Umungwor Lucky Oseji

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ABSTRACT The emergence of e-commerce has created new financial needs that in many cases cannot be effectively fulfilled by the traditional payment systems. Recognizing this, virtually all interested parties are exploring various types of electronic payment system and issues surrounding electronic payment system and digital currency. Broadly, electronic payment system can be classified into four categories: Online Credit Card Payment System, Online Electronic Cash System, Electronic cheque system and smart cards based electronic payment system. Each payment system has its advantages and disadvantages for the customers and merchants. These payment systems have numbers of requirements e.g. security, acceptability, convenience, cost, anonymity, control and traceability. Therefore, instead of focusing on the technology specifications of various electronic payment system, the researcher have distinguished electronic payment systems based on what is being transmitted over the network; and analyze the difference of each electronic payment system by evaluating their requirements, characteristics and assess the applicability of each system. Methodologically, the information generated was drawn from shoprite retail stores as the population and staff were used as sample for detailed research findings while secondary data were generated from various textbooks, journals, newspapers, projects works, web and dissertations. The research hypothesis used was chi-square (X2) that concluded that, to be competitive, the integration of electronic payment system should be part of the policy of the business. In conclusion, adequate infrastructure facility especially power supply should be provided and mass encouragement in the use of Electronic Payment system should be introduces to encourage a cashless economy.

TABLE OF CONTENTS Pages Title Page Certification Dedication Acknowledgment IV Abstract CHAPTER ONE:
1.1 1.2 1.3 1.4

I ii iii


Background of the Study History of Shoprite Retail Stores Significance of the Research Study Statement of the Research Study 12 Research Questions Limitations of the Research Study Research Hypothesis Research Methodology and Design Definition of Terms REVIEW OF RELATED LITERATURE

1.5 1.6 1.7 1.8 1.9

12 14 14 15 16


Concept of Electronic Payment System 30 Synthesizing the Nature of Electronic Payment System 33 Characteristics of Electronic Payment Systems Classification of Electronic Payment System 39 37


2.3 2.4

2.5.1 2.5.2 2.5 2.6 2.7.1 2.7.2 2.7.3 2.7.4 2.7.5 2.7.6 2.7

Account Based Systems Electronic Currency Systems Determinant of Electronic Payment System Types of Electronic Payment Devices Purchase Cards Smart Cards Cash Cards Credit Cards Charge Cards Debit Cards The Role of Banks in the Operation of Electronic Payment System

40 49 51 55 57 58 58 59 60 60 61 64 64 64 73

2.8 2.9.1 2.9.2 2.9 2.10 2.11.1

Security for Online Payments Secure Socket Layer (SSL) Secure Electronic Transaction (SET) Electronic Payment System Stakeholders Cardholders 73 Merchants Card Issuer 73 Acquirer 74 Card Association 74 Third Part Processors 74

Challenges and Prospects of Electronic Payment System 65

2.11.2 2.11.3






Benefits and Importance of Electronic Payment System 75 Concepts and Nature of Business Transaction The Service Oriented Company Service Enterprise 85 Transport Services 86 Electronic Commerce Services 87 Retailing Services 87 Financial Services 88 Manufacturing Services 88 79 83

2.12 2.13 2.14.1








Research Design 96 Study of the Population Sample Size Sampling Techniques Sources of Data Description of the Research Instruments Standardization of the Research Instrument Administration of the Questionnaires Data Analysis Techniques Limitations of the Study 97 98 99 100 100 101 102 102 103

3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10

4.1 4.2 4.3 4.3.1 4.3.2 4.3.3 4.3.4 4.3.5 4.3.6 4.3.7 4.4

RESEARCH METHODOLOGY 106 107 107 107 108 109 111 111 112 113 114

Data Presentation and Analysis Analysis of the Research Questionnaires Analysis of the Respondents Bio data Question 1 Gender Question 2 Age Question 3 Marital Status Question 4 Education Qualification Question 5 Management Position Distribution Questions 6 Work Experience Question 7 Length of Service Analysis of Research Questions

4.4.1 Research Question 1: So many customers and merchants prefer the use of electronic payment to the traditional payment system? 4.4.2 Research Question 2: Is the importance of Electronic Payment System a Significant factor to For its’ adoption for business transaction? 4.4.3 Research Question 3: Has the Implementation of the Electronic Payment System Improve Definition Sales Performance? 116 4.4.4 Research Question 4: How secured, convenient, friendly and effective is the operation of the electronic payment system to merchants and customers? 4.4.5 Research Question 5: How cost effective is the operation of Electronic Payment System to all parties involved? 4.4.6 Research Question 6: Has the implementation resulted 118 117 be considered 115 114

To high customers and profit turnover? 119 4.5 Test of research hypothesis 120 4.5.1 Test of research hypothesis I 4.5.2 Test of research hypothesis II 4.6

120 122 123 123 124

Summary Interpretation of Research Hypothesis Interpretation of Research Hypothesis SUMMARY, FINDINGS AND

4.6.1 Summary of Research Hypothesis

5.1 5.2

Summary of Findings Recommendation Conclusion Bibliography

126 128 130 134



CHAPTER ONE GENERAL INTRODUCTION 1.1 BACKGROUND OF THE STUDY Electronic payment system evolved as a result of the global technology advancement within the globe. The operations of the electronic payment system in a service oriented

company involves the issuing banks, the merchants and the card holder or users through the use of automated teller machine, point of sales terminal or other device that could be phone, web, inter-bank branch transfer etc. the

increasing use of the payment system by customers and merchants is due to the fact that, it is convenient to use, it reduces cost of business transaction, increase efficiency, effectiveness and most especially, it is very secure to use and carry about. To the issuing banks, it limit the traffic of physical appearance of customers in he banking hall, reduces paper work, improves efficiency, accuracy and profit in their business transaction. Imala (2002 pg. 6.) The tremendous progress and achievements witnessed in almost every sector of the financial activities in the economy is as a result of the introduction of electronic payment system. The technology is used in the financial sector, insurance sub- sector; academic institutions, stock exchange market, franchise industry have earlier defined the simplicity in which payments are made to effect and authenticate

transactions. Payment can easily be traced from the actual amount spent, the precise time of the transaction and most especially comfort makes the introduction and

implementation into the economy acceptable by both the issuers, the merchants and the card holders or users, Valentine (2008 pg. 18). The need to have a more accurate, more reliable, and effective transfer and movement of cash evolved as a result of the difficult faced by both financial and non financial organization including individuals. Valentine (2008 pg. 17). The security implication or risk involved in the flow of physical cash from organization to individual is so high that it involves both human and huge financial resources to convey small or large amount of money from one location to another. Furthermore, the man-power and labour hours required to successfully carryout a business transaction cannot be overemphasized. It could take the whole twelve hours and

several personnel to actualize a financial transaction in the banking hall whether small or large. These personnel includes security, teller, bulk-personnel and even the branch operation manager. From the client perspective, comfort, convenience, safety, efficiency, effectiveness, and accuracy is of high importance because it helps to guarantee customer loyalty and patronage. It increases the confidence and fidelity of the client to the company providing the service. But all these are perceived or lacking in the manual form of payment system, considering the time spent to finalize a single transaction, the hassle involved in the collection and the movement of cash. Ugwu, Ilori (2000 pg. 16). The settlement of payment in the trans-boarder business transaction is another challenges faced using the manual payment system. This had led to lost of life and valuables worth millions of naira through trans- boarder robber. It has crippled many businesses and makes many faced financial crisis. There are many other reasons why most organization

and individual prefer alternative and current means that is more secured, hassle free, efficient and effective means of making payment while transacting business. This is what the electronic payment system that knows no bound, easier, more customer friendly, effective, reliable and more secured could do; especially a service oriented company, like Shoprite retail stores, which is the focus of this research work. 1.2 HISTORY OF SHOPRITE RETAIL STORE

Shoprite Plc, whose headquarter is situated in the Western Cape province of South Africa is the largest Africa’s food retailer’s company that operate over 969 corporate outlets in 17 countries across Africa, the Indian Ocean and Southern Asian. The shoprite group of companies started from small

beginning in 1979 with the purpose of a chain of 8 cape based supermarkets for R 1 million. According to

After the listing of the Shoprite Plc in the Johannesburg stock exchange (JSE), there was a planned action strategised to expand within and outside South Africa. The first was the acquisition of the Grand Bazaar Limited in 1990. By the following year, Shoprite acquires the National checkers chain of supermarkets which increased the capacity of the company to about six fold. 1995 was the year the group of companies established its first international store in Central Africa, Shoprite Lusaka in Zambia. In the same year, Shoprite purchased the central Buying Organization then known as Sentral. In 1997, the group acquired the ailing OK bazaars group from SAB. By 2001, Shoprite realized a big ambition, Allen stores were opened in North Africa. 7 Shoprite supermarkets are now trading in Egypt. October 2002, saw the acquisition of the French owned champion supermarket group in Madagascar. In November, the same year opened the first Hyper beyond South Africa boarders and by December 2002, another acquisition was made. This time it was the score supermarket in Tanzanian. In 2004, the group started trading as a wholesale operator in Indian and

franchised its first Shoprite Hyper in a modern shopping centre in Mumbai. Furthermore, in December of 2005, the group entered Nigeria, the world fifth largest oil producer, when it opened a supermarket in a new shopping center in Lagos. Today, the Shoprite group trades with 194 outlets in 16 countries outside of the republic of South Africa, while its South African operation total 1,026 corporate outlets, bringing the number of corporate stores in the group to 1220. The Shoprite Holding Ltd comprises of Shoprite checkers supermarkets, U-save stores, ok furniture’s, megasave wholesale stores, Sentra stores and buying partners. The Shoprite group is vast in the mood of transacting business with its customers. The group is involved in the use of modern electronics service business facilities to enhance an effective and efficient business transactions and

customer relation with its esteemed customers.

According to Ayo and Charles (2008 pg. 8), Electronic services are important in B2C e-commerce for managing customer relations and enhancing sales. In the electronic world, the customer and the merchant do not meet face-toface, and the clients are more discerning with increased options and solutions available to them online. With the click of a mouse, a customer can find another provider. As customer embrace e-commerce their expectations about service support and how they make purchases are changing. Services to customers offered electronically to enhance their online shopping experience include search support; eresponse to customer queries, orders and transactions, epayment, e-transaction record management, e-assurance and trust, e-help and other online support in the B2C espace. The Shoprite group of companies, Africa’s largest food retailer, operates more than 1068 corporate and 275 Franchise outlets in 17 countries across Africa, the Indian Ocean Islands and Southern Asia, and employees more than

75,000 people across 9 trading and 7 operational divisions. The shoprite Holdings Ltd comprises the following entities. SHOPRITE HOLDING LTD SHOPRITE CHECKERS LTD

















Over the past 12 years, shoprite has expanded the worth/thrust northward beyond South Africa boarder.

