Dissertation Adeniyi Balogun Electronic Retail Payments System in Nigeria (Repaired)

MASTERS OF ARTS IN FINANCIAL MANAGEMENT DECEMBER 2012

ELECTRONIC RETAIL PAYMENT SYSTEMS IN NIGERIA

:User Acceptance Through Infrastructure Perspectives

Dissertation submitted in part fulfillment of the requirements for the degree of Masters of Arts in Financial Management at Liverpool John Moores University

Adeniyi Balogun

IElectronic Retail Payment Systems In Nigeria: User Acceptance Through Infrastructure Perspectives A. Balogun

Declaration

No portion of this work referred to in the dissertation has been submitted in

support of an application for another degree or qualification of this or any other

university or other institute of learning. Further, all work in this dissertation is

entirely my own, unless referenced in the text as a specific source and included in

the bibliography.

IIElectronic Retail Payment Systems In Nigeria: User Acceptance Through Infrastructure Perspectives A. Balogun

This work is dedicated to the Allu 4. What a way to pay the ultimate price…

IIIElectronic Retail Payment Systems In Nigeria: User Acceptance Through Infrastructure Perspectives A. Balogun

Abstract

This study examines the recent “Cash-less” policy of the Central Bank of Nigeria

(CBN), with the main objective of identifying infrastructural constraints to

Electronic Retail Payments Systems’ (ERPS) adoption by the Nigerian consumer.

The paper presents a multidimensional analysis of ERPS’s adoption. It evaluates

characteristics of ERPSs as determinants of user acceptance (Abrazhevich, 2002)

and, through a survey, identified which are most important to Nigerian consumers.

On the other hand, a critical analysis of existing ERPS infrastructure was

undertaken based on international frameworks and guidelines provided by the

CPSS, PSDG and the SADC—scanning authoritative sources for actions set in

motion by Nigerian regulators to mitigate inherent bottlenecks. Finally, this paper

provides recommendations by fusing discoveries from user perceptions of ERPSs

and identified Infrastructural constrictions.

Findings highlighted low awareness levels of ERPSs functionality as well as a

lack of trust towards its adoption by Nigerian Consumers. The study also revealed

regulators’ commitment towards the policy; however, the “Big-bang1” approach

presents challenges as it seems “too much” is being undertaken all at once.

In conclusion, this paper presents strategies to improve consumers’ trust in the

“Cash-less” Nigeria initiative, emphasising increased communication, security,

and awareness, through various formal and informal mediums.

Key Words: Electronic payment systems, Electronic retail payment, User

acceptance, Nigeria.

1 A type of instant changeover, where parties associated with a new system moves to the fully functioning new system on a given date

IVElectronic Retail Payment Systems In Nigeria: User Acceptance Through Infrastructure Perspectives A. Balogun

Acknowledgement

To the King of Kings and the Lord of Lords, my God in whom I trust – what

would I be without you? I wonder…

To my Agbèké, my gem of incomputable fortune, here is a BIG thank you.

To Otunba Adeolu Balogun—Mentor Extraordinaire. Thanks for your

investments in me.

My deep appreciation goes to Mr Gavin Brown, Dr Yvonne Morgan, Mr Mike

Cremin and Ms Liz Harvey. Without your individual contributions towards my

personal, academic and professional development at some point, completing this

work would not have been possible. It has been a great privilege, learning from

and meeting you all.

On a final note, to my Siblings, Good friends and my growing number of Nieces

and Nephews, I say thank you for your continuous support and encouragement—

pre, during and post this academic engagement.

I love you all.

Adeniyi Balogun.

Manchester, UK

11th November, 2012

VElectronic Retail Payment Systems In Nigeria: User Acceptance Through Infrastructure Perspectives A. Balogun

List of Content

DECLARATION..............................................................................................................................I

ABSTRACT....................................................................................................................................III

ACKNOWLEDGEMENT.............................................................................................................IV

LIST OF TABLES......................................................................................................................VIII

LIST OF FIGURES.......................................................................................................................IX

LIST OF ABBREVIATIONS.......................................................................................................XI

1. INTRODUCTION..........................................................................................1

1.1 STUDY BACKGROUND..........................................................................................11.2 COUNTRY OVERVIEW...........................................................................................31.3 PROBLEM DISCOURSE...........................................................................................51.4 RESEARCH OBJECTIVES AND QUESTIONS.............................................................71.5 SCOPE AND DELIMITATION...................................................................................81.6 STRUCTURE OF DISSERTATION.............................................................................9

2. ELECTRONIC RETAIL PAYMENT SYSTEMS (ERPS)......................11

2.1 DEFINITION OF ERPSS.......................................................................................122.2 GLOBAL SNAPSHOT OF NON-CASH PAYMENTS.................................................122.3 THE NIGERIAN CONTEXT...................................................................................14

2.3.1 Electronic Payment Environment in Nigeria.............................................................162.3.2 Types and classifications of ERPSs in Nigeria..........................................................19

2.4 USER ACCEPTANCE OF TECHNOLOGY................................................................262.4.1 Technology Adoption Theories...................................................................................262.4.2 ERPS Characteristics as Determinants of User Acceptance.....................................29

2.5 MECHANISM OF ELECTRONIC RETAIL PAYMENT SYSTEMS...............................312.6 INTERNATIONALERPS FRAMEWORKS AND GUIDELINES...................................33

2.6.1 Payment Systems Development Group (PSDG).........................................................342.6.2 Committee on Payment and Settlement Systems (CPSS)............................................362.6.3 Southern African Development Community (SADC)................................................37

3. RESEARCH METHODOLOGY................................................................39

3.1 RESEARCH PURPOSE...........................................................................................393.2 PRAGMATISM PHILOSOPHY................................................................................403.3 MIXED APPROACH..............................................................................................423.4 ACTION RESEARCH STRATEGY...........................................................................433.5 MIXED-MODEL CHOICES....................................................................................443.6 DATA COLLECTION AND ANALYSIS...................................................................46

3.6.1 Self-Administered Questionnaires..............................................................................463.6.2 Multiple-Source Secondary Data...............................................................................473.6.3 Stratified Random Sampling.......................................................................................483.6.4 Quantitative and Qualitative Data Analysis...............................................................48

3.7 ACCESS...............................................................................................................493.8 ETHICAL CONSIDERATIONS................................................................................49

VIElectronic Retail Payment Systems In Nigeria: User Acceptance Through Infrastructure Perspectives A. Balogun

3.9 CREDIBILITY OF RESEARCH DESIGN..................................................................503.9.1 Validity.......................................................................................................................503.9.2 Reliability...................................................................................................................513.9.3 Generalisability..........................................................................................................52

4. USER SURVEY OF ERPS..........................................................................53

4.1 DEMOGRAPHICS AND DESCRIPTIVE STATISTICS................................................534.1.1 Age..............................................................................................................................544.1.2 Education....................................................................................................................554.1.3 Income And Employment............................................................................................56

4.2 USER PERCEPTIONS OF ERPSS CHARACTERISTICS............................................57

5. NPS STOCKTAKING REPORT................................................................62

5.2 ENVIRONMENTAL...............................................................................................645.2.1 Country Demographics..............................................................................................645.2.2 Physical Infrastructure...............................................................................................66

5.3 INSTITUTIONAL...................................................................................................695.3.1 FGN............................................................................................................................695.3.2 CBN............................................................................................................................705.3.3 DMB...........................................................................................................................715.3.4 Non-Banks..................................................................................................................725.3.5 Telecommunications Networks...................................................................................745.3.6 Switching Companies.................................................................................................75

5.4 LEGAL AND OVERSIGHT LANDSCAPE................................................................765.5 TECHNOLOGICAL................................................................................................78

5.5.1 Infrastructure and Application...................................................................................785.5.2 Development and Deployment of Technology............................................................79

5.6 BUSINESS ENVIRONMENT...................................................................................825.7 FINANCIAL..........................................................................................................835.8 SWOTS GRID.....................................................................................................84

6. CONCLUSIONS AND RECOMMENDATIONS.....................................85

6.1 TRUST...............................................................................................................866.2 SECURITY........................................................................................................876.3 COST.................................................................................................................876.4 RELIABILITY AND USABILITY...................................................................886.5 CONFIDENTIALITY AND REWARD............................................................89

7. RESEARCHER’S REFLECTIONS ON LEARNING..............................92

7.1 INTRODUCTION...................................................................................................927.2 WHAT HAS BEEN LEARNT?................................................................................927.3 HOW HAS THE LEARNING OCCURRED?.............................................................947.4 FUTURE APPLICATIONS OF LESSONS LEARNT....................................................97

REFERENCES AND BIBLIOGRAPHIES.......................................................98

APPENDICIES...................................................................................................114

APPENDIX A1 LEGAL: SCORING METHODOLOGY.......................................................................114

VIIElectronic Retail Payment Systems In Nigeria: User Acceptance Through Infrastructure Perspectives A. Balogun

APPENDIX A2 TECHNOLOGY; SCORING METHODOLOGY ...........................................................115APPENDIX A3 OVERSIGHT SCORING METHODOLOGY................................................................117APPENDIX B SURVEY INSTRUMENT.........................................................................................119APPENDIX C GUIDELINES........................................................................................................123APPENDIX D HYPOTHESIS TESTING.........................................................................................124

List of Tables

VIIIElectronic Retail Payment Systems In Nigeria: User Acceptance Through Infrastructure Perspectives A. Balogun

Table 1 Selected Social and Infrastructure Indicators

Table 2 Product classification

Table 3 Channel classification

Table 4 ERPS Characteristics

Table 5 NPS Perspective

Table 6 Pragmatist Philosophy

Table 7 Approach emphasis

Table 8 Strategy Criteria

Table 9 Qualitative v Quantitative

Table 10 Mixed-Model

Table 11 Questionnaire choice criteria

Table 12 Country demographics

Table 13 Communication facts

Table 14 Electricity facts

Table 15 Transportation facts

Table 16 DMB facts

Table 17 Legal and oversight scoring

Table 18 Development and deployment scoring

Table 19 SWOTs Grid

List of Figures

IXElectronic Retail Payment Systems In Nigeria: User Acceptance Through Infrastructure Perspectives A. Balogun

Figure 1 Timeline of money

Figure 2 GDP Growth rate

Figure 3 OPEC Share of world crude oil reserves

Figure 4 GNI per capita (US$)

Figure 5 Structure of dissertation.

Figure 6 Literature Map

Figure 7 Global Non-cash Payment Report 2011

Figure 8 Key Global players Currency-In-Circulation

Figure 9 Nigerian cash transaction

Figure 10 World Literacy map 2011

Figure 11 CIC to GDP ratio

Figure 12 CIC per capita

Figure 13 Corruption Perception Index 2011

Figure 14 Internet users (per 100 people)

Figure 15 Mobile cellular subscriptions (per 100 people)

Figure 16 Electric power consumption (kWh per capita)

Figure 17 Cards accepted here sign

Figure 18 Mobile phone transactions

Figure 19 M-PESA transaction in Kenya

Figure 20 POS Transaction

Figure 21 ATM located outside bank

Figure 22 Biometric authentication

Figure 22 Diffusion of innovations

Figure 23 Technology Adoption Model

Figure 24 Theory of Reasoned Action

Figure 25 Organisation of electronic retail payment systems

Figure 26 Electronic retail payment processes.

