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CHAPTER ONE

INTRODUCTION

1.1       Background of the Study

Electronic payment system is the conduct of payment via internet which relates to activities of information searching, information sharing, purchasing or exchanging products and services; also maintaining customer relationship without face to face meeting unlike transaction done in traditional way. Often e-payment is wrongfully perceived as a way of doing business between web retailers and web end customers but rather e-payment encompasses an entire range on conducting online business whether it’s the interaction between business to business, business to customer, and business to government (Wada and Odulaja, 2012).

According to Ainscough and Luckett (2006), all internet users are potential customers to companies in e-payment. While the use of e-payment is obviously beneficial and has been implemented by millions of companies all over the world, in line with its benefits, companies have also faced certain challenges. Among others, they have realized that ensuring customer satisfaction and developing customers’ trust of e-payment services is no easy task, yet it is a very important task for the long-term growth of a business.

Customer satisfaction is when products and services meet the expectation of the consumers. It is very important that consumers are content with the products and services provided by the particular website as satisfied customers are likely to be loyal and make repetitive purchases which will increase profitability of that particular e-payment company.

Customer satisfaction has been described as a consumer’s post evaluation of a purchased product or service, given pre-purchase expectations (Adewuyi, 2011). Striving for customer satisfaction is no different than good payment. By “payment” is not means only the Four Ps but rather payment in the classic sense of being customer oriented and market driven. Attempting to find out what customers want and then trying to deliver the same may be seen as striving for customer satisfaction or simply doing good payment.

Users of e-payment Web sites often have high expectations for the quality of service, and if those expectations are not met, the next site is only a click away. A number of performance problems have been observed for e-payment Web sites, and much work has gone into characterizing the performance of Web servers and Internet applications (Auta, 2010).

Ever since the introduction of e-payment in the 1990s thanks to the World Wide Web (WWW), online trade has taken the world by storm. Empowered by the Internet, e-payment quickly spread out to most businesses as companies found it to be an effective way of communication between parties, e-payment, which can be simply defined as the exchanging of digitized transmission of electronic orders, is a cost-optimal way to promote and run a business (Imiefoh, 2012). Before the existence of electronic systems of payments, transaction of businesses in the financial and productive sectors had been a difficult and stressful one. Mostly, banks make use of ledgers, folio numbers, and postcards like data sheet where customers name, specimen signature, photo where kept in record. The manual operations caused very slow and inefficient performance of the banks in Nigeria. Technology has affected the performances of all Nigerian banks in the previous time. This century has been associated with the availability of dynamic customers whose interest is targeted on banking services, improved regulation, and high profitability. 

The Electronic means of payment is a way of carrying out financial transactions with the use of mobile or internet in order to reduce the huge risk involve in carrying physical cash or paper cheque. Electronic banking guarantee speed, efficiency, fair and well secured transactions compared to that of cash-at-hand procedure (Jenevive & Anyanwaokoro, 2017).  A number of means of Electronic Payment System abound thereby leaving customers’ with the choice of whichever they prefer and the knowledge to Information Communication Technology (ICT) today allow customers to choose whichever platform they like. The ability of banks also to engage in proper maintenance culture gives room for customers’ retention thereby providing a means of survival for small and medium scale entrepreneur. Nigeria used to be cash based economy with over 90% of funds residing outside the banking sector as against the developed world where the money in circulation is 40% and 9% in the United Kingdom and United States respectively.

Before the emergence of modern banking system, banking operation was manually done, and that solely account for the inefficiency in handling transactions. This manual system involves posting of transactions from one ledger to another without the aid of computer system. Computations which should be done through computer or electronic machines were done manually, which sometimes lead to miscalculations due to human errors, which results in extension of closing hours when account is not balanced on time. (Siyanbola, 2013). 

Ever since the introduction of Electronic Payment System, studies have shown that it enhanced services delivery in the banking industry and brought a great development in the Nigerian Banking Industry. However, a lot of problems are associated with the introduction of this electronic payment system out of which the following falls: low internet penetration, money laundry, and high cost of maintenance of e-payment machines, improper customers’ identification and account verification of online purchases, literacy and concerns on risks.

The performance of the Nigerian banking system depends on the confidence and satisfaction of bank customers on the products and services offered by the banks. Customer satisfaction anchors on the expectations and insight about the services offered. Electronic payment services have provided benefits for customer satisfaction in dealing with financial institutions with the number of services rendered to their customers. Customers find it very easy and satisfactory in operating in modern banking these days because most of the activities done are at their own convenient which has ended the era of queue system in the banking hall.

Technology forms the backbone for better results in offering banking services. This is articulated in the Hong Kong and Shanghai Banking Corporation (HSBC) report of 2000, which stated that benefits from technology are more than three times its cost. Banking transactions need continuous innovation in order to meet the yearnings and aspirations of the ever-demanding customers. Hence, banks need to roll out new products and services quickly and effectively, using latest cutting edge technology (Augusto, 2002). The benefits banks derive from electronic payment products and services delivery is improved efficiency and effectiveness of their operations so that more transactions can be processed faster and most conveniently, which will undoubtedly impact significantly on the overall performance of the banks. The customers on the other hand, stand to enjoy the benefit of quick service delivery, reduced frequency of going to banks physically and reduced cash handling, which will give rise to higher volume of turnover. 

However, these developments in the Nigerian banking industry seem not to have achieved their aims. Queues are still seen in the banking halls, bank customers still handle too much cash, and hardly people talk about the electronic banking products that are available in Nigeria. Pertinent questions include: how are these customers really enjoying the services? To what extent has customers’ patronage for and reaction to a particular product depended on their level of understanding of what the product can do?

Customers have continued to complain about a lot of short comings of electronic payment systems. These short comings, as stated by the customers’ include; machine out of order, machine out of cash, no printing statements, cards get blocked, frequent breakdown of Automated Teller Machines (ATM) service, unreliability of ATM service, lack of sufficient technicians in all bank who solve breakdown of ATM machine, lack of sufficient alternative system which substitute ATM service for the customer when temporary problem happen in the machine, lack of convenience of E-bank service, lack of mobile banking service, lack of reliable tele-banking, lack of credit card service, under-development of technological infrastructure, low level of relevant knowledge creation and innovation, interruption of network, lack of suitable and regulatory frame work for e-commerce, resistance to changes in technology among customers and service providers as result of fear of risk and many more. The ATMs are also saddled with consistent breakdowns and the internet services to easily access are difficult as far as the ordinary customer is concerned coupled with the rise in internet banking related fraud. All these have almost negated the introduction of the electronic payment services in general. It is therefore imperative to investigate whether the advent of electronic means of payments are really improving customers’ satisfaction of banking services. However, the study tends to examine the impact of electronic payment system on customer satisfaction among undergraduate students.

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