Currently, 198 corporate outlets serve customers in 16

countries outside of South Africa. The Directors are as listed below;  J.W BASSON (63) B COM CTA CA (SA) Chief executive officer Mr. JW Basson joined pep stores as financial manager in 1971, and in 1975 he was appointed to the pepkor Board. He still serves that company in this capacity. He is the chief executive and managing director of shoprite checkers and Shoprite holdings respectively and serves as the remuneration committee. Other are  C G Goosen (62) B coms Hon CA (SA) Deputy Managing Director  B Harisunker (57) Divisional Manager  BR Meyers (57) General Manager: Marketing and Product Development  A E Karp (50) General Manager: Furniture Division  E L NEL (60) B com CTA CA (SA)

General Manager: Retail Investments Executive Alternative Directors  JAL Basson (33) BACC General Manager: Hungry lion  M Bosman (52) BACC Hon CA (SA) General Manager: Group finances  PC Engelbrecht (40) Bcompt Hons CA (SA) Chief Operating Officer. Non-Executive Directors  Dr. CH Wiese (67) BA LLB DCOM (LC) Chairman  TRP HLONGWANE (70)  JA LOUW (65) BSc Hons B (B & A) Hons  JF MALHERBE (80) Bcom LLB  JG REDEMEYER (60) Bcom CTA CA (SA)  JD WIESE (28) BA (VALUE AND POLICY STUDIES), LLB, MIEM 1.3 SIGNIFICANCE OF THE RESEARCH STUDY

The advantage of adopting a more advanced medium of payment through the use of electronic payment system strongly out weights, the conventional means of cash exchange, justify the purpose of this research work. The purpose of the study tends to establish the followings:  To factor out the effectiveness of electronic payment system on customer satisfaction.  To reveal the importance of electronic payment system on business transaction.
 To find out its growth and acceptability of the

payment system into the economy
 To







security convenience and adaptability of using the payment system  To know the level of regulation that electronic payment system is exposed to and supports received from the regulators.  To know the impact, growth and acceptability of electronic payment system in the over all economy.

1.4 STATEMENT OF RESEARCH PROBLEMS The integration of electronic payment system into all spheres of our daily business transactions in the economy is a sure way of creating a system that is free from transfer of physical cash to an easier, safer and convenient means that generate lesser risks of cash flow. Most organization prefer to employ the use of this system but are still skeptical of the efficiency and effectiveness of the system due to the incessant public power supply Outage, Ineffective Internet Service Providers, Instability or lack of professionalism in the information sector, poor technology, inefficient and effective regulatory authority among others. 1.5 RESEARCH QUESTIONS The research questions to be considered since the reasons of the study are clearly and precisely specified as:

 Why was the electronic payment system introduced

as a medium or means of business transaction into the Nigeria Economy?  Are the merchants and customers properly educated about the technicality in the usage of the electronic payment system for business transaction?  The rate of automated teller machine utilization by service available?  Do many customers and merchants prefer the use of electronic payment system to traditional payment system?
 Is the importance of electronic payment system a





significance factor to be considered for the adoption of business transaction?
 Has the implementation of the electronic payment

system improved organization sales performance?  How secured, convenient, friendly interface and effective is the operations of the payment system to the merchants and customers?

 How cost effective is the operation of electronic payment system is to all the parties involved?  Has the implementation resulted to highly customer and profit turnover? 1.6 LIMITATION OF THE STUDY The research study will be restricted to the case study. Shoprite retail stores and to the confines of Nigeria environment which will be guided by the various research works based on the related research study. Other limitations identified are:  Financial constraint: that is cash inadequacy.  Time constraint: there might be no adequate time require for the conduct of the research work  Inadequate information: - This posses a lot of challenges as it might not be obtained as needed. 1.7 RESEARCH HYPOTHESIS HYPOTHESIS 1










of payment for every purchase.

Ho: The electronic payment system is not effective for settlement of payment for every purchase.

HYPOTHESIS 2 Hi: Organizations rely on electronic payment system to increase sales in the face of competition Ho: Organizations do not rely on electronic payment system to increase sales in the face of competition. 1.8 RESEARCH METHODOLOGY AND DESIGN This is the basic plan which guides the data collection and analysis phases of the research project. It is the blue print that guides the collection, analysis and interpretation of the research observation. It will also assist the researcher to establish if relationship exists between variables. For the purpose of this research work, correlation research designed is used. This makes it possible to determine the nature of the relationship between payment system

(independent variable) and business transaction (dependent variable) in the organization. The population study will be information generated from Shoprite Nig. Ltd the samples from workers with varies in educational background and level of experience in the use of electronic payment system devices, which represent the primary source of data while the major source of data for this study are secondary data and information gathered from relevant textbooks, newspapers, journals, projects works, web, and dissertations. The sample techniques adopted will be random sampling techniques while will be analyzed using the frequency table and the research hypothesis will be chi-square (X2) which will be based on data collected from the relevant administered questionnaire given to respondents. 1.9 DEFINITION OF TERMS CARD: - means, any card including an automated teller machine card, electronic fund transfer point of sale

card, debit card, credit card or stored value card, used by a consumer to effect an electronic fund transfer.

FUND TRANSFER: - means, any

transfer of funds, other than a transaction originated by cheque, draft or similar paper instrument, which is initiated through an electronic terminal, telephonic instrument, point-of-sale terminal, stored value card terminal, debit card. ATM, computer magnetic tape or any other electronic device so as to order, instruct, or authorize a financial institution to debit or credit an account.


means, any card for use at any automated teller machine to initiate electronic fund transfers.

means, other


current account

deposit, maintained

savings by a




consumer in a financial institution in which credits and debits may be effected by virtue of electronic fund transfers.

 AUTHORIZED PARTY: means, a bank, a financial

institution, a clearing house, a service provider or any person or an entity authorized by the state bank to transact business.





means, any person or a financial

institution operating any ATM at which consumers initiate electronic fund transfers.
 ACCEPTED CARD: means, a card, code or other

means of access to a consumer’s account for the purpose of initiating electronic fund transfer.
 ACCESS CODE: includes pin, password or code,

which provides a means of access to a consumer’s account for the purpose of initiating an electronic fund transfers.
 CONSUMER: means, any person who or which uses

the facility of electronic fund transfer.
 DEBIT INSTRUMENT: means, card, access code, or

other device other than a cheque, draft or a similar

paper instrument, by the use of which a person may initiate an electronic fund transfer.

FUND OR ELECTRONIC MONEY: transferred through an electronic



terminal, ATM, telephone – instrument, a computer, magnetic medium or any other electronic devices so as to order, instrument or authorize a banking company, a financial institution or any other company or person to debit or credit an account and includes monetary value as represented by a claim on the issuer which is stored in an electronic device or payment instrument, issued on receipt of funds of an amount not less in value than the monetary value issued, accepted as means of payment by undertakings other than the issuer and includes electronic store of monetary value on an electronic device that may be used for making

payments or as may be prescribed by the state bank. Erikson (2003 pg. 150).
 CLEARING HOUSE: - means corporation, company,

association, partnership, agency or other entity that

provides clearing or settlement services for a payment system.


undertaking, which issues means of payment in the form of electronic money and is duly authorized to do so.





implementation of payment system electronically.
 ELECTRONIC TERMINAL: - means, an electronic

device, operated by a consumer, through which a consumer may initiate an electronic fund transfer.
 OPERATOR: means, any financial or other institution

or any person, authorized by the state of bank to operate any designated payment system.
 PARTICIPANT: means, a party to an arrangement

that establishes a payment system.
 PAYMENT INSTRUMENT: means, any instrument,

whether tangible or intangible, that enables a person to obtain money, goods or services or to otherwise make payment.

 Payment system: - it means, a system relating to

payment instruments, or transfer, clearing, payment settlement, supervision, regulation or infrastructure thereof and includes clearing, settlement or transfer or book entry government securities.



TRANSFER: - means an electronic fund transfer authorized in advance.





means, a payment system which can effect final settlement of funds, payment obligations and Book Entry government securities and instruments on a continuous basis during such operating hours of a processing day as the State Bank may determine on a transaction – by – transaction basis.
 SERVICE PROVIDER: includes an operator or any

other electronic fund transfer service provide.
 SYSTEM RISK: means, the risk that relates to the

inability of a participant to meet its obligation in the payment system as they become due or a disruption to

the payment system that could for whatever reason, cause other participation in the payment system to be unable to meet their obligations as they become due.
 ELECTRONIC PAYMENT: - The dispenser or money

through the use of machine in a quicker and more efficient channel.
 CREDIT CARD: A card that indicates that the holder

has access to a line of credit with a bank for the settlement of debt.






discharges obligation between two parties or more.
 POINT OF SALES (POS) TERMINAL: The activity of

making, buying selling or supplying goods and services between two or more persons for profit.
 CONSORTIUM: A temporary association of several

banks or issuing houses for a common purpose.

CHAPTER TWO REVIEW OF RELATED LITERATURES 2.1 CONCEPT OF ELECTRONIC PAYMENT SYSTEM As the world continues to globalize, it won’t be an understatement that methods of transacting business and

exchange of value is rapidly changing. As a matter of fact, more and more sophisticated mechanism are introduced to facilitate and enhance payment putting into consideration reliability, convenience, cost effectiveness, service efficiency and security of transaction into the business world has caused a remarkable and dramatic change in a positive light. According to Imala (2002 pg. 44), the payment system is enabling mechanism is of a particular importance because of

its wide use as a means of payment, its availability, and its universal acceptance. The reasons for it’s adoption and why it is widely accepted according to Kamel (2007 pg. 25), include ease of usage, short processing time, and ubiquitous availability. Business practitioners are increasingly reducing the rate at which they involve physical cash and other traditional payment devices in their daily transactions. This can be credited to a statement made by Paul (2002 pg. 5), “that every year more retailers are starting to convert checks into electronic transactions at the point of sale. Erik and Sarah (2006, pg. 97), stated that the success or failure of a new payment system can have a large economic impact, with shifts toward electronic payment options in particular, having the potential to save up to one percent of a nation’s gross domestic product. However, in putting all these factors together, there is need to have a proper understanding of the concept of electronic payment system. Many Authors devised several meaning for

it. But for the purpose of this study, it will be limited to the following;

Murthy CSV (2002 pg. 626), explained electronic payment as an implementation of payment electronically; According to Mahil and Idrbt (2007 pg. 10), an electronic payment or mobile payment may be defined as any payment where an electronic or mobile device is used to initiate, authorize and confirm an exchange of financial value in return for goods and services. Nicholas (1997 pg. 190), defined electronic payment system as simply alternative means to deliver traditional banking and related products and services. Imala (2002 pg. 104), said electronic payment system evolves the provision of payment services over electronic devices such as telephones, personal computers and the internet. An electronic payment system can further be defined according to Raja (2008 pg. 48), as a payment services that utilize information integrated and communications (IC) card, technologies including and



telecommunications networks.