Figure 27 Payment System Development Group Framework

Figure 28 NPS MODEL

XElectronic Retail Payment Systems In Nigeria: User Acceptance Through Infrastructure Perspectives A. Balogun

Figure 29 The research ‘onion’

Figure 30 Qualitative V Quantitative

Figure 31 Age demographics

Figure 32 Education demographics

Figure 33 Income and employment demographics

Figure 34 Survey highlights

Figure 35 Interoperability and Acceptability

Figure 36 Non-Banks and trust

Figure 37 Innovations in smartcard technology

Figure 38 Kolb’s Learning Cycle

Figure 39 Kolb with Honey and Mumford Combined

XIElectronic Retail Payment Systems In Nigeria: User Acceptance Through Infrastructure Perspectives A. Balogun

List of Abbreviations

ACH Automated Clearing House

ATM Automated Teller Machine

B2C Business to Consumer

BIS Bank for International Settlements

BRIC Brazil Russia India and China

CIC Cash in Circulation

CBN Central Bank of Nigeria

CEMEA Central Europe Middle East and Africa

CPSIPS Core Principle for Systematically Important Payment Systems

CPSS Committee on Payment and Settlement Systems

DMB Deposit Money Bank

EBPP Electronic Bill Presentment and Payment

EFINA Enhancing Financial Innovation and Access

ERPS Electronic Retail Payment Systems

FGN Federal Government of Nigeria

FSAP Financial Sector Assessment Program

GDP Gross Domestic Product

GNI Gross National Income

GSM Global System for Mobile Communications

HIC High income countries

ICT Information Communication Technology

IMF International Monetary Fund

LIC Low income countries

NBS National Bureau of Statistics

NIBSS Nigerian Inter Bank Settlement Systems

NPC National Planning Commission

NPS National Payment System

OPEC Organisation of Petroleum Exporting Countries

OTC Over the Counter

XIIElectronic Retail Payment Systems In Nigeria: User Acceptance Through Infrastructure Perspectives A. Balogun

P2P Person to Person

PIN Personal Identification Number

PSP Payment Service Providers

POS Point of Sale

PSDG Payment Systems Development Group

SADC Southern African Development Community

SIPS Systemically Important Payment Systems

SSA Sub Saharan Africa

SWIFT Society for Worldwide Interbank Financial Telecommunications

TAM Technology Acceptance Model

TALC Technology Adoption Life Cycle

TRA Theory of Reasoned Action

UKTI United Kingdom Trade and Investment

WPR World Payment Report

1Electronic Retail Payment Systems In Nigeria: User Acceptance Through Infrastructure Perspectives A. Balogun

1. Introduction In this chapter the researcher introduced the topic that is being researched:

“Electronic Retail Payment Systems in Nigeria

: User acceptance through infrastructure perspectives”

The researcher described the background, country overview, problems statement,

scope, as well as the research objectives and questions.

1.1 Study Background

In his classic work, An Inquiry Into The Nature and Causes of The Wealth of

Nations, Adam Smith noted, “the division of labor from which so many

advantages are derived, is not originally the effect of any human wisdom, it is the

necessary, though very slow and gradual, consequence of a certain propensity in

human nature, which has in view no extensive utility; the propensity to truck,

barter and exchange one thing for another” (Smith 1776, vol. 1: 17).

Since the overcoming of barter in the history of mankind, trade has consequently

involved the exchange of goods and services for equivalents of abstract value

representation such as money (Sadeghi and Schneider 2001). A reality, “through

which every man lives by exchanging, and or becomes in some measure a

merchant, and the society itself grows to be what is properly a commercial

society” (Smith 1776 vol. 1: 20).

Over the course of history, abstract value depictions has seen money evolve

through primitive items such as cowries and cattle (9,000 BC), coins (1000 BC),

fast forward to the penny and the pound in medieval European era between 410-

1485 (Davies 1996).


Figure 1 Timeline of money source: www.bemoneyaware.com

Expansion in trade and finance volumes in 1485 saw money evolve through cash

as banknotes, cheques and early paper-based credit card payments (ibid). Money

in the process has facilitated exchange, stored value, served as a unit of account

and hence, measurement, whilst also furnishing a platform for deferred payments

(Stewart 1898, Spalding 1921).

Innovations in payment technology such as ATMs, credit cards and mobile

payment etc. have recalibrated traditional payment systems (Kalakota & Whinston

2000, WPR 2011, BIS 2012), bypassing the human interface through banks

(Abrazhevich 2001a). This paradigm shift forms its base on cashless transactions,

where individuals are able to pay for goods and services through electronic

channels, absent physical cash (Khiaonarong and Liebenau 2009) – in a form

known as e-payment (Asaolu et al 2011).

This is not to infer earlier means of payments have not served their purpose. Just

as paper money replaced precious metals to pave way for the industrial revolution

(Estabrooks 1988), ERPSs are here to provide a platform for globalisation.

During the late 1990s, a number of African nations began implementing policies

to modernise their National Payment Systems (NPS) (Susanto and Zo 2011).

Progresses in e-payment technology had informed an opportunity to improve the

effectiveness of existing retail payment structures (SADC 2002).

Preceding deployment of electronic retail payment in Nigeria, cash-dependence

meant retail transactions were 100 percent cash based (Asaolu et al 2011). This

deterred most Nigerians from depositing their money in banks, opting instead to

save and spend in physical cash (Ayo 2012, Ovia 2009). Among other matters to

be explored, this phenomenon increased the number of adult population without

bank accounts and its related services (Gholami et al 2010).


Driven mainly by ATMs, the use of e-payment systems in Nigeria accounted for

N360bn ($2.4bn) transaction value in 2008 (Ayo et al 2008). With a $250bn GDP

in the same year, this is comparatively low (Adesina and Ayo 2010). ATMs are

used mainly for cash withdrawal towards the final leg of retail transactions (ibid),

bypassing payment channels like the POS and internet based e-commerce.

Notwithstanding renewed efforts to entrench e-payment use, cash remains the

most preferred payment method among Nigerians.

1.2 Country Overview

Nigeria is the most populous country in Africa, with a population of 168 million

people (NBS Nigeria 2012). As Africa's second-largest economy (after South

Africa), Nigeria has one of the fastest growing economies in the world, with an

average real GDP growth rate of 7.2% between 2009–2011 (World Bank 2012).

Figure 2 GDP Growth rate Source: World Bank, 2012

Ranked as the 8th largest among OPEC members in crude oil reserves, Nigeria

remains under developed, owing to years of successive military rule and economic

mismanagement (Okonjo-Iweala et al. 2007, UKTI 2010).


Figure 3. OPEC Share of world crude oil reserves

As a consequence, economic stagnation engendered increased poverty and

depletion of public institutions (Obasanjo 2007), heralding endemic corruption

(Okonjo-Iweala 2007). Public expenditure on human capital and infrastructural

development has been affected as a result; with 70% of Nigerians currently living

below poverty line (CIA 2012). In 2011 GNI per capita shows Nigeria is way

behind at $1200 per capita in comparison to South Africa, UK and the USA.

Figure 4 GNI per capita (US$) Source: World Bank, 2012

Table 1 highlights select social indicators in comparison with world regions on

income differentiated basis. This summarily attempts to presents the Nigerian

picture.


Table 1. Selected Social and Infrastructure Indicators

2009-2010

NIGERIA SSA LIC2 HIC

GNI per capita Atlas Method (US$) 1,180 1,176 528 40,136

GDP (US $ bn) 194 1,097 416 40,819

Internet users (per 100 people) 28.4 10.9 30.5 69.8

Mortality rate, under 5 (per 1,000) 143 58 58 58

Electric power consumption (kWh per capita) 121 511.5 229.5 9,117

Literacy rate % 61 73 - 100

Source: Adapted from Okonjo-Iweala et al (2007)

While its public institutions are still fragile (CIDA 2012), Nigeria has undertaken

a series of national reform programmes since returning to democratic governance

in 1999. The Nigeria Vision 20:2020 strategy is aimed at launching the country

onto a path of sustained and rapid socio-economic development by year 2020. A

subset, The Payment System Vision 2020 was developed in 2007 with an

objective to promote and entrench electronic payments among economic agents.

(NPC Nigeria 2012)

1.3 Problem Discourse

The Central Bank of Nigeria (CBN), a body responsible for the overall control

and administration of the Federal Government of Nigeria’s (FGN) monetary and

financial sector policies, issued a policy circular on 20 April, 2011, titled

“Industry Policy on Retail Cash Collection and Lodgement”. Taking effect from

1st January 2012, it stipulates a maximum daily amount of cash withdrawals and

lodgements through Deposit Money Banks (DMBs), for individuals and

corporations, above which a cash handling charge is applied.

This policy gave rise to the “Cash-less” Nigeria initiative, with the primary

objective of entrenching electronic payment adoption for retail transactions. The

2 On 16th April 2011, Nigeria was upgraded from Lower Income to Lower Middle Income (World Bank, 2012)


CBN assures that when fully operational, the policy will drive the development

and modernisation of Nigeria’s national payment systems (CBN 2011).

A lot of criticisms have trailed the “Cash-less” policy since its introduction,

mainly owing to presumed inadequacy in planning, low awareness levels of

banking services, online-payment fraud, and the deficient state of existing e-

payment framework (Guardian Nigeria 2011, Atanda and Alimi 2012).

User acceptance being crucial to the success or failure of any information system

initiative (Davis 1993, BIS 2012,Tucker 2012) is a major barrier confronting the

“Cash-less” Nigeria project—understanding its dynamics is important for the

success of the initiative.

Although “there is nothing impossible to him who will try” (Alexander the Great,

nd), Nigeria’s present legal, knowledge and physical infrastructure framework

present strong challenges to the smooth transition from an omnishambles e-

payment structure, to Nigeria’s “Eldorado” of electronic retail payment

technology dispersion.

The researcher believes findings from this undertaking will provide fresh analysis

and insight to enable consumers, analysts and policy makers understand and

identify challenges to ERPS’s adoption in Nigeria and, through the process

contribute to the general body of knowledge.


1.4 Research Objectives and Questions

Against this backdrop, the major thrust of this paper is to investigate and evaluate

characteristics of ERPSs which inform consumer patronage, and through the

lense of international frameworks and guidelines, identify infrastructural

challenges to user acceptance.

The specific objectives are as follows:

1. To describe what an electronic retail payment system is.

2. To identify electronic retail payment systems in Nigeria.

3. To assess and explore issues of Nigerian users’ acceptability of ERPSs

4. To highlight potential and impending infrastructural constrictions to

ERPS’s acceptance in Nigeria.

5. To make recommendations.

The prominent research questions are:

1. What are ERPSs?

2. What types of ERPSs exist in Nigeria?

3. What ERPS characteristics drive the Nigerian consumer’s behaviour

towards its adoption?

4. What are the infrastructural constraints to implementing efficient ERPS in

Nigeria?

5. Have any arrangements been made by Nigerian stakeholders to contain

these challenges?

6. What else can be done?


1.5 Scope and Delimitation

Due to resource constraints, encompassing all important details critical to ERPSs’

functionality will not be feasible. However, by recognising a select, this paper

aims to assist augment understanding of ERPSs in congruence with those

Nigerian consumers, analysts and policy makers might be familiar with. For this

reason, focus will be based mainly on electronic retail payment methods grounded

on banking services such as ATMs, debit and credit cards, mobile, etc.

