ATM or bank transfer.

The producers or sellers of FMCGs in Nigeria, particularly in Lagos State will benefit from the study as it will enhance customer payment for their goods without difficulty of paying. This is because the volume of sales could be increases as the customers do not need to carry cash for payment.

The government will benefit as the improvement in the performance of the organizations using E-Naira payment system will enhance the purchases of customers through the use of less cash which reduces the Central Bank of Nigeria (CBN)’s cost of printing currencies and management of such currencies.

The study provides useful research materials for literature review for other researchers who may be carrying out related researches in this area of study in the future.

1.7 SCOPE OF THE STUDY

This study covers the investigation of the impact of E-Naira payment system on consumer buying behaviour of fast moving consumer goods in Cadbury Nigeria Plc and Nestle Nigeria Plc. The study is limited to the determining the extent POS, ATM, E-Naira payment system infrastructural facilities and telephone E-Naira payment impact on customer buying behaviour of FMCGs in Cadbury Nigeria Plc and Nestle Nigeria Plc.

1.8 LIMITATION OF STUDY

The constraints encountered by the researcher in the course of carrying out this research work are as follows:

The study is only based on the responses of the respondents to the questionnaire. Those who refused could not be compelled to fill the questionnaire. Therefore, only the opinions of those who voluntarily filled the questionnaire were used for this study.

In order to overcome this limitation, the customers were issued a letter of indemnity against any error or omission resulting from their responses and their names were not to be made known.

1.8 OPERATIONAL DEFINITION OF TERMS

Therefore, the following research concepts are defined according to their meaning in this study:

Automated Teller Machine (ATM): A machine used for dispensing of cash and perform other financial services such as deposit taking, transfer of funds between bank accounts, making enquiries about a given accounts on self operation basis.

E-Naira paying system infrastructure: Facilities which are used for carrying out the E-Naira payment system such as a combined set of hardware, software, networks facilities, communications etc. (including all of the information technology peripherals), in order to develop, test, deliver, monitor, control or support IT services.

Central Bank of Nigeria (CBN): The Central Bank of Nigeria (CBN) is a regulatory financial institution set up by the Federal Government of Lagos to regulate and supervise banking operations in Lagos which includes the banks and other financial institutions. Its power is derived from an Act establishing it.

Contactless payment card: This is an electronic payment card used for processing payments without direct contact with the device; these are new technology which complements the traditional e-payment cards.

Customer buying behaviour: the process and activities people engage in when searching for, selecting, purchasing, using, evaluating and disposing of products and services so as to satisfy their needs and desires.

Customer Education: Customer education on E-Naira payment is the creation of awareness about the existence of a device, its meaning, what it can do with the intention of ensuring its patronage or adoption.

Customer Trust in POS: This can be defined as the ability of a user to recognize that the device is confidentially secure, with high level of integrity and authentication and authorization before transactions can be made.

Data Interchange (EDI): EDI is the exchange of business data using the current data format and it involves data exchange among parties that are connected through network connectivity i.e. point-to-point connection, usually dial-up.

Debit and Credit Card: A debit or credit cards are cards issued by a bank to a customer for ease of financial transactions. Example of a debit card is the one issued by bank for use by either ATM or POS machine.

e-Commerce: E-commerce is the buying and selling of goods and services electronically e.g. the use of POS. This includes buying and selling of products and services by businesses and consumers through an electronic medium. Electronic.

POS: Point of Service (POS) is an electronic device used to make payments for goods and services electronically in an organization.

Telephone E-Naira Payment System: The use of the telephone handsets for transfers of money for the payment of goods and services.

Verve Cards: This is one of the newest cards in use issued by banks on Interswitch network for either in ATM, POS, KIOSKS or with both CHIP and PIN The combination of Chip and PIN gives it additional security features.

Visa and Master Card: These are different models of credit and debit cards used for electronic payments in various devices Retrieved such as POS terminals, ATM etc.

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