2.3 SYNTHESIZING THE NATURE OF ELECTRONIC PAYMENT SYSTEM The totality of payment system in this part of the world reveals predominance of cash in settlement of financial transactions. Even though, electronic process is incorporated into payment system, limited services exist where such payment is electronically initiated, processed and completed with finality without interfacing with some form of cash. Given the IT situation in the continent and the context of epayment, Nigeria can be classified largely as a mobile country as depicted by its phenomenal growth in mobile telecommunications technologies Bassey (2008, pg. 64). Considering the sophistication of the mobile telephone, it has functional capabilities for serving as a virtual bank, internet banking terminal or Automated Teller Machine (ATM), point of sale terminal, thereby making it strategic alternative for bridging the digital deride in Nigeria. Strategic investors in the mobile sector include; MTN, Vodacom, Zain, (also known as celtel), orange, milicom and the new

established Etisalat and others. Thus, the growth in mobile tele-density in the continent has rubbed off positively on the payment system.

These includes services such as funds or credit transfer and payment for goods and services. Usually, the short

messaging service – based account is in existence with transaction carried out using text commands. The point to note is that much of the services have been initiated by conventional banks or non-bank private sector actors working in relation with the traditional banking institutions. An exemplary usage of the mobile phone technology in monetary transactions in Nigeria as noted by Bassey (2008, pg. 64), is the flash-me-cash facility offered by first inland bank. The facility is a mobile payment solution designed specially to serve as a means of payment for goods and services (such as purchase of virtual recharge vouchers, bill settlement, fund transfer etc through GSM phones and the internet. The mobile phone number of the registered user

serves as the account member and offers the capabilities of making payments to third parties by generating automated text messages via the server to recipient’s phone. The generated message suffices as authority for payment which can be presented at any branch of first inland bank for monetary claim and the recipient is not required to be an account holder. In summary, therefore, the e-payment system in Nigeria can be describe as being in the form of E-purse transaction, online credit card payment, electronic payment based on trusted third party, smart card (credit and debit)

transactions, cheque book order, bulk payments, mobile funds transfer and payment, electronic billing presentment and payment. However, the internet as a facilitator of the electronic payment system in the service industries is not an exception as it has brought about a dramatic growth in the volume of online transactions all over the world. These business activities according to Ayo (2008, pg. 8), include electronic

fund transfer (EFT), supply chain management, e-marketing, online marketing, online transaction processing, electronic data interchange (EDI) and automated management among others. The current dot com era has witnessed a lot of changes arising from the growth in Information and

Communication Technology (ICT). The ICT has remained the dominant factor and platform for business transactions. The platforms offered for commercial transactions include the internet (i-commerce) the web (web-commerce), the mobile services or devices (m-commerce) and all are collectively referred to as electronic commerce (e-commerce).

Consequently, the arrival of the internet, driven by the world wide web subset has redefined the traditional e-commerce. The difference between the platforms of operation,

particularly the electronic and mobile, prefixed “e” and “m” respectively, is that electronic medium offers “anytime access”, while the mobile medium offers “anytime and anywhere access” to business transactions respectively.




According to Mahil and Idrbt (2007 pg. 11), a wide range of systems have been developed for electronic payments. In order for payment systems to become acceptable in the market as a mode of payment, the following conditions have to be met;
 Simplicity






application must be user friendly with little or no learning curve to the customer. The customer must be able to personalize the application to suit his or her convenience.
 Universality: - E-payments service must provide for







customer (C2C), or form a business to a customer (B2C) or between business (B2B). The coverage should include domestic, regional and global environments. Payments must be possible in terms of both low value micro-payment and high value macro payments.

 Interoperability: - Development should be based

on standards and open technologies that allows one implemented system to interact with other systems.
 Security, Privacy and Trust: - A customer must be








provider that his or her credit or debit card information may not be misused. Secondly, when these privacy





should not be hot in the sense that the credit histories and spending patterns of the customer should not be openly available for public scrutiny. Electronic payment systems have to be as anonymous as cash

transactions. Thirdly, the system should be foolproof resistant to attacks from hackers and terrorists. This may be provided using public key infrastructure. Security, biometrics and passwords integrated into the electronic payment solution architectures. Cost: The e-payments should not be costlier than existing payment mechanisms to the extent possible. An e-payment

solution should compete with other modes of payment in terms of cost and convenience. Speed: The speed at which e-payments are executed must be acceptable to customers and merchants. Cross boarder payment: To become widely accepted, the e-payment application must be available globally and world wide.

2.5 CLASSIFICATION OF ELECTRONIC PAYMENT SYSTEMS The analysis of electronic payment systems in this project based on the wide range of systems that have been developed for electronic payments are classified into

account based and electronic currency systems Graham (2006 pg. 19). Account – based systems allow payment via an existing personalized account (usually a bank account), where as electronic currency systems allow payment simply if the payer has an appropriate amount of electronic currency.

ACCOUNT BASED SYSTEMS: are divided into five which are described below:  Credit cards,  Debit cards  Mediating systems  Mobile payment and telephony account system, and  Payments via online banking. ELECTRONIC CURRENCY SYSTEMS: can be divided into:  Smart card  Online cash system As the focus of this project is centered upon recent trends in electronic payments system, the scope of this overview does not cover offline payment mechanisms such as cash on delivery. This section gives an overview of the

characteristics of each of the different classifications of electronic payment systems, briefly discerning their futures and initial comparisons among the systems. The discussion covers selected characteristics such as applicability, ease to obtain, ease of use and cost.

 CREDIT CARDS: - Credit cards are widely used to

pay online. Initially there was relatively little adaptation of credit cards to online payments apart from additional security codes. But new, more secure features have been added to protect transactions. A major difference between online and offline payment is that in online purchases, a physical copy of the card is not provided and the merchant does not obtain a signed or similar confirmation from the customer. Also whereas, all offline transactions are authorized, this is not the case for all online purchases (especially with small

businesses) although authentication and verification technologies have increased the ability of accurately authorizing transactions. CHARACTERISTICS
 Applicability: The credit card system has a long-

established network of users and merchants ensuring widespread applicability and a large user based for

transactions of most kinds. However, fees for credit card operations for small payments are relatively high, a fact that makes credit cards a less suitable payment system for micro-payments. A potential way of adapting credit card to micro-payments is by using cumulative or aggregation payment solution. Another limitation arises for person-to-person payment as a seller needs a merchant account with the credit card company to accept payment and this option may not be feasible for occasional transactions or small businesses.
 Ease to obtain: - one of the main advantage of

using credit cards for online payment is that the customer does not need to obtain any additional hardware or software and there is no need for further registration with third – parties. However, some

segments of potential buyers may not be eligible for this payment method. For instance, in the rapidly growing online games market, me third of games players are less than 18 years old. They may not have credit card business minimum financial conditions have

to be fulfilled. More importantly, in some emerging economies where credit cards are not widespread, the system may not be suitable for online payments.
 Reliability/ease of use: - Payment systems are

relatively easy to use provided users have experience with online transactions. The frequency of uncompleted transactions may serve as an indicator of ease of usage.
 Cost: The fee charged by the credit card company to



ranges locations,









category, and sales characteristics (including size, the importance of national and international sales), and there is usually a certain fixed fee for opening and maintaining a credit card account.
 Security and related issues: Since credit cards








systems, there are inherent risks associated with their use of such. Cardholder authentication has usually been handled through the provision of name, credit card







authentication. To prevent information interception during the

transmission of Credit Card information, Secure Socket Layer (SSL) Service, which is widely used for variety of security applications, is commonly used. SSL also allows verification of merchant ident6ify via the SSL server certificate.
 DEBIT CARDS: Debit Card payments are directly

withdrawn from the bank account and not from an intermediary account in contrast to Credit Cards. This can make it difficult for consumers to handle a dispute/charge back, since there is typically no extra protection of the funds in a debit account. Once the funds have been withdrawn, they are harder to refund than with a credit card. Also, for debit payments a physical card and or providing a card number is often not necessary, an account member may be enough.

Apart from these differences, the payment mechanism is comparable with credit card transactions. CHARACTERISTICS Debit cards have a significant user spread, which in most countries is higher than the number of Credit Card user depending on financial regulation and conditions attached to Credit Card Issuance. However, debit card payment is generally not as widespread on merchant Web Sites as Credit Card payment, their application is mostly limited to national payments, due to the national structures, operations and regulation of

banking systems and they do not address the demand for international payments. Furthermore, their cost structure (as for Credit Cards) is not most suitable for realizing one-off micro-payments. It is again essential to provide SSL for the transaction as well as for merchants and consumers to take the necessary security precautions. Banks frequently

impose stronger identification requirements for debit payments and their overall security has been found to be higher than for Ordinary Credit Card Payments.
 MEDIATING SYSTEMS: - These mechanisms employ

traditional payment means and add a further layer kit. To be able to use the service, it is necessary to register providing Credit Card or bank account details as the source of payments. A very successful mediating service for online transactions, beginning in the United States, is the Paypal Payment option. To pay, buyers only need to know the seller’s e-mail address, which is verified and linked to a paypal account. The payment will be debited from the buyers is personal paypal account. No further financial information is transmitted to the seller. Another mediating service is the German Firstgate click and buy. By 2005, more than 3,500 industry content providers of media publishing, research, music and

online games with more than 5 million customers used the payment system. Further, the payment system has become increasingly internationalized, notably with the development of the Click and Buy Alliance that connects and major financial payments

telecommunications institution. Other

providers, important



options are offered by mobile service providers. There are differences in pricing structure, in whether or not both parties have to sign up for the service and other such characteristics across providers. Some payments systems allow payment from the personal bank account and are bank-related offerings; whereas others may require pre-funding an account with the service

provider. For example, the United Kingdom has several online account based e-payment services, used for person-to-person payments and sometimes by

businesses to offer customers a means to pay online. Examples are Moneybookers and Natwest festpay.