The term e-payment and ERPS are used interchangeably in its most liberal sense,

to represent small-value monetary transactions which enable storage and

expenditure for consumer goods and services, wholly or partly through electronic

channels. In the ICT diction, this is better referred to as Business to Customer

(B2C) and Person to Person (P2P). Emphasis is on end users, sometimes referred

to as customers or consumers.

Obtaining coveted information from the Nigerian business environment was

tough, particularly owing to non-availability of detailed data from government

departments on e-payment transactions. It would have helped if interviews with

assigned project managers were conducted, as deeper insights on preparations

and arrangements will have been attained. In addition, getting accurate data on

surveyed customers’ education and financial status had to be approached with

caution.


1.6 Structure of Dissertation

This diagram shows briefly how the dissertation is written and organised (See

figure 5). The dissertation is organised in 6 chapters following this order.

Figure 5 Structure of dissertation. Source: Authors Diagram

The literature map (Figure 6) describes relationships between components of this

paper.

Chapter 1: Introduction

Chapter 2: Electronic Retail Payment Systems

Chapter 4 & 5: Findings, Analysis and Discussions

Chapter 3: Research Methodology

Chapter 7: Self-reflective Learning

Chapter 6: Conclusions and Recommendations


Figure 6 Literature Map Source: Author Design

Figure 7 Lite

ram

User Acceptance of Electronic retail payment systems

Nigerian context, World payment report survey

Surveys and Guidelines for developing Electronic retail payment systems in countries

Measurement benchmarks for certain components of the NPS perspective

Infrastructure Perspectives

SADC

Defined based on Online and face to face application

NIGERIA

Diffusion of innovation, Technology Acceptance Model Theory of Reasoned Action

Background

Evaluated by Product and Channel

NPS Perspective: to guide findings and discussions

PSDGCPSS

Background

Definition of ERPS

Types

Theories

Characteristics Framework

Macro Economy

Infrastructure

Literacy

Income levels

Telecommunications:

Electricity

Banking Sector

Vision 20:2020

User related EPS characteristics

4. What are the infrastructural constraints to implementing efficient electronic retail payment systems in Nigeria?

3. What ERPS characteristics drive the Nigerian consumer’s behaviours towards electronic retail payment adoption?RESEARCH

QUESTIONS

5. Have any arrangements been made by Nigerian stakeholders to contain these challenges?

1 and 2 What are ERPSs and which ERPSs systems exist in Nigeria?

6. What else can be done?


2. Electronic Retail Payment SystemsChapter one introduced the background, problem discourse and the specific

research objectives and questions. This chapter aims at building a theoretical

framework for answering the research questions. It provides contributions on

ERPSs and the Nigerian situation; user acceptance of technology theories and

ERPS characteristics—completed with frameworks to assess existing ERPS

infrastructure.

In a letter to his rival Robert Hooke, in 1676 Isaac Newton said “I have seen a

little further; it is by standing on the shoulder of Giants” (Hawking, 2002:725).

Moving from this notion, a critical review of literature follows the assumption that

knowledge about a particular subject can be derived from, and built upon work

carried out by others on a particular subject matter.

The objective of any literature review is thence, to establish conversance with an

existing body of knowledge, and in the process, by proving credibility,

demonstrate the linkage between previous research work and current study;

reconciling and summarising that known, towards the propagation of new

thoughts and ideas.

Several researchers have addressed issues of user acceptance of electronic retail

payment systems. However, a close look reveals these have not taken a holistic

view of the entire ERPSs landscape with most being one dimensional analysis.

For example, most contributors have focused on specific aspects like fraud, trust,

usability, ERPSs systems design and so on (ISO 9241 1996, Lee et al. 2010,

Wierzbicki 2010, Efendioglu et al 2004, Abrazhevich, 2001b), others have written

exclusively about payment mediums like POS, ATMs and internet (Adeoti et al

2012, Adeoti and Oshotimehin 2011, Agbasi et al 2010, Onyema, 2011, Atanda

and Alimi 2012, Okafor and Ezeani 2012).

In the international scene, the Nigerian context is often left out of considerations

for ERPSs development. Although organisations like the CPSS and PSDG attempt


to provide guidelines and recommendations for ERPSs entrenchment in countries

worldwide, their views often times leave out country specific vectors which are

crucial to the ERPS calculus.

For these reasons, the researcher has attempted to consider a wide array of

contributions, to ensure a clear picture of user acceptance of ERPSs in Nigeria is

presented.

1.7 Definition of ERPSs

Due to the ever evolving nature of ERPSs, there is yet to be a universally agreed

definition for it (Tyree et al 2000). The researcher nonetheless, has attempted to

consider a notable select, ranging from remote online based e-commerce use, to

its face-to-face application.

Kalakota & Whinston (1997) describe e-payment as an exchange of digital

financial instruments between buyers and sellers which take place online. Taking

this further, it is also defined as payments by direct credit (Humphrey et al 2001),

electronic transfer of payment card details or through other electronic channels

(Agimo 2005a). As electronic money facilitates ERPSs, it can be said an ERPS is

one in which “monetary value as represented by a claim on the issuer is stored on

an electronic device and accepted as means of payment by undertakings other than

the issuer” (ECB 2001:40).

1.8 Global Snapshot of Non-Cash Payments

According to the World Payment Report (2011), global volume of non-cash

payments transactions grew by 5% in 2009 to 260 billion, despite macroeconomic

weaknesses. It further highlights electronic payments’ rapid adoption in

developing economies (see figure 7). Fuelled mainly by the growing use of card

payments, in 2009 usage rose 22% In CEMEA while it was 8.6% for BRIC. The

US and the Euro area remain by far the largest non-cash payment markets

worldwide, accounting for 40% and 21% respectively in 2009.


Figure 7 Global Non-cash Payment Report 2011 Source: WPR, 2011

Currency-in-Circulation to GDP ratio as a measure of cash dependence (Collins et

al 1999), is highest in Japan at about 18% in 2010, followed by Hong Kong at

13% (Figure 8). Sweden where bills and coins make up about 3 percent of the

economy (CBN news 2012) ranks least at 3.16%.

Figure 8 Key Global players Currency-In-Circulation Source: The Economist, 2012


1.9 The Nigerian Context

In Nigeria, traditional retail payments are centred on the use of cash in settling

transactions, where a buyer sees a product, examines it and pays for it in cash

(Ibrahim 2009). It would not have been a rare sight in the early 90’s to observe

transactions where kilograms of cash were being exchanged for goods of similar

weight, carried in what are known as “ghana must go bags3”. To simplify retail

transactions, high value currency notes have unendingly been introduced by the

CBN into the economy (Sanusi 2012), complemented by its attendant implications

for cash management, security and money laundering (Lemo 2011, Adeoti and

Oshotimehin 2011).

Figure 9 Nigerian cash transaction 4 Source: www.bbc.co.uk

Despite earlier attempts by commercial banks, e-payment products launched have

had low adoption rates owing to various reasons. Nwokocha (2009) identified

that for transactionary purposes in Nigeria, confidence in cash overshadows other

forms of payment. Also the Nigerian psychology is inclined to hold and touch a

payment medium like cash, ascribable to illiteracy and ignorance of e-payment

benefits (Ovia, 2002). The depletion of education standards over the years had

seen literacy rates plummet (CIA, 2012), recording 61% in 2011.

3 Not related to the country Ghana4 USD 1 = Naira 157; GBP 1= Naira 252 at 20.11.12


Figure 10 World Literacy map 2011 Source: CIA Factbook 2012

As shown in figure 11, cash usage increased in 2009, reaching USD9.2bn in 2011.

This same measure shows a decline in Sweden, with the US having the highest

percentages overall. However, CIC per capita (Figure 12) depicts an interesting

angle where cash usage in Nigeria is lower than those of Sweden and the UK.


2006 2007 2008 2009 20100

1

2

34

5

6

78

CIC to GDP ratio

SwedenUnited KingdomUnited StatesNigeria%

Figure 11 CIC to GDP ratio (Data from BIS 2012, CBN 2012) Source: Author design

2006 2007 2008 2009 20100.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

CIC per capita

SwedenUnited KingdomUnited StatesNigeria'0

00

Figure 12 CIC per capita (Data from BIS, 2012; CBN 2012: World Bank 2012) Source: Author design

1.9.1 Electronic Payment Environment in Nigeria

A host of inefficiencies underlie the existing payment process. One potential

reason for negative user attitudes towards ERPSs stems from Nigeria’s reputation

for electronic fraud (David-West, 2012), where concerns of fraud-risks discourage

user adoption of e-payment mediums (Olusegun 2006; Lee, 2009). Transparency

international ranked Nigeria 143 least corrupt of 183 countries surveyed in 2011.

More, KPMG, A global audit and financial advisory firm, in its June 2012 Africa

Fraud Barometer Report, rated Nigeria as the most fraudulent country in Africa.


Figure 13 Corruption Perception Index 2011 Source: Transparency international, 2012

Internet adoption (see figure 14), although rapidly permeating public and

commercial transactions since 2003 (Akintola et al 2011), diffusion rates in rural

areas are considerably low (Adeyeye, 2008) counteracting the entrenchment of e-

payment dispersion nationwide (Anyanwu et al, 2012).

Figure 14 Internet users (per 100 people) Source: World Bank, 2012

While all hope is not lost, mobile cellular subscriptions have continuously

increased, with geometric growth in user numbers since 2003. Active telephone

lines have leaped from 51,000 in 1999 to over 90million in Q2 2012 (NBS,

Nigeria 2012). These growths in subscriber numbers present an opportunity for

mobile phone payment technology, particularly in rural areas where internet

penetration rates remain low (EFINA, 2010; Oviosu 2012; NCC, 2008).


Figure 15 Mobile cellular subscriptions (per 100 people) Source: World Bank, 2012

Take electricity infrastructure (see figure 16), at 121 kWh per capita in 2009 is

abysmal. In comparison, the US and UK averaged 13,000 and 6000 kWh

respectively in the same year. Irregular power supply contributes to

underdevelopment of ICT in Nigeria (Onyema, 2011). ERPSs require a threshold

level of electricity capacity to operate efficiently (SADC, 2002; BIS, 2012) as

electronic information should flow to initiate and confirm transactions efficiently

(discussed further in 2.5).

Figure 16 Electric power consumption (kWh per capita) Source: World Bank, 2012

Following banking sector reforms between 2004 and 2005 (Oyegoke, 2007),

DMBs were required to increase their minimum capital base from $15m to

$192m. This lead to mergers and acquisitions in the banking sector (Ayo et al


2005). DMBs reduced from 89 weak institutions to 25 sound ones (Bello, 2006;

Sanusi 2011).

Banks are the primary providers of retail payment instruments in Nigeria. To

ensure efficient service delivery, these recharged institutions employed ICT

solutions such as POS, ATM and, Mobile banking towards growing market share

(Ayo and Ukepere, 2010; Oni and Ayo, 2010; Mukherjee and Nath, 2003) with

most commissioning non-interoperable softwares and hardware platforms

(Chiemeke, 2008; Anyanwu et al, 2012). As a result, 80% of branches do not meet

the minimum logistical requirement needed to support electronic banking as only

20% have real-time ICT interconnectivity (Nwokocha, 2009).

Non-Bank providers on the other hand, are engaged in offering targeted payment

solutions like prepaid cards and payment processing networks (EFINA, 2010).

The Nigerian postal services NIPOST is at the forefront, extending banking

services to the unbanked as well as rural dwellers, enabled by its branch outreach

(ibid).

