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FACTORS AFFECTING ADOPTION OF POS TERMINALS BY BUSINESS ORGANISATIONS IN NIGERIA (A CASE OF DELTA STATE)

CHAPTER ONE

INTRODUCTION

BACKGROUND OF STUDY

Monetary authorities in all countries around the world have carefully supervised and encouraged the value of reliable and productive payment systems, as the growth of a national economy depends on encouraging a secure, convenience and affordability payment system. Many nations have been facing difficulties in ensuring that the payment system is secure, convenient and affordable. Countries have thus created robust and effective payment mechanisms that guarantee a successful economic growth for the transactions necessary.However, it is said that Nigeria has a cash-driven payment system. In Yaqub, Bello, Adenuga and Ogundeji (2013), Ajayi and Ojo (2006) explained that the most common method of payment is cash in Nigeria and that a large percentage of the public are unbanked. Most people maintain cash at home that makes them vulnerable to safety risks. In most African developed countries this is still happening, since the company also primarily depends on the actual cash for monetary transactions. This makes the countries highly cash-based.

Cash-based exchange has certain benefits, since it is often useful for completing and concluding a transaction, permits anonymity if granted and is seen by its users as a public good (Yaqub et al., 2013). But for a nation economy, the cash economy is dangerous, cumbersome, and unsafe. That is because not controlled money by banks cannot be regulated and operationally controlled (Adeoti 2013). In addition, the essence of the cash of developed countries was found to be the cause for their growth delay.some challenges posed by high cash flow include robberies and crime in cash, income losses from excessive cash handling, inefficient management of cash due to the nature of the process, etc. While cash is easy, taxation is less straightforward and the distribution, management, management and processing of the cash is expensive. Another challenge is the high cost of commercial banks of depositing and moving cash within branches. Cost of transportation and security of cash and that of bank staff is also of concern. Excessive cash movement also leads to emergence of corrupt practices in the country. Furthermore,excess cash in circulation leads to money theft occurring by people who have so much cash and do not want to be asked about how they purchased it. The cash costs to Nigeria's financial sector are high and rising as NGN 50 billion naira was very near in 2008. (Central Bank of Nigeria [CBN], 2011). An summary of CBN's cash management policies shows that the financial sector in Nigeria is growing and rising. At the end of 2012, direct cash costs were valued at NGN 192 billion.These expenses come from the regular printing of bills, money sorting, cash flow, massive cash keeping, police costs to control high volumes of stolen goods and burglaries. It follows however that the Nigerian government has to pay cash as a payment method. In consequence, these risks must be reduced.The currency number, the risks associated with carrying cash, in circulation and promote the use of electronic payment method of non-cash payment means. CBN (2012) also announced that over 99 percent of its consumer business in Nigeria banks accounted for cash based operations as of December 2011. The overall number of cash transactions across traditional five payment networks was calculated at 215 015 003, of which 51.20% were ATM withdrawals over the counteR withdrawal, 33.55% and cheques 13.50%. Point of sales (POS) and web channels accounted for 0.49% and 1.26% respectively. This provides the evidence that the Nigerian economy is heavily cash-based and the imperative for a means to reducing the volume of cash in circulation.

STATEMENT OF PROBLEM

In Lagos state, the pilot scheme of implementing the cash strategy started in January 2012. Based on its cash activity by March2012, the CBN levied certain fees to discourage consumers from cash transactions. Six States (Rivers, Anambra, Abia, Kano, Ogun and the Federal Capital Territory) were implemented in accordance with the strategy. On July1,2014, cash scheme was implemented in the other 30 federal states. However, observation has shown that many products and services buyers already make big transactions and pay for goods and services in currency.This leads to high cash costs, high cash risks, high subsidies, informal economy, inefficiency and corruption. Adeoti and Oshotimehin (2012) announced that despite the general increase on the rate of adoption of e-payment instruments in Nigeria, the rate of adoption and use of POS is poor relative to the rest of the e-payment system. In Nigeria, poor awareness of the benefits of using POS, lack of appropriate structures, low penetration of the Internet, inability to network, absence of open standards or confidence in banks and providers, awareness of POS availability are reasons that have been related to low adoption of POS in Nigeria,Frequent power failure, small POS numbers per merchant store where available, preference for cash, and network connection protection (Ayo & Babajide, 2006; Adeoti, 2013, NIBSS, 2015). In the 2012 survey of Nigeria Inter-bank Settlement System Plc (NIBSS) carried out by Financial Derivatives Company (FDC), Ltd., it was determined that, while POS terminals, electronic funds transfer, and payment checks exist, many merchants still accept cash over the POS level. Investigations into why the merchant admitted electronic cash during the POS terminals showed that POS was being deployed Unintentional as they had been deployed by the banks without the merchants being requested. The delay in accessing funds following purchases by POS was another explanation for non-use. Poor connectivity was also listed as a POS challenge Moreover, while research has been carried out on the introduction of electronic payment systems such as ATM and internet banking, a lack of publication of POS variables in Nigeria has been found in particular.

OBJECTIVE OF STUDY

The primary of objective of this study is ;

To examine the factors that drive adoption of POS by business organization in delta state.

To investigate the relationship between customer trust and the adoption of POS of selected business organization in delta state.

RESEARCH QUESTIONS

What are the factors that drive adoption of POS by business organization in delta state?

What is relationship between customer trust and the adoption of POS of selected business organization in delta state?

SIGNIFICANCE OF STUDY

The role and relevance of efficient payment systems have been closely monitored and promoted by various monetary agencies of the world and including Nigeria.As the world move further and faster into a thriving technological age,so must the way business are conducted.the knowledge gained will help the owners, the marketers and the managers of business organisations.in addition, the knowledge would inform the customers,who traditionally carry large cash to avoid carrying cash and get protected from criminals

SCOPE OF THE STUDY

The idea of this research work is to assess the factors affecting adoption of pos terminals by business organization.this study will be covering mainly delta state

LIMITATION OF THE STUDY

Finance for general research work was a challenge during the course of this study, availability of materials and time constraint were the major challenges the researcher had while carrying out this study

DEFINITION OF TERMS

POS: The point of sale is a place where a retail transaction is completed. At the point of sale, the merchant calculate the amount owed by the customer, indicate that amount,may make an invoice for the customer and indicate the option for the customer to make payment

BUSINESS ORGANIZATION: The term business organization describes how businesses are structured and how their structure helps them meet their goals. In general, businesses are designed to focus on either generating profit or improving society. The basic categories of business organization are sole proprietorship, partnership, and corporation.

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