 Applicability:




satisfactory payment method for purposes such as online auctions; they allow person-to-person transfers without the seller having to register as a merchant (as required for accepting Credit Card payments) As mediating services rely on established payment

networks, they benefits from an already existing networks. The payment function can also increasingly be used in other areas, example, for some dot com to pay taxes in certain countries, to provide gift vouchers, online music sales among others.
 Ease to obtain: Consumers have to sign up for the

service but charging the account does not involve major efforts as existing credit cads can be used. However, it means establishing an extra relation with an additional provider and can be used only after

registration for online purchase. But a key advantage for sellers is that they can obtain an account easily and do not need to create a merchant account. This is the essential feature of the paypal payment option that explains much of the success. It renders the service

particularly attractive to small and medium scales sellers. The payment system is thus capturing a niche market rather than providing a general payment option.
 Cost: The paypal system is free of charge for buyers

and earns revenue from charging merchants. It charges a rate of 2 -2.9% and a flate fee of USD 0.30 per transaction. To make its cost structure more attractive for micropayments in the digital music sector; the company changes 2.5% plus paid accounts. 2.5.2 ELECTRONIC CURRENCY SYSTEMS
 SMART CARD SYSTEMS: In the early stages of the








cybercash or digicash, were proposed, Graham (2006 Pg. 74). However, they had little success and most of

these instruments have disappeared. Currently, smart card-based systems are most commonly used to pay small amounts within organizations (e.g. vending or copying machines). They usually rely on specialized hardware and dedicated smart card readers for

authentication. CHARACTERISTICS
 Applicability: The user base for new electronic

currency systems is initially necessarily small. Often only a few merchants accept the new payment means so that it is not perceived by consumers to be a payment option. However, these systems can be built on widely available networks. For example, the prepaid cash system of the Italian Moneta online, offers a temporary visa cad that permits buyer to pay on merchant web sites where there is Visa Card

acceptance. The question is, however, whether this is a feasible business model for new payment system

providers. Consumers have to perceive on advantage in this system over available alternative options.
 Cost: There are different costs for prepaid card and

smart card systems prepaid accounts such as scratch – cards have physical and distribution costs as well as retailer commissions. For smart cards there are

additional installation costs for consumers, as specific software and hardware are generally necessary for online use. Both electronic currency systems may also have or require large databases to prevent abuse such as double spending, adding a further overhead cost. Overall, these systems potentially have large

transaction cost that may limit their use in some application.
 Anonymity: Electronic currency systems potentially

allow anonymity in the same way as paper currency in offline transfers. However, provides may require

consumer registration and undermine the potential for anonymous payment of these systems.





In the offline world where payments are often made face-toface or various physical instruments like checks one involved, it is widely believed that it is much more difficult to perpetrate a fraud than it is in the online world Cornwell (2000, Pg. 16). If someone hands you cash, issues of trust rarely arise (although the money could be counterfeit). If someone pays with credit card, you can check his/her signature against the mandate on the back of the card (although the signature could still be a forgery). Because online buyers and sellers are not in the same place and cannot exchange payments and products at the same time, issues of trust come to the surface. The acronym (PAIN) has been devised to represent the key issues of trust that must be addressed by any method of e-payment. Cornwell, (2000 Pg. 17).
 Privacy: The parties must be assured that the

details of the transaction are kept confidential and they

are not used for purpose other than those agreed to by the parties.
 Authentication




sellers, and any intermediaries (e.g. Credit Card Issuer) must be assured that the participants are who they claim to be and that each is acting within his or her authority payment.
 Integrity: The parties involved must be assured that






the e-payment, the data and documents representing the payment cannot be altered without detection.
 Non-repudiation: The parties must be assured that

e-payment binds the participant to the transaction and that no party can deny or illegally back out of the transaction. Trust is not the only characteristic that determines whether a method of e-payment has a chance of acceptance.
 Independence: Some forms of e-payment require

specialized software or hardware to make the payment. Almost all forms of e-payment require the seller or

merchant to install specialized software to receive and authorize a payment. Those methods that require the payer or buyer to install specialized components are less likely to succeed.
 Interoperability and Portability: - All forms of e-

commerce run on specialized systems that are also interlinked with other enterprise systems and

applications. An e-payment method must match with these existing system and applications and be

supported by standard computing platforms.
 Security: How safe is the transfer and what are the

consequences of the transfer being compromised? Again, if the risk is higher for the payer or buyer rather than the payee or seller, then the method is not likely to be accepted.
 Anonymity: This is closely related to the issue of

privacy. Unlike Credit Cards and checks, if a buyer uses cash, there is no way to trace the cash back to the buyer. Some buyers want their identities and purchase patterns to remain anonymous. To succeed, any e-cash

or digital cash system has to maintain anonymity. In the further, other e-payment methods, including Credit Card purchase, may be required to minimize the epaper trait from the buyer o the seller.
 Divisibility: Most sellers only accept Credit Cards for

purchases within a minimum and maximum range. If the cost of the item is too small say you are purchasing a single article from a magazine that only costs a few dollars, a credit card won’t do. On the otherhand, if an item or set of items cost too much say you are an airline company purchasing a new airplane then a Credit Card won’t work there either. Any method that can address the lower or higher end of the price continuum, or can span one of the extremes and the middle has a chance being widely accepted.
 Ease of use: On the B2C side of electronic, Credit

Cards are the standard for ease of usage. To make a web purchase with a Credit Card, all a consumer has to do is select the type of card, enter the number and expiration date, then hit a submit button. If it is much

harder than that; it is simply going to fall prey to Credit Cards. On the B2B, the real question is whether the online e-payment methods can supplant the existing offline methods of procurement.
 Transaction fees: When a Credit Card is used for

payment, the merchant pays a transaction fee up the 3%. Approximately 33% of the fees goes to the merchant is bank, about 4% to the Credit Card association (e.g. Visa), and the remainder to the issuer of the Credit Card. These fees make it prohibitive to support smaller purchase with Credit Cards and leave rooms for alternative forms of payment. 2.7 TYPES OF ELECTRONIC PAYMENT DEVICES
 ELECTRONIC WALLETS: Most of the time when you

make a purchase on the web you are required to fill out a form with your name, shipping address, billing address, Credit Card information, etc. Doing this a few times is find but having to do it every time you shop on the web is annoying. Some merchants solve the

problem by having you fill out a form once and then save the information on their servers for latter use. One way to avoid the problem of having to repeatedly fill out purchase information, while at the same time eliminating the need to store the information on a merchant’s serve is to use an electronic wallet (ewallet). An e-wallet according to Cornwell (2000 pg 20), is a software component that a user downloads to their desktop and in which the user store credit-card members and other personal information. When a user shops at a merchant who accepts the e-wallet, the ewallet allows the user to perform one-click shopping with the e-wallet automatically filling in the necessary information. Credit Card companies like Visa

( main.html) and Master Card ( offer e-wallets. So does Yahoo! America online (called quick checkout), and Microsoft (passport). While e-wallet can make the transactions faster, they still face the same dilemma as any other

from of specialized payment creating a critical mass among merchants.
 PURCHASE CARDS: while cards are the instrument of

choice for B2C payments they are not for the B2B marketplace. Traditional, payments between companies have been handled by check; electronic data transfer (EDT), or electronic fund transfer (EFT) fn smaller purchases, checks have been the norm the problem is that this is that this is a costly process. Today, the major Credit Card players – visa, Mastercard and American Express – are trying to convince companies to utilize purchasing cards in order to re-engineer the purchasing process for high volume, low cost

purchases. The transaction cost involves the buying costs (sourcing/ordering), reconciliation and paying costs and data integration costs. Cornwell (2000 pg. 20), explained that purchase cards are a special purpose non-revolving payment cads issued for non strategic materials and services, i.e. stationery, office

supplies and printing, computer supplies, repair and maintenance services, courier services and temporary labour services.
 SMART CARDS: The newest entrant in the e-card or

payment card arena according to Cornwell (2000 Pg. 24), plastic payment card but it is distinguished by the presence of an embedded microchip. The embedded chip can either be a microprocessor and a memory chip combined or only a memory chip with non-

programmable logic. The micro-processor card can add, delete, and otherwise manipulate information on the card, while a memory – chip card can only undertake a pre-defined operation. Although the microprocessor is capable of running programs like a computer, it is not a stand-alone computer. The programs and data must be downloaded from some other device (like a card reader or an ATM machine).
 CASHCARD: According to, cash is a

pre-funded card that can be used for just about any

transaction, from making purchases on the internet, buying groceries at supermarkets using a POS terminal, to withdrawing cash from Automated Teller Machine, (ATM). Besides, cashcard can be used for fund transfer purposes. Funds on the cashcard can be transferred from the card to any accounts residing in any of the banks on the Interswitch is network. Unlike the debit card, a bank account is not required before a card user can own a cashcard. Instead, the cashcard is linked to a virtual account while information and value on the card is stored on a central database which can be accessed through multiple terminals such as ATMs, point of sale; mobile phone and the internet (that are connected to interswitch,) and a branches of member bank on the interswitch network. There are three common types of payment cards with another one on the way. The common type according to Cornwell (2000 pg. 29), include:
 Credit Cards: A Credit Card provides the holder with

credit to make purchases up to a limit fixed by the card

issuer. With a Credit Card there is rarely on annual fee. Instead, holders are charged interest – the annual percentage rate on their unpaid balances. The interest rate is usually very high and if the holder is tardy in making a payment the rates can exceed 20%. Visa and mastercard are the predominant Credit Cards. Among all types of cards, visa and Mastercard Credit Cards account for approximately 5% and 30% of the global payment card purchase volume.
 Charge Cards: The balance on a charge card is

supposed to be paid in full upon, receipt of the monthly statement. Technically, the holder of a charge card receives a loan for 30 – 45days equal to the balance of their statement. There are usually annual fees with charge cards. American Express’s Green Card is the leading Charge Card, followed by the discover card.
 Debt









purchased item comes directly out of the holder’s checking account (called a demand deposit account).

The transfer of funds from your account to the merchant’s takes place within one to two days. Master Card visa are the predominant debit cards worldwide, although in Europe it is the combined mastercard/Europay (formerly Eurocard) that leads to the pack.