Other analysts and stakeholders have echoed the current legal framework among

other infrastructural deficits, as vectors against ERPSs’ functionality (Bello, 2006;

Oghenerukevbe, 2010; Dankwanbo 2009). Despite attempts been made by the

government to contain these challenges, they still impair ERPSs’ adoption and

operation.

In the area of supervisory and oversight functions, the Nigerian National

Assembly passed laws to strengthen the CBN through the amended CBN Act

2007. In tackling corruption, money laundering and internet fraud were stressed,

seeing two institutions established. The Economic and Financial Crimes

Commission (EFCC) and the Independent Corrupt Practices and Related Offences

Commission (ICPC).

While Nigeria is aching for socio economic development, it would seem

electricity infrastructure, legal framework and literacy considerations will frustrate


the ERPS entrenchment drive, or so it seems. We now proceed to explore the

types available.

1.9.2 Types and classifications of ERPSs in Nigeria

Three factors are stimulating the development of ERPSs: reducing operational and

payments processing costs, growing online commerce and the decreasing costs of

technology (Kalakota & Whinston, 1997). For a retail payment to occur, a

mechanism and a value bearing instrument must exist (Reserve Bank of Australia,

2008). Classified based on product and operational channel features (BIS,

2012), types of electronic products for retail transactions in Nigeria can be

described as follows:

A. Payment Product Classification

Card Electronic Emerging

Credit Direct debit Mobile phone

Debit Direct credit

Prepaid Bill Payment

Table 2 Product classification Source: Author Design

I. Card Based Products

With prevalence in urban areas, these include credit, debit and prepaid cards. Most

cards are similarly sized, measured 85.60 × 53.98 mm, as expounded by the ISO

7810 international standard (Paul, 2006). Currently dominated by Interswitch, the

Nigerian domestic card market has since 2008, had Visa and Mastercard become

more active players (EFINA, 2008).

Credit cards

These have a buy it and pay later feature, with the revolving credit paid partly or

in full (O’Mahony et al, 2001). Low level of financial inclusion and the absence

of credit scoring bureaus mean credit card use is still very low in Nigeria (Ovia,

2002).


43.

Debit cards

These enable the holder to access funds in a current account with transaction value

debited immediately (Chaudbury and Kuiler, 2002). Typically used for smaller-

value transactions, in 2009 over 20m were issued, recording above 100m

transactions (Interswitch, 2010; Ovia, 2009). It is estimated that over 50% of

cards issued are inactive (EFINA, 2010). It has also been noted that Identity

verification is loose for opening bank accounts in Nigeria (Nwokocka, 2009). It is

important KYC procedures are thorough, to mitigate money laundering (CPSS,

2004).

Prepaid cards

Stores value on cards for small-value transactions. They are usually not PIN

protected and are very susceptible to fraud through theft or loss (BIS, 2004). Daily

transaction limits are set low at USD133 per day (CBN 2010). Low Authorisation

levels could also be a consideration affecting confidence in its adoption in

Nigeria.

Figure 17 is usually displayed where cards are accepted as a means of payment.

Figure 17 Cards accepted here sign Source: www.pebblestones.co.uk

II. Electronic Based Products

These include direct entry and Electronic Bills Presentment and Payment (EBPP).

Direct entry transactions include direct credit, where through internet banking or

OTC, payer initiates transactions directly from their bank account. The other,

direct debit, payer’s pre-arranged approval allows recipient initiate payment from

payer’s bank account. Income levels inform choice of direct entry as a payment

choice (Kwast and kennickell, 1997; Mantel 2000), low levels of incomes as seen

in Nigeria, affects is adoption amongst users.


The EBPP provides means to pay utility bills, levies and so on over the Internet

(Ovia, 2008). Case in point, the Electronic Tax Administration and Payment

(ETAP) systems enable on-line tax returns. According to Okure (2012) awareness

through education and marketing are inimical to EBPP adoption in Nigeria.

III. Emerging Options

Innovations in retail payments are constantly emerging, influencing users in their

choice of payment instrument by remodelling the payment process. (Tucker

2012).

Mobile phones

Initiates and confirms payment through a mobile telecommunications device

(Zika, 2005). M-payments as also referred, are expected to grow globally from 4.6

to 15.3 billion transactions between 2010 and 2013 (WPR, 2011). Its use as a

payment product is growing rapidly in Nigeria where the adult population own

more phones than bank accounts (Oviosu, 2012). By early 2012, the volume of m-

payments increased 300% over 2008 to USD63m, reflecting the improving

teledensity in Nigeria (Adeoti and Oshotimehin, 2012).

Mobile phone payments can be categorised in two ways.

1. For phone related services where data is provided through a mobile device

(e.g. maps and music)

2. Payments with mobile phone as a payment device particularly in P2P

transactions.


Figure 18 Mobile phone transaction Source: www.verifone.com

Figure 19 M-PESA transaction in Kenya Source: www.afritorial.com

Successes have been achieved with mobile money in Africa. An example is the

M-PESA offered in Kenya, which has seen financial inclusion among the

unbanked population improve (Mckinsey, 2012).

B. Operational Channels Classification

Facilitate the use of a number of payment products, such as credit cards, debit

cards, and direct entry products etc. through channels describes as follows.

Electronic Over-the-counter Emerging

POS Bank Branches Biometrics

ATM

Internet Table 3 Channels classification Source: Author design

I. Electronic Based Channels

Every payment product requires a payment mechanism to facilitate electronic

transfer of information and funds, types typically used in Nigeria include:

POS terminals

POS networks link point-of-sale terminals and allow the use of payment cards for

the purchase of goods and services at several locations (Ayo et al. 2010). POS


adoption is still relatively low in comparison to the rest of e-payment systems

(CBN, 2009). In June 2011 about 11,000 were deployed nationwide (Obiano,

2012), however, it is estimated only 25% were active, referable to network

infrastructure failure and merchants resistance to adopt, owing to high charges

(EFINA, 2010). According to Adeoti and Oshotimehin (2012), fewer customers

are satisfied with speed of transactions, merchants’ services levels and security.

Figure 20 POS Transaction Source: www.heraldsun.com.au

ATMs

Mostly found outside banks, initiates transactions by cards, verified by a PIN

(Rose, 1999). Services like cash deposits, EFT and bill payments are increasingly

being offered through ATMs (Abor, 2004). ATMs use continues to grow

(Adepoju and Alhassan, 2010, Ayo et al., 2010), albeit as a cash dispensing

machine. In 2010, value of transactions stood at USD1.7bn representing a 99%

increase above 2008 (CBN, 2011), owing to aggressive deployment and user

adoption (Adeoti and Oshotimehin, 2012).

While Adeyemi (2010) contends that people spend exuberantly due to ease of

cash withdrawal, others echo, access through interoperability and fraud are

challenges negating ATM adoption in Nigeria (Muhammad 2009; Afam 2009).

Some contributors stress further, the high teleco and private electricity generation

costs (EFINA, 2010; Nwokocha, 2009) as well as contentedness of the citizenry

with “home banking” remain major drivers limiting its acceptance (Uzor 2009).


Figure 21 ATM located outside bank Source: www.wangjiashuo.com

Internet

Consumers have a choice of either transacting from an internet banking portal or

through e-commerce enabled websites. Nigerian consumers are gradually

adopting e-commerce, rooted on internet banking services which enable third

party transactions (Ovia, 2008, Susanto and Zo 2011). However, the lack of trust

and confidence informs consumers’ preference to be physically present during

transactions (Efendioglu et al, 2004; Adeshina and Ayo, 2010; Susanto and Zo,

2011; Pan and Zinkhan, 2006).

II. Over-The-Counter (OTC)

Over-the-counter is a highly flexible channel as it facilitates nearly all types of

payments products. At bank branches, customers can initiate EFTs, update

personal banking records, set up direct payments plus a number of other

transactions. OTC channel is often characterised by long queues, where customers

waste long hours in banking halls to transact (Asaolu et al, 2011).

III. Emerging Channels

Biometrics


Computerised identification payment channels for individuals, by analysing

physical characteristics. Common types in use today include: fingerprints, voice

recognition, and iris recognition (Mordini, 2012). Payment applications using

biometrics are fast emerging with fingerprint authorisation leading innovations

(BIS, 2012).

Figure 22 Biometric authentication Source: www. eandt.theistt.org

Biometric authentications are well suited for relatively high-risk transaction

environments like Nigeria. Ibiyemi et al (2011), opines the high levels of ATM

fraud in Nigeria can be checked by the use of biometric security features while

Atanda and Alimi (2012) stress integration of the national database of citizens’

identities as critical success factors for biometrics adoption.

With so many user negating insights identified, we shall move on to explore some

theories on ICT adoption. By so doing, we hope to present how human behavioral

factors influence ERPS acceptance. Noting, infrastructural deficiencies alone are

not responsible for ICT non-adoption (BIS, 2012; Rogers, 1998).

1.10 User Acceptance of Technology

Concurring with Dillon & Morris (1996), user acceptance is “the demonstrable

willingness within a user group to employ information technology for the tasks it


is designed to support”. Absent such acceptance, no technology can successfully

exist on the market, with ERPSs being no exception (Abrazhevich, 2001c).

1.10.1 Technology Adoption Theories

Rogers (1983) on the diffusion of innovations, describes the adoption or

acceptance of a new electronic product in line with the demographic and

psychological characteristics of defined adopter groups using the Technology

Adoption Life Cycle (TALC) model.

Figure 22 Diffusion of innovations Source: Thakur, 2008 (pp 11)

Shown as a classical normal distribution curve in Figure 22, the TALC suggests

that the first set of people to adopt a new technology are called innovators -

usually more educated, prosperous and risk oriented. This is followed by early

adopters - often young and also educated. Next on the curve are the early and

late majority- conservatives, older and less educated. And finally, laggards- very

conservative, old and least educated (Elliot, 2006).

With low education and literacy levels in any society, ERPSs adoption might

struggle to “cross the chasm”, a term used by Moore (1993) to describe the

tipping point, where technology can either become entrenched or disappear from

the market space due to non-adoption (Thakur, 2008) .


Numerous theories and models have been developed to explain information

systems from a social psychology perspective. Researches undertaken on ICT

have identified user attitudes plus human factors as notable vehicles affecting the

success of information system adoption, (Rice and Adyn, 1991; BIS, 2012;

Tucker, 2012).

Take for instance, the Technology Acceptance Model (TAM)—an individual’s

intention and actual use of a technology solution is influenced by its perceived

usefulness and perceived ease of use, noting the later informs the former (Davis,

1989; Dillon and Morris, 1996; Tella, 2012).

Figure 23 Technology Adoption Model

TAM in summation argues, actual use is ultimately a function of a user’s

perception of the ease and usefulness characteristics of a particular technology.

Although well grounded (Marchewka, Liu and Kostiwa, 2007), the TAM does not

encompass other external determinants of payment system adoption such as

security, confidentiality, control, efficiency and trust (Reid and Levy, 2008;

Schepers and Wetzels 2007) as it was developed to provide a basic account of the

drivers of computer software acceptance in a broad-based context (Davis, 1989;

Plouffe et al. 2001).

Stressing this point, Salancik & Pfeffer (1978) with the Social Information

Processing Model (SIPM), posit that external variables such as opinions,

information and behaviours of others can affect a user’s perception and thus


acceptance or rejection of technology which is more applicable in the ERPS

context.