2.8 THE ROLE OF BANKS IN THE OPERATION OF ELECTRONIC PAYMENT SYSTEM The participation of some institutions most especially banks can not be over looked. Therefore, the key assist for banks in the online payments business according to Graham (2006 pg. 76), is that consumers often have relatively high trust in their banks. Banks have developed online banking services to take advantage of the widespread availability of ICTs and the internet to lower their costs and expand their reach. Participants in an electronic payment system may include users, financial institutions, third party processors, and government – becked Central Banks. Although electronic

capabilities have changed the framework of payment systems, financial institutions will continue to participate in a variety of roles. According to Nicholas (1997 pg. 48), banks may perform any one of the roles described below or a combination of multiple roles.
 Owner or Investor: Banks might acquire equity or

similar stakes in payment systems, which can take the form of an equity investment, partnership or joint venture arrangement, or consortium member. As such, the bank may bear financial, strategic, compliance and reputation risks depending on the ownership structure and the venture’s success or failure.
 System Developer: System development might be

undertaken as an in-house effort or under agreements with other parties. In either case, development efforts introduce financial, systematic, reputation, and

strategic risks potential liability can be well beyond the amount funded, contracted, or in the case of stored value programs, the amounts held.

 Issuer: Issuers sells stored value to participants,

either directly or indirectly through another entity. Issuers bear transaction and liquidity risks associated with funding the recorded obligations. Issuers also bear strategic, compliance, and reputation risks, and are potentially liable in the event value is counterfeit or compromised.
 Distributor/Redeemer: The roles support stored

value systems by distributing or redeeming value. The responsibilities can be taken on individual or can be combined in a dual capacity. In the case of distributing banks, the risks include transaction, compliance,

reputation, credit and liquidity risks. Redeeming banks are exposed to transaction and credit risks.
 Record keeper/Transaction Achiever: Although

appearing to be largely administrative, these roles maintain audit traits and provide the means to settle disputes among participants. Ineffective operations may result in heightened transaction, reputation, and compliance risks.

2.9 SECURITY FOR ONLINE PAYMENTS There are two main systems for transaction security, secure socket layer and secure electronic transaction Graham (2006 pg. 75). SECURE SOCKET LAYER (SSL): This is the widely used secure service system and is an important measure to establish trust between online seller and buyer. Encryption and decryption allow secure transfer of information between an internet browser and server. (i.e. between buyers and seller). Data cannot be intercepted or change during transmission. SSL also permits merchant identification

through SSL server certificates. The SSL standard has been widely adopted because it is relatively simple and easy to use and does not place excessive demands on the average consumer is home PC, while at the same time reducing major concerns about the public nature of the

communication infrastructure Graham, (2006 pg. 75).



(SET): According to Graham

(2006 pg. 76), SET is an alternative, more complex security system based on digital certificates and signatures. SET needs specific software and is more difficult for cardholders to obtain and usage, and despite the high level of security offered it has not gained widespread use. 2.10 CHALLENGE AND PROSPECT OF ELECTRONIC PAYMENT SYSTEM The old economy is risk – avoiding, even though it has harboured signs of incipient risks. In contrast, however, the new digital economy is primarily both risk – generating and risk – managing, making it resilient in responding to risk. Riddled with risks, therefore, it becomes inevitable for a part to be divorced from it, whether one is within or outside the scope of the new economy. Risk being an invention exalted by the new economy, the novelty of the world risk society lies in the fact we, with our civilizing decisions, cause global consequence that triggers problems and danger that radically contradict the

institutionalized language and promises of the authorities. Thus, risk permeates every aspect of modern economic activity, indexed by natural and technological risk, real and socially constructed risks, invisible, visible and virtual risks, actual and perceived risks as well as borderless risks Bassey (2008 pg. 98). According to Bassey (2008 pg. 98), the “Omnipresence of risk” underlies our perspective in appraising the challenges and prospects of electronic payment in Nigeria in the sense that acting or not acting does not provide immunity from the effects. It is not hard to imagine a future scenario where it may not be possible to produce currency notes in the conventional form arising from non-manufacture of currency minting machines, where the cost of insisting on producing existing firms of money (cash) would be so outrageous that it would be both impossible and undesirable to continue. It is not hard to imagine given that we are witnesses to what is happening in the broadcasting industry. Electronic payment systems ride on the information and communication







infrastructure is a natural precondition for development of electronic payment system. This presupposes that the major challenge is lack of good and dependable ICT infrastructure. Thus, we identity the three interrelated viz. the dimensions for the




regulatory and cultural – cum – human – dimensions. The infrastructure dimension encompasses ICT accessibility,

affordability, networks, connectivity and usage. Related to these are issues of interconnectivity, network failures, low bandwidth, high cost of connectivity, frequent power outage, etc.










benchmarking IT industry competitiveness are important in giving us insights to the component challenges of ICT infrastructure. environment. These IT include specific overall business legal




environment, research and development environment and support for IT industry development which would enable the

flourishing of the ICT industry. Other areas needed to give the electronic payment system a better operating structure according to Bassey (2008 pg. 98), includes the following;  Interconnect all major cities with ICT broadband infrastructure and strengthen connectivity to the rest of the world by 2012.
 Connect Nigeria villages to broadband ICT services

by 2015 and implement share access initiative such as community telecentres and village phone.  Adopt key regulatory measures that promote

affordable, widespread access to a full range of broadband ICT services, including technology and technology and service neutral licencing/authorization practices, allocating spectrum for multiple, competitive broadband wireless service providers, creating national internet exchange points (I x Ps) and implementing competition in the provision of international intent connectivity.

 Support and development of a critical mass of ICT

skills required by the knowledge economy. Notably through the establishment of a network of ICT centres of excellence in each states in Nigeria and ICT capacity building and training centres in each state, with the aim of achieving a broad network of inter-linked physical and virtuous centres while ensuring coordination

between academic and industry by 2015.
 Adopt

a national e-strategy, including a cyber

security framework and deploy at least one flagship egovernment service as well as e-education, e-

commerce and e-health


using accessible

technologies in each sate in Nigeria by 2012, with the aim of making multiple e-government and other eservices widely available by 2015. The issues of cost reduction being central to the argument on the adoption of e-payment is not

discernible to the generality of financial service users. Furthermore, there is a general perception that epayment involves risk. And the experience of African

users in this regards has been well founded. There have been cases of ATM debiting accounts without payments and refunds never made. Often the reasons belying this include non traceability of who is the liable partner, the transmitter, the operating institution or the user. Furthermore, people want to know what to expect in the future before they commit themselves in the present. Some may want to know how electronic payment would affect the gift system if all cash goes digital or the carrying of cash becomes impossible. This concern may even extend into the sphere of religious celebrations where worship and cash offering are viewed as a related mode of religious expression involving thanksgiving. Another challenge from the cultural – human angle is the increasing dollarization of e-payment and the attendant convertible inconvenience which undermines national currencies (Bassey, 2008 pg. 99)

In addition, the lack of virile credit database a individual account holders according to Bassey (2008, 99), has not aided the development of electronic payment. In most cases, individuals using electronic payment

terminals are generally required to draw within limits of available fund in their account. The establishment of private credit bureau (credit Reference Company) by mine commercial banks in Nigeria to provide reliable credit information on individuals is a step towards addressing the needs of poorly served segments of society. In South Africa, where there are fairly

developed credits services, credit bureaus have been blamed for non-transparency in the process of

blacklisting individuals, thereby reducing their credit worthiness rating. As e-payment takes root and

facilitate across – boarder transactions, more positive involvement of national currencies would be expected where the people would not be required to own a dollar account before the can open or fund their international credit/debit cards like the MasterCard or visa. Just like

language, the extinction of national currencies is considered by some as has of economic independence and people might not be too receptive to losing their freedom Adapting of choice in using national to currencies. this is




imperative for the growth of such payment options. The true test of electronic payment system was witness in the last festive period (Christmas and New Year) when the use of Automated Teller Machines (ATMs) was in vogue. E-payment, according to Usman (2008, Pg. 9) is a means whereby banking business is transacted using automated processes and electronic channels such as personal computers, telephone, internet, cards, point of sales terminal and ATMs, among others. Investigations carried out by Nigeria Tribute according to Usman (2008 Pg. 10), in some of the banks in Lagos during the celebrations showed that the usual crowd that is usually associated with banking halls at the period was virtually absent as people resorted to ATMs

and other e-banking channels to access cash to meet urgent expenses. There has been no single lost transaction on interswitch platform since we started the business of enabling e-business in the country. Epayment has been on the rising side and the number of transactions recorded everyday in the country is already hitting 30 millions. Certainly, there is no cause of unnecessary alarm. On the problems of

malfunctioning and other problems being experienced by users on day to day basis. Interswitch boss said they are human and mechanical which the banks concerned could be able to handle. 2.11 ELECTRONIC PAYMENT SYSTEM STAKEHOLDERS The process of using a credit card offline or online involves a member of participants. They are the driver forces that brings about the functionality of the payment system. The stakeholders according to Cornwell (2008 pg. 34), includes the followings:

 Cardholder: consumers or corporate purchaser who

uses a credit card to pay for a purchase
 Merchant: the entity that accepts credit cards and

offers goods and services in exchange for payments.
 Card Issuer: financial institution (usually a bank)

that establishes an account for the cardholder and issues credit.
 Acquirer: financial institution (usually the bank) that

establishes an account for a merchant and acquires the vouchers of authorized sales slips.
 Card






Acquirers (like visa and MasterCard), which are created to protect and advertise the card brand, establish and enforce rules for usage and acceptance of their bank cards, and provide networks to connect the involved financial institutions. The brand authorizes the creditbased transaction and guarantees the payment to merchants.
 Third party processors: outsourcers who performs

some of the same duties as formerly provided by the

issuers, acquirers, and card associations, including signing up merchants, selling and servicing card – reader terminals, performing the pre-processing

needed to send the customer a bill. 2.12 BENEFITS AND IMPORTANCE OF ELECTRONIC PAYMENT SYSTEM The electronic payment system has been of immense benefit and importance hall the stakeholders in the service and even goods industries. Looking at the possibilities of the growth in the nearest future, Cornwell (2008, Pg. 40), enumerate the following as the benefits;

Productivity Gains: - purchasing departments are

freed from day to day procurement activities and can focus on developing and managing relationships with suppliers.

Bill Consolidation: - Small purchases from many

cardholders can be consolidated into a single invoice that can also be paid electronically through EDI or EFT.


Payment Reconciliation: - Data from the card can be general more easily integrated making with the





process of payment reconciliation simple; more efficient and more accurate.

Preferred Pricing: Traditionally, suppliers have

had to wait at least 30 days for payment, with purchasing cards, settlement occurs in a few days or less. This enables companies to negotiate with their suppliers for more favourable prices since suppliers have better control over their cash flow.

Management Reports: - The financial institutions

issuing the cards supply detailed reports of purchasing activities. This makes it easier for a company to analyze their spending behaviour and monitor supplier

compliance with agreed upon prices. Having enlisted the benefits, the followings are the importance of electronic payment system according to Cornwell (2008, Pg. 35).