The theory of reasoned action (TRA), which has wider applications, will be more

appropriate to understanding how user attitudes and beliefs can affect ERPS

technology adoption decisions where exchange of money is involved.

With origins in social psychology, the TRA defines connections between beliefs,

norms, attitudes, behavioural intention and actual behaviour (Fishbein & Ajzen,

1975; Hennessey, 2012).

Figure 24 Theory of Reasoned Action Source: Abrazhevich, 2001

TRA postulates, an individual’s actual behaviour is driven by behavioural

intentions which are a function of an individual's attitude—positive or negative

feelings about actioning a behaviour, its assessment and, desirability of resultant

consequences (Liker and Sindi 1997) and subjective norms—perception of

whether people important to the individual think the behaviour should be

performed (Terry and O’Leary 2011). A limitation exists as attitudes and norms

are often reframed interchangeably (Eagly and Chaiken 1993).

In summation, the TRA can be enhanced with the view that user perceptions of

ICT can be determined through objective characteristics of technology, alongside

human factors and interaction with other concerned parties (Abrazhevich 2004).


Going by the user emphasis of this paper, ERPS characteristics which could

determine user attitudes, behaviours and intentions need to be identified, which

leads us to section 2.4.1.

1.10.2 ERPS Characteristics as Determinants of User

Acceptance

Earlier attempts have been made to characterise ERPS’s in the works of

Medvinsky and Neuman (1995), Lynch and Lindquist (1996) and Wayner (1997).

These studies have focused on the technical aspects leaving out user related

considerations (Abrazhevich 2001b). In congruence with the user emphasis, the

researcher has identified characteristics summarised as follows:

CHARACTERISTIC DESCRIPTION RELATED LITERATURE

CONFIDENTIALITY

Need of users to protect their privacy,

identity and personal information

against data exploitation.

Abrazhevich,2004Sadeghi & Schneider, 2001

ACCEPTABILITY

Extent to which ERPS instruments are

accepted for face to face and online

transactions

Medvinsky & Neuman, 1995Humphrey, D. B. and Hancock, D. (1997)

COSTSystem’s ability to process small and

micropayments, absent high

transaction costs

Low, Maxemchuk and Paul, 1994

BIS, 2012, Humphrey et al 2001

INTEROPERABILITY

A payment system is interoperable if

its use is not exclusive to a service

provider. E.g. bank ATM accepts

other bank customer’s card.

Abrazhevich, 2004

RELIABILITY The smooth running of payment

infrastructure. e.g. speed of processing

Medvinsky and Neuman, 1995Guttmann, 2003

SECURITY

Resistance of payment system to

attacks in the Internet and physical

environment. E.g. protection of

payment details from hacker assaults

and PIN shield on POS

CPSS, 1996;Sadeghi & Schneider, 2001 Lynch and Lundquist,1996Asokans et al., 1997


TRUST

Degree of customers’ confidence that

their money and personal information

will be safe, and that all parties

involved will not act against users’

interests when adopting ERPS in

societies

Wierzbicki, 2008Efendioglu 2005Abrazhevich, 2004

USABILITY

Ease of use and friendliness i.e. not

sophisticated or complex

ISO 9241, 1996Lynch & Lundquist, 1996BIS, 2012

Table 4 ERPS Characteristics Source: Author design

By investigating and ranking these characteristics, an understanding of those

characteristics of high importance, which ultimately influence user acceptance and

thus, adoption in retail transactions in Nigeria can be identified and cross-analysed

against existing ERPS infrastructural frameworks and preparations of relevant

authorities in mitigating risks to consumers. Moving on, we explore briefly, the

mechanism of electronic retail payments.


1.11 Mechanism of Electronic Retail Payment

Systems

Differences exist in organisational structures across countries, however, ERPSs

typically include three integrated systems (see figure 25 below): Transaction,

clearing, and settlement systems (CPSS 2004).

Figure 25 Organisation of electronic retail payment systems Source: Bank of Canada, 2003

Figure 26 illustrates the universal process of a retail payment and the direction of

information and funds through the transactions, clearing and settlement systems.


Figure 26 Electronic retail payment processes. Source: Author modified: Bank of Canada 2003

When customers decide to pay, information about their identity, ability to pay etc.

are passed en route seller’s bank to buyers’ as shown by processes 1 and 2.

Through the Automated Clearing House (ACH) in process 3, customer payment is

initiated as in 4. Interbank fund settlement 5, channelled via the central bank is

then initiated, completing the transaction with transfer of settlement information

6, confirming transaction with banks.

Operators and overseers of Inter-institution clearing and settlement systems need

to ensure that such systems are sufficiently robust in terms of institutional and

operational arrangements, risk management and settlement procedures (BIS,

2004)

Volume of Internally processed information is dependent on the level of clearing

and transaction system integration (BIS 2006). Where these systems are

centralised and standardised, it reduces the amount of data processing amongst

participating institutions (receiving and paying), making settlement quicker and

more cost effective (BIS 2008).

SWIFT, a member-owned cooperative with headquarters in Belgium is involved

in the secure exchange of proprietary data while ensuring its confidentiality and

integrity. Over 10,000 financial institutions and corporations in 212 countries


engage SWIFT services to exchange millions of standardised financial messages

(www.swift.com.). The deployment of SWIFT‘s infrastructure by a country is

deemed as a benchmark when assessing its clearing and settlement systems

(PSDG 2010).

Talking benchmarks, we shall now proceed to key out international frameworks

for the measurement and assessment of a country’s ERPS’s infrastructure,

viewing guidelines and critical success factors recommended by authorities in the

field.

1.12 International Retail Payments System Frameworks And

Guidelines

The World Bank plays an extensive role in the development of payment systems

through the Financial and Private Sector Development Vice presidency (World

Bank 2012). Leveraging on a network of over 150 relevant institutions in the

arena of payment systems, the World Bank has engaged in supporting payment

system reforms and providing bespoke advice, to name a few.

The Core Principles for Systematically Important Payment Systems (CPSIPS)

suggest 10 characteristics that all SIPS should satisfy. Relevant guidelines for

consumers are identified in excerpts as follows:

I – The system should have a well-founded legal basis under all relevant

jurisdictions

IX – The system should have objective and publicly disclosed criteria for

participation, which permit fair and open access.

VIII – The system should provide a means of making payments, which is practical

for its users and efficient for the economy.


VII – The system should ensure a high degree of security and operational

reliability and should have contingency arrangements for timely completion of

daily processing.

1.12.1 Payment Systems Development Group (PSDG)

The PSDG is at the centre of an international network, whose main objective is to

support countries to reform payments, remittances and securities settlement

systems (PSDG 2010). Figure 27 below depicts its position within the overall

framework for modernising payment systems worldwide.

Figure 27 Payment System Development Group Framework Source: World Bank, 2011.

The PSDG specifies a number of public policy objectives that need to guide the

policies and actions of national authorities in countries with under-developed

retail payments systems. In 2010, the document “Measuring Payments Systems


development” presented measurement methodologies for national payment

systems viz:

1. Legal and regulatory Framework

2. Retail payments system

3. Payment systems oversight function and cooperation.

The exercise aims at furnishing a broad view of the level of development of

identified components of a countries payment systems, with the intention to

providing countries with tools to measure their development scored as high;

medium-high; medium-low and low.

1 Legal And Regulatory Framework (APPENDIX A1)

Assessing the robustness of a country’s legal framework based on two

perspectives,

i) The specific payment system concepts covered by existing laws

ii) Legal powers of the Central Bank to oversee payment systems

2 Retail Payments System (APPENDIX A2)

Also based on two perspectives, evaluates the depth of payments system use,

i) The deployment of infrastructure to process retail payment instruments

and key policy decisions that have an impact on safety and soundness of

services provided.

ii) The efficiency and extensiveness of cashless payment instrument adoption

and availability of a variety of payment instruments

3 Payment Systems Oversight Function and Co-operation (APPENDIX A3)

This indicator focuses on the enabling environment to perform oversight

functions based on four aspects,

i) Organisational arrangements for oversight function

ii) Clarity in the objective of oversight function

iii) Cooperation with other authorities


iv) Cooperation with other stakeholders

It is important to note, country-specific considerations due to local and

environmental (e.g. physical and social) conditions are not reflected in the

components measured. For this reason the author adopted the SADC scanning

perspective. (Discussed further in 2.6.3)

1.12.2 Committee on Payment and Settlement Systems

(CPSS)

Formerly established in 1990 under the aegis of the Bank of International

Settlement (BIS), its foundational study was of ICT matters and preparation of the

“Red Book” intended to report settlement issues such as retail payment and

electronic money issues among others (BIS 2002).

In its May 2012 report “Innovations in Retail Payment Systems”, it identifies how

individuals’ behavior towards technology adaptation can be explained by the

following four factors:

1. The peculiarities of specific payment instruments.

2. Demographic factors: age, education, income level.

3. Transaction characteristics: transaction amount, type of goods and

location.

4. Financial incentives: transaction charges, discounts and reward

programmes.


These factors have been considered in the design of the research questionnaires

(APPENDIX B) aimed at understanding relationships between payment methods

adopted by respondents in their light of these factorial characteristics.

1.12.3 Southern African Development Community

(SADC)

The SADC, an inter-governmental association of 15 southern African countries, in

1996 launched the SADC Payment System Project. This was to assist member

countries define domestic payment strategies and development plans.

The “Guide to Developing a Strategic Framework for Payment System

Modernisation”, intended as a set of broad guidelines on National Payment

systems (NPS) issues in the African context was published. It considered

continent specific challenges such as lack of modern telecommunication

infrastructure and technical know-how (Ngcobo and Herselman 2007, Zulu 2006).

Its focuses are based on a three dimensional model of NPS modernisation viz:

Strategic Process, NPS Perspectives and the Support Structure as describes by

Figure 28 below


Figure 28 NPS MODEL source: SADC, 2002

Viewed from many important angles, an existing NPS can be analysed taking

into consideration the following NPS perspectives (SADC, 2002). See Table5.

PERSPECTIVE COSIDERATION COMMENTARY

ENVIRONMENTAL

Country demographicsSize, Population, Education and

Political Stability

Physical InfrastructureCommunication, Transportation,

Electricity

Geographic spread of commerce Spread and link of commercial centers

ECONOMIC

Economic consideration Needs of sectors

Monetary policy and credit

policy consideration

Link between monetary policy and

NPS

INSTITUTIONAL Stakeholder Roles and responsibilities

BUSINESS

Businesses Practices and

procedure

Business climate

Security Fraud, Money laundering

LEGAL Legal Framework Scope, Robustness,

Institutional Arrangement Deficiencies, Effects


RISK Risk Identification Quantified, Monitoring,

Contingencies, Reporting Risk Management

TECHNOLOGICAL

Communications network Sophistication, Support

Applications Efficiency, Skills availability

Development and Deployment of

technology

Approach

FINANCIAL Cost of transaction processing

price

Agreed pricing,

Table 5: NPS Perspective Source: Author Design

For the purpose of this research, highlighted components of the NPS

Perspectives Model are applied in a stocktaking exercise to identify

infrastructural challenges facing electronic retail payment systems adoption in

Nigeria; doing so will help guide research findings and thus, inform some of

the analysis and recommendations of this paper.

3. Research MethodologyChapter two attempted to review related literature extensively. In this chapter,

this paper’s methodological settings are described. Based on the Research Onion

(Saunders et al. 2009), this chapter highlights the research purpose, philosophy,

approach and strategy underlying the choice of data collection as well as the

analysis techniques adopted, justifying each in the light of relevance to research.

Below is a diagram of the Research Onion.


Figure 29 The research ‘onion’ Source: © Saunders et al 2008

1.13 Research Purpose

Three types of research purposes exist in business management (Saunders et al

2008) i.e. descriptive, exploratory and explanatory research. Descriptive research

attempts to produce a representation of persons, events and situations (Robson

2002:59) while exploratory proposes to assess a phenomenon in a new light.

Finally, explanatory research, which focuses on explaining the inter-relationship

between variables of a problem (ibid).

This paper attempts to describe consumers’ acceptance of ERPSs by identifying

factors which explain their intentions to adopt e-payment mediums in retail

transactions in the light of existing infrastructural challenges. In congruence with

the thrust of this paper (section 1.3), the purpose is both descriptive and

explanatory.

1.14 Pragmatism Philosophy


Acknowledging the view of Johnson and Clark (2006), it isn’t merely about a

research being philosophically informed, but how well a researcher reflects upon

philosophical choices and defends them in relation to other adoptable alternatives.

Research philosophy concerns the development and nature of knowledge through

two major thought lines, each containing significant differences which shape

assumptions of the world and thus, our research thought process.

The first, Ontology, concerned with the nature of reality, has two views–

Objectivism, depicting the perspective that social actors exist externally in reality

of social phenomena, while Subjectivitism posits, social phenomena are a function

of perceptions and consequential actions of social actors involved. Epistemology

on the other hand pertains to constituents of acceptable knowledge in a field of

study.

Auguste Comet, the 19th century French philosopher, was the first to state that just

as other subjects of scientific inquiry, society could be analysed empirically

(William and Baiche 2001, p203). To this end, social researchers have often

employed systems of methods from natural science in analysis and interpretation

of social science studies, with well grounded procedures established overtime

(Sun, 2010).

Since these debates are in terms of philosophy choice between Positivist - natural

scientists inclined towards theory linked observable social reality (Remenyi et al.

1998:32) and Interpretivist - advocates of differences in human roles as social

actors, affecting outcomes of social reality, the researcher believes choosing one

position is impracticable simply because the most important determinants of this

research are the varied research questions and one single view lacks sufficiency

for all research objectives involved.

Findings and recommendations of this study are based on insights sought from

various perspectives in a continuum like cycle (Tashakkori and Teddlie 1998).

Take for instance user acceptance, the emphasis is on quantifiable observations


that lend themselves to statistical analysis (Saunders et al, 2008). While the

positivist philosophy might suffice, understanding infrastructural constraints on

the other hand requires both quantitative and qualitative analysis of available

secondary information.

More so, this research takes a cue from the philosophy concerned with questions

of existence of objects independent of knowledge called Realism. The type

applicable here is Critical Realism which holds, knowledge of reality is a

consequence of social conditioning (technological, economic, demographic etc.)

and cannot be understood independently of social actors (consumers, regulators,

banks, etc) (Dobson 2002). Even where all supporting infrastructure required were

to exist for an efficient ERPS, without its acceptance and thus adoption it will

prove a futile effort.

Another point is the Pragmatist’s applicability to a multi level study as is the case

in this research. By identifying roles and interrelations of the social actors

(consumers, regulators and Government) and social conditions involved, the

research will host a wide array of key considerations to inform research

recommendations.

For these reasons, the Pragmatism philosophy is most appropriate. The summary

table below further highlights the researcher’s choice criteria to achieve a frame

work for the research.

CHOICE CRITERIA Positivist Realism Interpritivism Pragmatism

Research question orientation- - - ✔

Multi level study consideration - ✔ - ✔

Internal v External External Varied External Multiple

Objective v Subjective Objective Objective Subjective Multiple

General focus Theory based Context based Reality based All


Observable Phenomena (data) RestrictedPartly

RestrictedPartly open Open

Independence v Dependence (social factors)

IndependentPartly

dependentMultiple Multiple

Table 6 Pragmatist Philosophy Source: Author Design

1.15 Mixed Approach

The theory adopted by a research determines its approach (Saunders et al., 2008).

There are two approaches viz Inductive - building theory and Deductive – testing

theory, with both having unique emphasis as describe below:

Emphasis Inductive Deductive

Principle Social Science Natural Science

Context Research based Between variables

Focus Data to Theory Theory to Data

Data Qualitative Quantitative

Researcher’s independence? NO YES

Generalisability NO YES

Approach Flexible Structure Highly Structured

Table 1 Approach emphasis Source: Author Design

Deduction involves the development of a theory which is subjected to a controlled

test, where an allowance is made for anticipating and predicting the occurrence of

a phenomenon (Collis and Hussey 2003).

According to Robson (2002), the first stage in a deductive research is to deduce a

hypothesis. With regards user acceptance and thus adoption of ERPSs, the

researcher argues that in addition the perceived ease of use and perceived

usefulness, alongside other social influences like social beliefs and attitudes.

Consumer views concerning security, trust, cost and interoperability, etc. could be

responsible, noting the views of Ovia (2002) and Nwokocha (2009) in section 2.2.


Hence, aspects of ERPSs which could influence user attitudes, behaviours and

intent to adopt ERPS need to be identified and weighted.

A deductive approach will be applied to key out ERPS characteristics as drivers of

behavioural attitude to facilitate understanding drivers of ERPS’s use. Matters like

the level of technological, legal and environmental infrastructure are evaluated

adopting the SADC framework as critical success factors. The inductive approach

is applied here for its flexibility.

1.16 Action Research Strategy

The Action Research strategy is most applicable. Unlike the case study,

experiment or survey, it focuses on research in action as against about action

(Coghlan and Brannick 2005). This emphasises the purpose of this research i.e.

understanding user acceptance through physical infrastructure constraints

militating against ERPSs adoption as a result of policy changes in Nigeria

Choice criteria Experiment Survey Case StudyAction

ResearchEthnography Archival

Change

Orientation✔

Time horizon ✔

Stakeholder

Involvement✔

Iterative ✔

Table 2 Strategy Criteria Source: Author Design

Other issues include the change focus and iterative cycle it affords. Data and

information need be continually and cyclically evaluated as information on policy

and actions are constantly updated by regulatory stakeholders.

1.17 Mixed-Model Choices


As earlier discussed, the positivist approach naturally leans towards quantitative

research methods to test research hypothesis. They usually employ statistical

analysis procedures and numeric data collection techniques like questionnaires.

Interpretivist on the contrary, utilises descriptive analysis rooted on the use of

words to present the analysis of social phenomena absent “number crunching”

known as qualitative.

Table 9 highlights main differences.

Quantitative Qualitative

Numbers Words

Static Process

Structured Unstructured

Behavior Meaning

Hard, reliable data Rich, deep data

Table 3 Qualitative v Quantitative Source: Developed from Bryman, Bell 2003, p302

Not only is it perfectly possible to combine approaches within the same piece of

research, but…it is often advantageous to do so (Saunders et. al., 2003). This

noted, if it is satisfactory to combine approaches, then it can be inferred that it is

acceptable to mix and match different research strategies within the different

research approaches (Ray, 2007). Based on Saunders et al (2008), research

choices can be segmented broadly by either mono or multiple methods.


Figure 30 Qualitative v Quantitative Source Saunders et al 2008

Choice

criteriaSource Variant Data collection Analysis techniques

Mono Mono MonoQualitative or Quantitative Qualitative or Quantitative

Multiple

MultiQuantitative Quantitative Quantitative

Qualitative Qualitative Qualitative

Mixed5Method Both Both

Model Both Both

Table 40 Mixed-Model Source: Author Design

The Mixed-model research choice is applied against Mixed-method as it affords a

better opportunity to answer this papers multi faceted research questions. It

combines quantitative and qualitative data collection methods and analysis which

will assist corroborate and contextualize the research findings. For example,

quantitative data on user acceptance are analysed qualitatively.

1.18 Data Collection and Analysis

There are two major sources of data: Primary - observed or gathered from direct

hands-on experience and Secondary - include raw and summarised primary data

collected for a different purpose by someone else. It is common to combine

methods to substantiate research results.

The nature of this paper’s questions has informed the choice of data collection.

For user acceptance, quantitative primary data are collected through Self-

administered questionnaires and Multiple-source secondary data for analysis of

existing infrastructure in line with the philosophy, approach and strategy of this

paper.

5 The main difference here is that although mixed method research uses both quantitative and qualitative views, quantitative data are analysed quantitatively and vice versa whereas, mixed model is interchangeable.


1.18.1 Self-Administered Questionnaires

Choices about types of questionnaires are broadly based on whether it is

completed by respondent or by researcher on the basis of respondent’s answers.

Self-administered questionnaires are designed so respondents can follow

instructions (Robson, 2002) and answer at their own pace. The possible

limitations of questionnaires are the potential of partial completion and non-

response (Saunders et al 2008). Further justification of researcher’s choice are

summarised below:

Choice criteria Self –administered Interviewer-administered

Cost Cheaper Expensive

Respondents convenience More convenient Not as convenient

Ease of Administration Relatively easy Quite complex

Large sample size compatibility YES NO

Geographic dispersion Compatible Complex

Collection time Shorter Takes longer

Table 11 Questionnaire choice criteria Source: Author Design

The research questionnaires have three parts.

(i) Personal information (demographics);

(ii) Payment instruments preference ranking and frequency of use

information

(iii) Questions on each ERPS characteristic ranked on a five-point Likert-

style responses ranged from 1 – “very important”; 2 – “quite

important”, 3 – neutral, 4 – “quite unimportant”, 5– “not important at

all”

Hypothesised drivers of user acceptance are ERPS’s features which are:

Relevant for user behaviour, attitudes and experience when used.

Significant signifiers of ERPSs’ characteristics to end users.


Key for ERPSs to function.

Important for social influence and hence use

To ensure questionnaires cover all relevant aspects of research questions, the

researcher divided the instrument into three parts mentioned earlier. The questions

were steered by the guidelines contained in the “innovations in e-payment” report

of the BIS also noted in section 2.6.2. Using various questioning styles such as,

categorizing and the liker-style ranking at different sections was to ensure

accuracy of responses sought. This was aimed at limiting the potential of boring

the respondents with similar styled questions. Pilot runs of questionnaires with

close friends also helped control quality.

1.18.2 Multiple-Source Secondary Data

The major advantage of this source of data is that it combines both documentary

(e.g. memo and circulars of CBN) and survey (e.g. World Bank Global Payment

Survey 2010) secondary data sources. Since qualitative and quantitative secondary

data form the basis of infrastructure challenge analysis, data in forms of surveys,

reports, and circulars which are available from websites of the IMF, BIS, CPSS,

World Bank, and CBN, and so on, were used. With time, cost and quality

considerations, it was impossible for the researcher to gain such insight otherwise.

The main risk of using secondary data is that its original objectives might not

completely fit the current research problem as it was intended for another study

(Ghauri et al., 1995). To improve the quality and reliability of data sought, data

types were gathered from reputable organizations with well defined

methodologies.