Loyalty: - Retailers are using smart cards to identify

their loyal customers and reward them accordingly. The payment system allows customers to collect points that can be redeemed for rewards in a number of ways. In the US, the Rite Aid and South part shopping Mall are using small card based reward systems.


Financial and card

institutions, companies

payment (Europay,


MasterCard, Visa, America Express and Discover) are using Smart Card to extend traditional card payment services. Multiple applications such as loyalty

programs, digital identification and electronic money will be securely offered in near future. In fact, in many countries, there are ten of millions of smart bank cards.

Information Technology: It would not be long

before PCs ship with smart card readers. All issuers will utilize the underlying security of the Smart Card to extend relationships from the physical world to the virtual world. Smart Cards will allow individual to

protect their privacy white card issuers will be able to ensure only valid customers access services.

Health and Social Welfare: many countries with health care systems are evaluating or


deploying smart card technology to reduce the costs associated with delivering services. The largest

operating system is one in Germany with over 80 million cards. The program was introduced in 1993 with the primary purposes of identification, eligibility,

verification and electronic claims processing. In a similar vein, France, Italy, and the United King

implemented a card – based system. Adicarte, that local authorities with tools to monitor and distribute social services in home care programs, eliminating the fraud and misuse of funds that previously plagued such programs.

Transportation: The availability of low cost single

chip contactless card technology with the emergence of combination Smart Card technology has many mass

transit agencies evaluating the technology, especially for collecting the force.

Identification: - Smart Cards have a natural fit in

the ID market and are being used in applications such as colleges, campuses, IDs, Drivers licenses and

immigration laws. In the US, close to 1 million Smart Cards will be used in the college market alone, this represents approximately 1 in 17 students. 2.13 CONCEPT TRANSACTION The emergence of electronic payment system has created new financial needs that in many cases cannot be effectively fulfilled by the traditional payment systems. Recognizing this, virtually all interested parties surrounding electronic payment system and digital currency. Broadly, electronic payment system can be classified into four categories as earlier discussed. Online credit card payment system, online electronic card system electronic cheque system and smart cards based electronic payment system mostly have its AND NATURE OF BUSINESS

usage in retail stores and services with classified advantages and disadvantages for the customer and merchant.

The emergence of electronic commerce has created new financial need that cannot be effectively fulfilled by

traditional payment systems. For instance, new types of purchasing relationships such as auction between individuals on-line have resulted in the peer-to-peer payment methods that allow individuals to email payments to the other individual. Recognizing this, virtually, all interested parties (i.e. academicians, government, business community and financial service providers) are exploring various types of electronic payment system and issues surrounding

electronic payment system and digital currency. Some proposed electronic payment systems are simply electronic version of existing payment such as cheques and credit cards, while others are based on the digital currency technology and have the potential for definitive impact on today’s financial and monetary system. While popular







fundamental changes in the financial sector because of the innovations in electronic payment system, according to Kalakota and Ravi (1996 Pg. 295). Payment systems that use electronic distribution networks constitute a frequent

practice in the banking and business sector since 1960s, especially for the transfer of big amount of money in four decades that have passed since their appearance.

Importance technology development have taken place, which on the one hand have expanded the possibilities of electronic payment system and on the other hand they have created new business and social practices, which make the use of these systems necessary. The term electronic payment system business transaction includes any payment to business, bank or public services from citizens or businesses, which are executed through telecommunication or electronic networks using modern technology. Furthermore, the payment is made from

distance, without the physical presence of the payer and naturally it does not include cash. Electronic payment business transaction systems have been in operation since 1960s and have been expandjing rapidly as well as growing in complexity. After the development of conventional payment system, electronic fund transfer (EFT) based payment system came into existence. It was first electronic based payment system, which does not depend on a central processing intermediary. An electronic fund transfer is a financial application of electronic data interchange, which sends credit cards numbers or electronic cheque via secured private networks between banks and major corporations. To use electronic fund transfer to clear payments and settle accounts on online payment services will need to add capabilities to process orders, accounts and receipts. But a Landmark came in this direction with the development of digital currency. The nature of digital currency or electronic

mirrors that paper money as a means of payment. As such, digital currency payment systems have the same

advantages as paper currency payment, namely anonymity and convenience. As in other payment system (i.e. electronic fund transfer based and intermediary based) here too security during the transaction and storage is a concern. Although from the different perspective, for digital currency systems double spending, counterfeiting and storage

become critical issues whereas eavesdropping and the issue of liability (when charges are made without authorization) is important for the notional fund transfer. Business Transaction in Electronic Payment System Outside money flows Inside money flows
Sellers Bank Intermediary Converts Outside and Inside monies Seller


Buyers Bank


To this figure, it shows that intermediary acts as an electronic bank which converts outside many (e.g. Naira or Dollars) into inside money (e.g. token or e-cash) which is circulated without online markets.

2.14 THE SERVICE ORIENTED COMPANY The service oriented company is used to enrich generic enterprise application. In essence, it is this combination of business policies, techniques, and procedures that allows networked resources to create decisive information

superiority in business operations. The insights and value of this new concept are critical to an enterprise is success and should be seen as a general advantage of business operations, Turbam King and Viechland (2004 Pg. 20).

A cornerstone of successful service oriented companies is it’s ability to leverage enterprise services and capabilities in order to share workforces across departments, organizations or companies. Such capabilities amount to an optimization of corporate data and management. predictable Supported by reliable, between



services that one deployed across a distributed enterprise, which can produce higher standards for business fulfillment and assurance. The growing news to incorporate and exchange information across networks has driven corporations to establish

infrastructure for high-distribution communities in a timely and safer manner. Service Oriented enterprise in general business operations assist in making any system business data available to all users at any time, subject to security and access control. 2.14.1 SERVICE ENTERPRISE

An enterprise includes interdependent resources such as people, organization, process and technology. The category

of people is represented as an abstract collection of knowledge and expertise. They are further classified and allocated into different organizations depending upon

business mission. The enterprise processes are business process production, application and data, according to (Murthy 2002 pg. 26). The technology category includes software and hardware infrastructure which co-ordinate business functions and share information in support of a common mission or set of related missions. To satisfy the enterprise, customers and users, the

technology resource should provide devices to support business operations. A service is typically defined as a collection of interface contracts and contractually defined behaviours that can be provided to an enterprise resource, for use by any of the enterprise resource. In the

telecommunication, retail store services, information service industries, enterprise service can be classified as a set of capabilities provided by a set of systems or utilities to their







telecommunications, or network, transport services, services that handle information resources including the storage, retrieval, manipulation and visualization specific to the resource and management accounting, service including and faulty security



functionalities, as well as service lifecycle management service instance management and user lifecycle

management. 2.14.2 TRANSPORT SERVICES

The infrastructure of network centric transport services that distinguishes them from the traditional environment are inability autonomy, awareness, self situation service reactivity, community temporal



continuity and management flexibility. Successful fulfillment can only be achieved through care planning which lays down an organized and structure approach to ensure the deployed services are in functional consistency. 2.14.3 ELECTRONIC COMMERCE SERVICES

This is the area of concentration that the project tends to exhaust. In otherword, in electronic commerce applications, multi-channel capability refers to an end-to-end customer support through process, using different channels to achieve continuity. For example, a customer can visit different vendors to complete a holiday shopping list across these domain processes involves a number of fundamental

acquisition and completion among the commodity services vendors which is coalesced via the concept of electronic payment system to enable seamless network centric

operations. Pago, (2003 Pg. 10), Pago Survey (2003, Pg. 10).

2.14.4 In the

RETAILING SERVICES transaction intensive retail sector information

superiority can be accomplished by combining information with retail data to achieve precision retailing. For instance, a sensor can scan, collect and share information of product with suppliers in near real-time, enabling suppliers to optimize and control production and distribution, while appropriately managing their individual supply chains. The

results are a significant reduction of distribution cost and high profitability. 2.14.5 FINANCIAL SERVICES

In the financial service industry, traders can exploit position of power by using information and information technologies to influence prices and delivery speed in trading objects. The service oriented enterprise perform transaction surveillances for financial companies, which institute general operational requirements to avoid fraud by monitoring trader’s trading patterns.



The ability to share information in near real-time among all relevant substitute departments information can for enable manufacturers to



increasing flexibility and responsiveness. A direct benefit from speed if information sharing is a reduced cost of goods, because of learn inventory for parts and finished products.

The service oriented enterprise or companies provide a consistent and standardized view of production to avoid risk from large inventories (e.g. excess finished product, or obsolete or overpriced components). An improved want can contribute to the design of more-attractive products while serving to trim project delivery timeliness.

CHAPTER THREE RESEARCH METHODOLOGY 3.1 RESEARCH DESIGN Research design is the basic plan, which guides the data collection and analysis phases of the research project, it is a blue print that guides the collection, analysis and

interpretation of the research observation Nnamdi Asika (1991 Pg. 28). It will also assist the researcher to establish if a relationship exists between variables. For the purpose of this research work, correlation research design is used. This makes it possible to determine the nature of the relationship between variables in this work that is between electronic payment system (independent variable) and business

transaction (dependent variable). 3.2 STUDY OF THE POPULATION Stouffer (1950 Pg. 355), explains that, the purpose of defining the population sample in research is not only to identify the element but also to enhance the measurement

of certain characteristics which can be estimated and classified according to the requirement of the population survey. The survey population was one hundred and twenty (120) which comprises of the staff of Shoprite Nigeria Limited, considering their current position, educational qualification in relevant fields and useful working

experience. The need to sample individual opinions of the staff of Shoprite is as a result of the vast experience in the operation and use of electronic payment system devices or instruments. 3.3 SAMPLE SIZE The determination of the sample size took serious

considerations in terms of the extent to which the samples gave a fair representation of the whole population, the greater the extent of the reliability of the data collected the more confident the result of the research can be considered to be reliable Deming, John Wiley (1980 Pg. 40). The sample size for this study is one hundred (100), though one hundred and twenty (120) questionnaires were administered but one

hundred (100) questionnaires were properly completed and retrieved from the respondents. Considering the experience and knowledge of the

respondents on the subject matter, it is restricted to those who have been operating and using the electronic payment system.

3.4 SAMPLING TECHNIQUES Among the elements that make up the population of study, there are similarities and therefore a study of a few of these elements will give profound understanding and sufficient knowledge of what is obtained in the entire populations of study Deming, John Wiley (1980 Pg. 40).

The sampling technique for this study is the random sampling technique to make opportunity for adequate participation of the identified population of this study. As mentioned earlier, the data from the study were gathered

from Shoprite Nigeria Limited. The data collected for this research is to assess electronic payment system as a tool for business transaction in service oriented companies. This study was analyzed using frequency table and the research hypotheses were tested using chi-square (X2). The results of the analysis were based on data collected from the administered questionnaires given to respondents.

The total number of one hundred and twenty (120) questionnaires was administered to the respondents but only one hundred questionnaires (100) were successfully

collected for this research. The reliability and efficiency of the research instrument was calculated as Alpha (α =

0.8767), meaning that the research instrument for this study was highly valid and reliable for the study. 3.5 SOURCES OF DATA a) Primary data were collected from the administered questionnaire to the related respondents.


Secondary data were data and information collected from textbooks, internet library, publications, previous research works, empirical journals, academic hardbooks among others.

3.6 DESCRIPTION OF THE RESEARCH INSTRUMENTS For the purpose of this study, the major instrument used for the study was questionnaire. The questionnaire was divided into two sections. A and B Sections. Section A comprised of questions relating to the biographic data of the respondents such as age, sec, marital status, educational qualification, work experience, religion and so on. The section B, focused on the subject matter of the study which is electronic payment system a variable tool for business transaction in service oriented companies. All questions asked were clear, simple, précised and relevant to the study. The respondents were also asked to be honest while answering the questions. The data collected from the research instrument were used to test the research hypothesis. This section of the questionnaires consist of 20 closed end items on four point

Likert scale ranging from strongly Agree, Agree, Disagree and Strongly Disagree. Good William and Paul Hatt (1952 Pg. 74). 3.7 STANDARDIZATION INSTRUMENT The research instrument was tested for reliability using the statistical package for social science (SPSS), which provide all the statistical tables and figures at a reliable analysis scale Alpha (α = 0.8767) with 98.0 numbered cases and 22 items of reliability coefficient meaning that the research instrument was highly valid and reliable for the purpose of this study. Freedman, Paul (1960 Pg. 85). 3.8 ADMINISTRATION OF THE QUESTIONNAIRES Originally, the administration of the questionnaires was positioned to cover 219 staff of Shoprite Retail store specifically in Nigeria. The questionnaires was strictly distributed or administered to related department based on the research subject matter and responses were received to make it successful. OF THE RESEARCH

3.9 DATA ANALYSIS TECHNIQUES The method of analysis used was chi-square (X2) and statistical package for social science to test the hypothesis, this method was used in order to achieve accuracy, and the data is subjected to chi-square (X2) test for acceptance and rejection of the hypothesis. However, the hypothesis will be rejected, if the calculated chi-square value is greater than the tabulated chi-square test otherwise you accept. It is denoted by X2 = ∑(O-E)2 E

Where: O E ∑ = = = observed frequency of responses. expected frequency of response. summation of response.

Level of significance = 1% or 0.01 Degree of freedom (dif) = (r – 1) (n-1)

Expected value = Number of respondents divided by number of options in a questions. Decision Rule: where the calculated X2 is greater than the tabulated X2, the hypothesis (Ho) should be accepted or when the calculated value X2 is less than the tabulated value X2, the hypothesis (Ho) should be rejected. Fetinger and Katz (1953 Pg. 107). 3.10 LIMITATION OF THE STUDY

In the course of this research work, various limiting factors were experienced, this and others includes:
a. Time frame: The time given to conduct the research

is limited because of the nature of the work in Shoprite retail store in Nigeria
b. Finance: The money required to carry out the

research work was not readily available and met, leading to a delay in obtaining information required for the research.
c. Attitude of respondents: The respondent were

reluctant to complete the questionnaires, as it posses

extra efforts without compensation. It is also observed that the hostile nature of the respondent toward filling the questionnaire by expressing their sincere responses is also a barrier towards carrying out the research study.

CHAPTER FOUR DATA PRESENTATION AND ANALYSIS 4.1 ANALYSIS OF THE RESEARCH QUESTIONNAIRE The research instrument was divided into two (2) sections namely section A and section B. however, section A deals with the respondents bio-data while section B deals with more specific questions relating to the research topic that requires their responses. 4.2 ANALYSIS OF THE RESPONDENTS BIO-DATA Table 4:1 to 4.7, covers the data collected based on section A of the administered questionnaires and presented as shown below: 4:2:1 QUESTION 1: GENDER FREQUENCY PERCENTAGES (%) 0.54 0.46 100.0


54 46 100 Gender Distribution










respondents ratio is very slim. While the male population represents 54% of the entire population, the female

accounts for the rest 46%. This shows that the numbers of male population are more involved in the operation and usage of electronic payment system slightly than their female counterparts. 4.2.2 QUESTION 2: AGE FREQUENCY PERCENTAGES (%) 0.06 0.67 0.19 0.08 100.0


Valid below 21yrs 6 21 – 30yrs 67 31 – 40yrs 19 41yrs and above 8 TOTAL 100 Table 4:2 : Age Distribution

The table above shows that six percent (6%) of the respondents were below the age of 21years old, sixty seven percentage (67%) were within the age of between 21years and 30years, nineteen percent (19%) were within the age of 31years and 40years, while eight percent (8%) were 40 years and above. It is observed that more of the respondents

fall between the age of 21 years and 30years respectively. It implies that majority of the population that is actively involved in electronic payment system falls between the age of 21years and 30 years. 4.2.3 QUESTION 3: MARITAL STATUS FREQUENCY PERCENTAGES


(%) Valid Single 65 0.65 Married 33 0.33 Divorced 2 0.02 Widow/widower 0 0.00 TOTAL 100 100.0 Table 4.3 Marital Status Distribution The table above shows that sixty five percent (65%) of the respondents were singles, thirty three percent (33%) were married and two percent (2%) were divorced with no widow or widower response. This implies that majority of the respondents were singles, meaning the rate at which they use or operate the electronic payment system will be high.






Y WAEC/GCE/NECO/WASSCE 4 0.04 OND/A.LEVEL/NCE 37 0.37 HND/B.Sc/B.ED/B.A/LL.B 43 0.43 PGD/M.SC/MBA 16 0.16 Other specify 0 0.00 TOTAL 100 100.0 Table 4.4: Educational Qualification Distribution The table above shows four percent (4%) of the respondents were WAEC/GCE/NECO/WASSCE holders, thirty six percent (36%) of the respondents were OND/A.LEVEL/NCE holders, forty three percent (43%) of the respondents were

HND/B.SC/B.ED) B.A/LL.B holders and sixteen percent (16%) of the respondents were PGD/MSC/MBA holders. This means that those that are involved in usage and operation of the electronic payment system are educated and have knowledge about the system.


Middle Low TOTAL Table 4.5:

35 53 100

0.35 0.53 100.0

Management Position Distribution.

The above table shows that twelve percent (12%) of the respondents were among the top management position, thirty-five percent (35%) of the respondents were among the middle management and fifty – three percent (53%) of the respondents were lower management position. What this implies is that, the majority of the personnel’s in the low management position were involved in the operation of the electronic payment system.


QUESTION 6: WORK EXPERIENCE FREQUENCY 8 56 24 10 2 100 PERCENTAGES (%) 0.08 0.56 0.24 0.10 0.02 100.0

VARIABLES Below 1yr 1-5yr 6-10yr 11-15yrs 16yrs above TOTAL

Table 4.6: Work Experience Distribution

The table above shows that eight percent (8%) of the population has experience below 1 year, fifty six percent (56%) of the population has experience between 1 year to 5years, twenty – four percent (24%) of the population ha experience between 6 years to 10 years, ten percent (10%) of the respondents that has experience falls between 11years and fifteen years, while two percent (2%) of the respondents has the working experience. This implies that, workers within 1 year to 5years work experience have the required exposure to fully operate and use the electronic payment system. 4.2.7 QUESTION 7: LENGTH OF SERVICE FREQUENCY PERCENTAGES (%) 0.11 0.62 0.21 0.06 100.0


Below 1yr 11 1-5yrs 62 6-10yrs 21 10years above 6 TOTAL 100 Table 4.7: Length of Services Distribution

The above table shows that eleven percent (11%) of the population had served below 1 year, sixty-two percent (62%) had served between 1year and 5years, twenty-one percent (21%) of the population had served between 10years and above. It implies that, 1 to 5 years of length of service has a strong work force that can handle the operation of the electronic payment system.

4.3 ANALYSIS OF RESEARCH QUESTIONS Brensnaham and Shapio (1966 Pg. 252), refers it as the refinement and manipulation of data in order to prepare them for the application of logical inference. This research work seeks to provide answers to the questions raised and stated in chapter one of this study. The question will be fully analyzed using simple frequencies from the responses of the questionnaire items directly related to the questions.


RESEARCH QUESTION 1: Do many consumers

and merchants prefer the use of electronic payment to the traditional payment system. Responses to item 5,6,7,11,18 and 19 in section B of the questionnaire were used to provide answers to this question. ALTERNATIVE TOTAL PERCENTAGES

(%) Strongly Agree 27.5 0.275 Agree 47.5 0.475 Disagree 21.5 0.215 Strongly Disagree 3.5 0.35 TOTAL 100 100.0 Table 4.8: Responses to Research Question 1.

The above table shows that 75% of the respondents observed, noted, and agreed that they prefer the use of the electronic payment system for business transaction 25% however have a contrary opinion. Since the majority of the respondents agreed that electronic payment system is preferred for business transaction, it is safe to conclude that electronic payment system is important tool for business transaction in service oriented companies.


RESEARCH QUESTION 2: Is the importance of

electronic payment system a significant factor to be considered for its adaptation for business transaction? Response to items 2, 10, 12, 13, 14 and 16 in section B of the questionnaire were used to provide answer to this question. ALTERNATIVE TOTAL PERCENTAGES

(%) Strongly Agree 27.2 0.272 Agree 44.5 0.445 Disagree 23.7 0.237 Strongly Disagree 4.6 0.46 TOTAL 100 100.0 Table 4.9: Responses to Research Question 2. From the above, it can be deduced that 28.3% of the respondents believed that the importance of the electronic payment system is not a significant factor for business transaction, while a large members of 71.7% of the respondents hold the view that the importance of electronic payment system has a significance factor to be considered for its’ adaptation for business transaction. Therefore, it is safe to conclude that electronic payment system is

important for business transaction in service oriented companies. 4.3.3 RESEARCH QUESTION 3: Has the

implementation of the electronic payment system improves organization sales performance? Responses to items 2, 3, 6, 10 and 17 in section B of the questionnaire were used to provide answers to this question. ALTERNATIVE TOTAL PERCENTAGES

(%) Strongly Agree 23.4 0.234 Agree 37.4 0.374 Disagree 31.8 0.318 Strongly Disagree 7.4 0.74 TOTAL 100 100.0 Table 4.10: Responses to Research Question 3. From the table above, it is noted that 60.8% of the respondents are of the opinion that the implementation of the electronic payment system improves organization sales performance and 39.2% of the respondents do not believe that the implementation of the electronic payment system improves organization sales performance. Therefore, it will be ideal to conclude that the electronic payment system has improve organization sales performance.







convenient, friendly and effective is the operations of the electronic payment system to merchants and customers? Responses to items 10 and 13 in section B of the questionnaire were used to provide answer to this question. ALTERNATIVE TOTAL PERCENTAGES

(%) Strongly Agree 20 0.20 Agree 35.5 0.355 Disagree 38.5 0.385 Strongly Disagree 6 0.60 TOTAL 100 100.0 Table 4.11: Responses to Research Question 4. From the table above, it is observed that 55.5% of the respondents agree with the fact that the operation of electronic payment system is secured, convenient, friendly and effective while 44.5% of the respondents decline with the statement. Therefore, it is safe to conclude that the operation of electronic payment system is secured,

convenient, friendly and effective to both the merchant and customers.