1.18.3 Stratified Random Sampling

A stratified random probabilistic technique enabled researcher touch a

representative sample by dividing the population according to mutually exclusive

homogenous subgroups (Marshall, 1999) based on IT literacy as opposed to

convenience sampling technique. This is to ensure the sampling frame is accurate


(Fink, 2003a) as its normal that people with good IT skills tend to adopt

technology quicker (Dobson, 2006). The alternative is the cluster sampling

technique where the surveyed population is based on identified clusters if they

exist (Tryfos, 1996). These clusters do not exist in our population.

Due to resource constraints, the law of large numbers (Janssen 1998; Judd 1985)

is not applied here because a sample of 50 respondents is targeted. By

apportioning target response to 60% bank branch and 40% online, the researcher

believes doing so, though based on judgment will improve statistical inference

(Casella 2008).

1.18.4 Quantitative and Qualitative Data Analysis

The purpose of analysing data is to get answers by linking information from a

pool of data (Yin, 2003). Using IBM SPSS v216, quantitative data collected from

questionnaires and other sources were analysed using descriptive statistics such as

percentages and frequencies, to summerise, identify and describe (Cameron and

Trivedi 2009) relationships between variables (Agresti and Finlay, 2009). To

provide visual clues, graphs, tables and infographics7 were designed to aid

reader’s comprehension.

ERPS infrastructure was analysed combining deductive and inductive approaches,

applying Template analysis based on the SADC NPS perspective model.

According to King (2004), a template is a list of categories which represent the

themes from data that have been collected. Qualitative data on legal and retail

payment frameworks were analysed deductively based on the PSDG methodology

for measurement, ranking various components from low through high. The

researcher after extensive findings believes this is the most applicable approach to

answering research questions.

1.19 Access

6 Software package used for statistical analysis. 7 “Graphic visual representations of information, data and knowledge” (Ibid)

http://en.wikipedia.org/wiki/Statistical_analysis

http://en.wikipedia.org/wiki/Computer_program


Access was requested through various Nigerian internet forums where members

were approached well in advance. Towards improving response rates, they were

asked to indicate their interest by communicating their e-mail addresses. Because

of poor internet connection in Nigeria, paper-based questionnaires were e-mailed

to interested respondents. Some questionnaires were completed through branches

of two busy commercial banks in Lagos Nigeria, GT Bank and Ecobank. Access

to banks was negotiated leveraging of researcher’s professional network of

contacts. To allay respondents concerns, using simple sentences, the researcher

explained the purpose of the study stressing confidentiality and anonymity

assuring. Secondary information is available for general public use on the internet

and had been confirmed not to require any special form of authority restricting its

use.

1.20 Ethical Considerations

Ethics are the ‘norms or standards of behavior that guide moral choices about our

behavior and our relationships with others (Cooper and schindler, 2008: 34).

Research ethics therefore informs a researcher’s behavior concerning every

component of a research work—from the research topic through design, analysis

and final write up (Easterby-Smith et al. 2008).

The researcher consulted wide to ascertain strict ethical standards were

maintained. Appendix XV of the LJMU dissertation guide provides an exhaustive

list of regulations on research conduct, which the researcher adhered to. For

example by acknowledging thoughts and ideas of others through referencing and

avoiding unauthorised collusion with any persons.

Other ethical considerations complied to were confidentially, controlling access to

questionnaires respondents’ data and installing standard firewall softwares against

breach. It was also appropriate to engage survey participants with courtesy,

consideration and due care in accordance to the ACCA’s code of ethics for

members. For example, household income instead of personal was requested as

well as using the phrase “education above” instead of “highest qualification”.


1.21 Credibility of Research Design

As expressed by Raimond (1993:55, cited by Saunders et al, 2008:156)

“How do I know?”

This brought to the researcher’s thought the concept of Bounded Rationality —

the idea that in decision making, an individual’s rationality is constrained by

information availability, cognitive capacity and time (Elster, 1983). Due to these

reasons it is not known what the “best” research design should be. Nonetheless,

the researcher has attempted to adopt a pattern which best suits the purpose of this

paper. Aimed at reducing the probability of reaching the wrong conclusions, the

researcher emphasised validity, reliability and generalisability as thus,

1.21.1 Validity

Validity asks questions about the proposed measure of a research and what is

actually measured (Yin, 2003). The researcher ensured data relevant to research

areas were specifically targeted. This explains the mixed-model choice for data

sourcing and analysis, with both primary and secondary data utilisation. To reduce

subjectivity in judgements, views of key international players in the ERPS arena

were sought. The SADC scanning perspective was applied for African related

considerations, assuring contextual evaluation. Validity could have been higher if

interviews with members of the “cash-less” project team were conducted.

To reduce the probability of low validity, it was important to focus on payment

systems offered by banks for its omnipresence. This is considering the low growth

stage of ERPS in Nigeria. These had a direct impact on survey respondents,

enabling them to fully understand and complete questionnaires. In all, the

researcher believes the validity of the research design is very reasonable.

1.21.2 Reliability

The “How” questions here relate to the probability of the same research design

yielding consistent results under similar research conditions (Easterby-Smith et al


2008:109) The researcher believes the measures of legal and payments system

oversight will be consistent, because international benchmarks based on experts’

methodologies were adopted.

Different interpretations may yet be given to other infrastructural considerations.

For example, taking a cue from the management expert Handy (1993), who opines

that how things are done amongst a select persons is relative to the collection of

thoughts and ideas they hold. In the payments landscape, every nation has a

business culture which informs the way transactions are conducted and in

summation, “what might be good for the goose might not suffice for the gander”

(old English saying).

All the same, the researcher, through extensive research has attempted to ensure

the research design is reliable, especially with the questionnaire analysis. Paying

particular attention to data inputting helped reduced errors, whilst maintaining an

independent position cut down bias in survey analysis.

1.21.3 Generalisability

Also referred to as external validity, is concerned with “How” findings may be

applicable or super imposed on other research settings. As earlier noted, payment

procedures vary in countries. The design approach used in the infrastructure

analysis of retail ERPS in Nigeria will be applicable to developing nations,

especially members of the African community who witness similar infrastructural

challenges. Survey questions on the other hand might not be as generalisable,

owing to its tailored design for the Nigerian setting.


4 & 5

Findings, Analysis and DiscussionsThe previous chapter, research methodology, set the sail and boundaries for

research findings. This section presents empirical data and analysis as follow: (4)

A descriptive analysis of survey results to characterise data collected and (5) A

report on ERPS related Infrastructure.

4. User Survey Of ERPSsThe survey attempted to identify user perceptions of various characteristics of

ERPSs as drivers for decisions to use them or otherwise. It has to be

acknowledged however, that the evaluation, although informative, is only an

abridged version of the entire picture of ERPS adoption in Nigeria. This is mainly


because the survey does not include the circumstances in which transactions are

made. Payments initiated through any channel would have unique and specific

conditions influencing an individual’s beliefs, attitudes, intentions and actual

behaviour to adopt a payment technology as noted by Fishbein & Ajzen (1975)

and Hennessey (2012).

This section answers research question 2, i.e. what ERPS characteristics drive the

Nigerian consumer’s behaviour towards adoption.

1.22 Demographics And Descriptive Statistics

Of the 50 questionnaires received, 4 were rejected due to inconsistencies in

respondents’ answers. 73.9% had used e-payments before and 45.7% use ERPS at

least twice a week. Demographically, respondents were quite balanced with

52.2% female. Survey participants between 18 and 55 make up 78% of sample,

representing the current active age structure in Nigeria. Most online respondents

were graduates, constituting the highest number of survey population. 47.8% of

respondents were employed, with the rest being mainly self employed and

students.

In the “Innovations in Retail Payment Systems” report of the CPSS (2.6.2), it

identifies how individuals’ behavior towards technology adaptation can be

explained by demographic factors such as age, education and income level. Here

we cross analyse these factors with research findings to identify adoption trends.

1.22.1 Age

Participants between 18 and 45, who might be considered more ICT savvy,

represent 56%.


Figure 31 Age demographics Source: Author design

Although respondents from every age group have used ERPSs, findings seem to

affirm the TALC (Section 2.4) where Rogers (1983), submits the innovators and

early adopters who embrace ICT more quickly are usually young and educated.

Here, 92% of respondents aged 18 to 45 have used ERPS. This notion is further

stressed by the frequency of weekly use where the same age groups use ERPSs

many times a week.

1.22.2 Education

Respondents were asked to indicate their highest education level as junior, senior

secondary, graduate and post graduate levels. 41.3% of respondents were senior

secondary. However, 54.5% are graduate level and above.


Figure 32 Education demographics Source: Author design

Looking at education and frequency of weekly use, it is not so hitting education

has a causal relationship with ERPS use. However, graduates surveyed tend to use

ERPS many times a week.

1.22.3 Income And Employment

76.1% of respondents are engaged in one form of employment or the other. On

the income side, 45.8% of females have monthly house hold incomes above

N100k ($630; GBP 393), same for 68% of male.


Figure 33 Income and employment demographics Source: Author design

Reverting to the TALC’s perspective, individuals with higher income and better

employment status are more inclined to ERPS adoption, especially use of direct

debits for payee initiated payments as noted by Kwast and kennickell, (1997) and

Mantel (2000). From figure 33 however, cash remains the most preferred payment

medium across all income and employment levels. Most prominent is that all self

employed respondents use cash. This is probably as a result of the cash dependent

nature of the informal economy in Nigeria.

Now that we have analysed demographic trends affecting ERPS adoption, it is

clear age and, partially education have a holding on ERPS adoption In Nigeria.

Income and employment nonetheless do not. The following section evaluates

survey opinions of ERPS’s characteristics as determinants of user acceptance.


1.23 User Perceptions of ERPSs Characteristics

This section of the survey is based on the TRA (2.4), which identifies that a user’s

actual behavior to adopt a technology or otherwise, is a function of positive or

negative feelings perceived about the desirability of resultant consequences. Since

the TRA infers that ICT features alongside interactions with other concerned

parties can serve as an indication for ERPS’s adoption, opinions of respondents

were assessed with liker-style questions ranging from 1 – “very important”; 2 –

“quite important”, 3 – neutral, 4 – “quite unimportant” and 5 – “not important at

all”. Notions on personal decisions on selected features were sought from “Yes”,

“Maybe” and “Never” responses.

Figure 30, Survey Highlights, provides a snapshot of key results from the

conducted survey. Not surprisingly Security ranked highest with 100% saying it

was Very Important. Another characteristic of importance was Trust, where in

line with the Social Information Processing Model (SIPM) (Salancik & Pfeffer

1978), 80% maintained they would rely on opinion of others to use ERPS in retail

transactions. Cost also scored high. 80% of respondents said they will avoid

ERPS use if charges were too high.

Reliability (the smooth running of payment infrastructure) also ranked 72% very

important. 60% of respondents indicate they would avoid ERPSs where absent.

This is a very important characteristic for users. The head of the NIBSS, Mr.

Adebisi Shonubi specifically identified GPRS network downtime as a major

hurdle for POS entrenchment (Punch Newspaper 2012).


Figure 34 Survey Highlight


Interestingly, being rewarded for using ERPSs as recommended by the CPSS

ranked low on the order (60% Unimportant). This could be as a result of the high

natured caliber of survey respondents. This however might imply the educated

and financially advantaged Nigerian ERPS users are not prepared to be wooed by

incentive schemes which encourage its use. It is logical nonetheless, that

economically deprived members of the Nigerian community will welcome such

incentives.