RESEARCH QUESTION 5: How cost effective is

the operation of electronic payment system to all parties involved? Responses to items 5, 6, 7, 10, 11 and 16 in section B of the questionnaires were used to provide answer to this question. ALTERNATIVE TOTAL PERCENTAGES

(%) Strongly Agree 22.8 0.228 Agree 46 0.46 Disagree 26 0.26 Strongly Disagree 5.2 0.52 TOTAL 100 100.0 Table 4.12: Responses to Research Question 5.

From the table above, it is noted that 68.8% of the respondents concur through their responses that the

operation of electronic payment system is cost effective to all parties. Meanwhile 31.2% of the respondents disagree that it is not cost effective. Therefore, it is correct to say that the operation of electronic payment system is cost effective to the issuer, merchants and the customers and users.







implementation resulted to high customers and profit turnover? Responses to item 10, 11, 13, 14 and 17 in section B of the questionnaire were used to provide answer to this question. ALTERNATIVE TOTAL PERCENTAGES

(%) Strongly Agree 24.8 0.248 Agree 44.6 0.446 Disagree 26.4 0.264 Strongly Disagree 4.2 0.42 TOTAL 100 100.0 Table 4.13: Responses to Research Question 6. From the table above, it can be deduced that 30.6% of the respondents beloved that the implementation of electronic payment system does not result to high customers and profit turnover, while a significant number of 69.4% of the respondents hold the view that the implementations of electronic payment system results to high customers and profit turnover. Therefore, it is safe to conclude that implementation of electronic payment system has resulted to high customers and profit turnover.


The information in the table below shows the result of the tested research hypothesis formulated and the

corresponding decision made in based on the calculated and tabulated chi-square results.



HYPOTHESIS 1: The hypothesis is accepted because the calculated value of X2 (24.4) is greater than the tabulated value of X2 (7.82). This shows that, electronic payment system is effective for settlement of payment in every purchase.

HYPOTHESIS II: The hypothesis is accepted because the calculated value of X2 (57.76) is greater than the tabulated value of X2 (7.82). This shows that organization rely on electronic payment system to increase sales in the face of competition. Hayes, William (1973 Pg. 160).

CHAPTER FIVE SUMMARY, FINDINGS AND RECOMMENDATIONS 5.1 SUMMARY OF FINDINGS In the world of marketing and the exchange of value for business transaction in Service Oriented Companies, the introduction of electronic payment system has played an important role that ensures high level of efficiency and profitability at every point of purchase, Agboola A.A. (2006 Pg. 74). The electronic payment system has brought about high level of mobility of money which has increases the confidence of customers thereby springing up increase patronage for merchants and issues. It is observed in the cause of this research that the level of investment in the infrastructure of electronic payment system has increased dramatically. According to Ayo, Charles K. (2008 Pg. 8), The subscriber base which is the yardstick for measurement has been on the increased thereby having a positive effect on the economy. The products of the electronic payment

system accounts for financial transaction of business, Bassey Charles (2008 Pg. 98). From the Analysis of the statement of Research Problems, scope of study, the framework of electronic payment system, and research hypothesis, the following findings were

revealed: The introduction of electronic payment is a major

breakthrough in the business to business and business to customer relationship in the world of business transaction in terms of payment settlement.

It was observed that electronic payment system has

succeeded in making a service oriented companies efficient. No organization can expect something new using the same strategies and machineries. Therefore, the introduction and implementation of the payment system has reduced the time spent for the settlement of payment electronically. It was noticed that the electronic payment system organization to achieve an unprecedented


increase in sale turnover and a correspondent increase in profit as a result of the introduction of the electronic payment system.

It was as well gathered that the establishment of the

electronic payment system has increased customer optimism in relation to security, conveniency, and the adaptability in the cause of business transaction.

It was observed that the Automated Teller Machine

(ATM) Card is the generally accepted card in most shopping centers especially ShopRite retail stores. 5.2 RECOMMENDATIONS After conducting a thorough research study into electronic payment system in service oriented companies in the Nigeria economy, the researcher came up with the following feasible recommendations after due consideration have been made on the results of findings stated above: At the level of electronic payment system, we should do our best to coordinate technological innovations in anticipation of future needs.


Adequate internet control devices should be put in place for detection of computer fraud to protect customers’ benefits including the personal data of the customer and the general public.


The providers of the electronic payment system should ensure proper education to users of the electronic payment system devices like

mastercards, value cards and other means of electronic payments.

The infrastructural facility should be improved to reduce or eradicate the problem of power supply and internet failure that is militating against the operation of electronic payment system facilities.


Organizations involved in the use or operation of the electronic payment system should ensure sufficient point of sales terminal at every purchase point to ease the waiting time of their customers.


When hiring and training staff, the companies should ensure qualified personnel are absolved to operate the electronic payment system at every point of

sales to avoid conflict among the parties (Merchants and Customers). CONCLUSION It has been established that the electronic payment system plays a significant role in business transaction in service oriented companies by contributing immensely towards successful service delivery, high sales performance, effective and efficient payment settlement to both companies and customers. According to Ayo Charles K (2008 Pg. 9). It is natural to assume that it is beneficial to business to integrate expanded electronic payment system into it’s daily business activity. Since the world has turned into a global village that is, smaller, faster and more complex, the latest technology is no longer on option but necessity. Cornwell A. (2000 Pg. 21). How one uses it to manage one’s business can be a defining competitive advantage. To get ahead and stay ahead at the right time in business, the integration of electronic payment system should be part of the payment policy of the business.

Finally, the electronic payment system is highly dependent on technological innovations. Adequate security should be provided in order to gain customers confidence in electronic payment system operations nationwide David R. (1982 Pg. 78). Therefore, the participation of the private sector in the development of the infrastructure of technology, the

electronic payment systems in Nigeria has come to stay.

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APENDIXES Department of Marketing, Sch. Of Mgt & bus. Studies’ Yabatech. Yaba Lagos. The Manager, Shoprite retails stores, Lekki, Lagos, Nigeria. Dear Sir/Madam,
(A CASE STUDY OF SHOPRITE RETAIL STORES.) I am a final year student of the department of Market of the above named institution. I am conducting a research on electronic payment system a variable tool for business transaction in service oriented companies. This research is undertaken in partial fulfillment of the award of Higher National Diploma (HND) in Marketing, from Yaba College Of Technology Yaba Lagos. I have chosen your organization (Shoprite Retail in Lekki) as a member of my population sample and hereby request that you please provide necessary answers to these questions and information sought below. My success in this study depends on your unflinching co-operation and I hereby assure you that every bit of information provides by you will be used purely for academic purpose. Thanks for your anticipated co-operation Yours faithfully, UMUNGWOR LUCKY OSEJI

QUESTIONNAIRES YABA COLLEGE OF TECHNOLOGY DEPARTMENT OF MARKETING This questionnaire is on the study of “electronic payment system a variable tool for business transaction in service oriented companies”, which is a partial fulfillment of the award of a Higher National Diploma in Marketing of the above institution. The questionnaire is designed to obtain data for academic purpose only. Please assist to fill the questionnaire as all information given will be treated in strict confidence and will be used fro the purpose of this research project only. PLEASE TICK YOUR ANSWERS AS APPROPRIATE SECTION A PERSONAL PROFILE Male 2. Age: [ ] ] ] Female [ ]



Below 21yrs [ 31 – 40yrs [ [ [ ] ]

21-30 [ ] 41yrs and above [ Married Widow ] [ [ [ [ ] ] ] ] ] [ [ ] ]



Marital Status: Single Divorced


Education Qualification: WAEC/GCE/NECO/WASSCE [ OND/A.LEVEL/NCE B.Sc/HND/B.ED/B.A/LL.B PGD/M.Sc/MA Other specify Management Position: Top [ Low [


] Middle [ ]


Work Experience: Below 1year [ ] 6 -10yrs [ ] 16yrs above [ ]

1-5yrs 11-15yrs

[ [

] ]


Length of service with the organization: Below 1yr [ ] 1-5yrs 6-10yrs [ ] 10yrs above

[ [

] ]

SECTION B The rating is based on the following scale: Strongly Agree (SA) Agree (A) Disagree (SD)




QUESTIONNAIRE Kindly tick (√) where appropriate in the box S/N 1 2 3 4 5 6 7 DESCRIPTION I know about the electronic payment system. The introduction of electronic payment system has improve performance. There are difficulties in operating the electronic payment system. Electronic payment system has impacted the sales quality of the organization. The organization prefers electronic payment system to other payment system. Your organization relies on electronic payment system to increase sales in the face of competition. The company employs the use of electronic payment system to enhance it’s reputation in the mind of it’s 8 9 customers. Electronic payment system can assist the organization in increasing long-term relationship with customers. Employees and customer are thoroughly educated S A A D S D

10 11 12 13 14 15 16 17 18 19 20

about the electronic payment system. The electronic payment system is effective and efficient for settlement of every purchase. The use of electronic payment system is encouraged in your organization for business transaction. Conflict of payment settlement is reduced with the introduction of electronic payment system. Customer’s personal identity number is secured

against fraud The electronic payment system has enhance quality relationship among the issuer, merchants and user. The electronic payment system is accessible and available to every customers for business transaction. The electronic payment system is accurate, reliable and affordable. Electronic payment system is needed in achieving profit objective of the organization. The corporate plan encourages modern use of

electronic payment system facilities. I use Automated Teller Machine (ATM) to settle payment for purchased items. Electronic payment system is well regulated by the appropriate agency and complains are well address.

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