Interoperability and Acceptability which rank below 70% quite important are

areas which users take seriously. As awareness and deployment of ERPS

instruments begin to improve, these are bound to become key areas of concern to

paying parties. Regulators should ensure paying systems are interconnected and

interoperable.

Figure 35 Interoperability and Acceptability Source: Author design

All the more, respondents with secondary school education level and higher as

well as all age groups do consider reliability (efficiency in payment

infrastructure) as very important. Where payment instruments are not believed to

be functional, 60% of users indicate they will avoid use of electronic payments.

In closing, the low level of awareness of ERPS’s functionality was highlighted by

the fact that 54% of respondents were not mindful their personal details were

stored by merchants and banks. Further, Confidentiality was 65% unimportant;

this might be a pointer as to users’ naivety of electronic fraud. Personal details are

now traded in black markets on the internet. It is important extensive awareness of


fraud risks are communicated by the regulators. Without such drives, there exists

a risk to squander the already marred level of trust in the Nigerian business

climate.


5. NPS Stocktaking Report Through a stocktaking of ERPS related infrastructure in Nigeria, question 3, what

are infrastructural constraints to implementing efficient ERPSs for retail

transactions will be answered. As part of this section also, answering the “what

has been done by Nigerian stakeholders” question is summarily addressed. By

identifying infrastructure constraints, implications for user acceptance will be

better understood.

This stocktaking procedure involves information collection about the present state

of ERPS related infrastructure in Nigeria, benchmarked selectively against

Sweden. The NPS perspective model (section 2.6.3) guides information gathering.

A diagnosis of the strengths, weaknesses, opportunities and threats8 (SWOT) of

the current NPS is then undertaken.

1.24 Introduction

According to the BIS (2002) Retail payment systems and instruments are

significant contributors to the broader effectiveness and constancy of the financial

system, in particular to user assurance and to the functionality of mercantilism.

Moreover, efficient and safe use of ERPS as a channel of exchange in transactions

is an essential function of the medium and a foundation of the trust held in it by

people. For these reasons, the efficiency and safety of retail payments are of

interest to all stakeholders involved.

An efficient and modern payment system is mutually related with economic

growth, which is a fundamental facilitator for economic development. According

to the CBN (2011), the “Cash-less” strategy was introduced for a variety of

notable reasons, including: driving development and modernisation of the NPS in

line with Nigeria’s vision 2020 goal of being amongst the top twenty economies

of the world by the year 2020. And also to abbreviate the expense of banking

8 A structured management tool to summerise Strengths, Weaknesses, Opportunities and Threats of a person, place or situation (Humphrey, 2005)


related services (including credit considerations) and push forth financial

inclusion by making available more effective payment options and extensive

reach.

Assortments of gains are anticipated to be derived by various stakeholders from

the entrenchment of ERPSs. For consumers, these have as part: increased

convenience; more service options; cheaper access to banking services (absent

branch presence) reduced risk of cash-related crimes; and access to credit. For

businesses, it promises: reduced revenue leakage; faster access to finance; and

reduced cash management costs. The Government is also considered through

improved tax revenue; extensive financial inclusion; and ultimately increased

economic development.

A country’s payment system acts as a catalyst for the flow of financial resources

(Gholami et.al, 2010; IFC, 2011). This can be enhanced with Joseph

Schumpeter’s (1934) observation that ‘we see all around us in real life, faulty

ropes as against steel hawsers’. In His Theory of Economic Development he

identified how economic logic prevails over the technological, relevant today in

emerging economies as clumsy money economies in lieu of efficient electronic

payment structures.

Sadeghi & Schneider (2001) identify that the modernisation process of a NPS

presents a major challenge to policy makers and specialists’ alike, as it involves

tasks ranging from major strategic plans, new legislation, unified standards, plus

development of new technology among others.

It’s also been noted, many emerging economies lack the threshold infrastructure

and banking sophistication to leapfrog from basic, to state of the art payment

systems (Listfield and Montes-Negret, 1994). To this end, it is prescribed,

modernisation projects should first, fix key problems such as education,

awareness and technological infrastructure etc. This should be followed by

incremental updating of the current system to meet basic standards of timeliness,


reliability and security after which long term advancements can be considered

(BIS 2006).

While most contributors, commentators and stakeholders in Nigeria and the

international community unanimously welcome the innovation of a modern

electronic payment arrangement, there are major concerns about the degree of

planning and implementation (Asaolu et al. 2011) and ultimately the level of

physical infrastructure available to support the “Cash-less” Nigeria drive. We

shall continue to examine existing infrastructure and institutional arrangements,

beginning with environmental considerations.

1.25 Environmental

This perspective describes the environment within which retail payment systems

are provided. It highlights the needs to be met and also sets the stage for

identifying constraints.

1.25.1 Country Demographics

This component evaluates the characteristics of a country and its population.

Size 923,768 km2

Population 162,471,000

Urban Population 50% total population

Age structure

0-14 years: 40.9% Male 32m ;Female 31m

15-64 years: 55.9% Male 44m;Female 43m

65 years and over: 3.1% Male 2m;Female 3m

Literacy 68%

Unemployment 21%

Political Stability High-risk

Table 12 Country demographics Source: World Bank, 2012: CIA, 2012; NPC, 2012

Officially called the Federal Republic of Nigeria, the country is modelled around

USA, and so, governed by a federal system of administration with 36 States, a


Federal Capital Territory (FCT) and 774 local government areas. The capital city

is Abuja. Nigeria is strategically located on 923,768 km2 of land area in West

Africa.

Nigeria is a culturally diverse nation constituting three ethnolinguistic groups –

Ibo, Hausa and Yoruba, represented by over 250 ethnic classifications, often with

differentiated languages. Although the official language is English, according to

the Nigerian Bureau of Statistics literacy survey (2010), only 57.9% and 71.6% of

the population are literate in English and other languages respectively. This

consideration might have a holding on usability (non-complexity in use)

characteristics of payment systems design, bearing in mind 60% of survey

respondents maintain they will avoid ERPS if complicated.

Further, Nigeria is a country of very religious people who are in the author’s

opinion frequently biased along religious ideologies. For example, the

introduction of Islamic banking in 2010 saw some members of the Christian

community averre marginalisation (BBC world service, 2010). This phenomenon

could impair user acceptance of ERPSs because the Hausa Muslims of the North –

predominantly education disadvantaged (NBS, 2010), might perceive the “Cash-

less” policy to be against their religious interest.

As earlier noted, the country is still very fragile, which means political stability is

ranked high-risk by the CIA. The Nigerian political environment has witnessed

abrupt changes over time. When succeeding administrations assume office, there

has always been a trend of scrapping earlier initiatives, with new ones started

afresh. The implication for a NPS overhaul is such that regulators and

governments need to be committed to a policy change to sustain “buy-in” from

users and stakeholders alike. This is important for ERPS “crossing the chasm”

(Moore, 1999).

With a rapidly growing population, it is estimated by the World Bank that

younger citizens constitute a large proportion of the Nigerian population. As


survey results highlight these young people adopt ERPS quicker and more often,

an advantage presents for user acceptance nationwide.

1.25.2 Physical Infrastructure

This considers the stock of basic facilities and capital equipment needed for the

functioning of a modern retail payment system initiative. CPSIPS VIII implies that

retail payments require a reliable underlying financial, communications and other

types of infrastructure. To reduce risks of loss to paying parties, it is also

important a national identification system for individuals exist.

Communication

Subscribers as at Sep, 2012

GSM 103,653,380

CDMA 3,239,370

Fixed/Landline 474,345

Population covered by mobile cellular network 80%

Internet users 24, 895,584

International Internet bandwidth (Mbps)693.0

Broadband download speed (mbps) 2.30

Fixed broadband Internet subscribers 67,776

Table 13 Communication facts Source: NCC, 2012; World Bank 2012; ITU, 2012

ICT is one of, if not the fundamental catalysts for new or improved payment

services and, resultantly, the new business models which usher innovations in to

the market. Since the telecommunication reforms in 2001, the numbers of active

subscribers have constantly been on the increase. As can be deduced from table 13

above, it is obvious there is an advantage for retail payment particularly for P2P

transactions.

Globally, the speedy development in ICT has contributed to retail payments’

spread over the past decade, for example, the introduction of new payment

methods aimed particularly at e-business and online P2P transactions. The level of

awareness of the internet benefits has also improved with over 24 million

Nigerian users in 2011. This growing awareness creates an enabling environment


for e-commerce and other related payment platforms. Although it has to be

mentioned, the cost of fixed broad band internet is considerable high and the

download speeds still slow. These will certainly have consequences for the speed

of POS medium.

In Nigeria, deeper penetration of mobile phones and smartphones, together with

the reducing costs of associated infrastructure has the potential to turn mobile

phones into new payment channels both for executing traditional payments (e.g.

credit transfers) and for entirely new payment schemes.

Electricity

Unit

Installed power generation capacity MW/million people 38.1

Power consumption kWh/capita 121.6

Power outages Day/year 320.0

Firms’ reliance on own generator % 61.0

Urban access to electricity % population 85.0

Rural access to electricity % population 31.0

Growth access to electricity % population/year 0.6

Table 14 Electricity facts Source: Derived from AICD electricity database

According to the International Bank for Reconstruction and Development (IBRD),

the Doing Business in Nigeria report (2012), shows Nigeria stands at 176 in the

ranking of 183 economies on the ease of getting electricity. Nigerian businesses’

biggest reported problem is unreliable power supply. About 83 percent of all

managers surveyed considered electricity outages to be a serious problem—more

than any other constraint. Firms of all sizes, traversing states and sectors, report

average power outages equivalent to 8 hours per day.

As a result, the percentage of Nigerian firms owning their own backup generators

is 61 percent. No comparator country experiences such severe business losses

related to the power supply. From table 14, it is glaring ERPSs will suffer as a

result of such harsh electricity conditions.


Taking cognisance of Nigeria’s power challenges, Dr Tunde Lemo, Deputy

Governor in charge of operations, CBN, mentioned in a newspaper interview that

the POS machines designed for the “Cash-less” initiative have specifications

peculiar to Nigeria. Saying, “All POS terminals will have a minimum battery life

span of 24 hours, while many will do 48 hours with no charge. They also come

with backup batteries and car chargers as appropriate to address the power

challenge.”

Transportation

Unit

Paved road density km/1000 km2 of arable land 174.1

Unpaved road density km/1000 km2 of arable land 94.2

Paved road traffic Average annual daily traffic 1,772.4

Paved network condition % in good or fair condition 67.4

Unpaved network condition % in good or fair condition 32.9

Perceived transport quality % firms identifying roads as

major business constraint29.9

Table 15 Transportation facts Source: Derived from the AICD national database

Transportation infrastructure like electricity is also appalling; users need to get

around efficiently when engaging in business transactions. Although most

measures contained in table 15 concern roads, the Nigerian rail network and

aviation sector also require urgent attention. In addition, maintenance and

management of ERPS infrastructure requires technicians and engineers are able to

attend to systems failure and interruptions at the earliest possible time. Without

efficient transportation infrastructure, the reliability of payment systems might be

unattainable.

ERPSs are increasingly being used by transportation agencies for the collection of

highway tolls, journey fares (e.g. Oyster cards in London) and parking fees. This

presents an opportunity for entrenchment of ERPSs in Nigeria. The BRT9 9 The Lagos Bus Rapid Transit System is a bus rapid transit system in Lagos State, Nigeria (Wikipedia, 2012).


transportation system in Lagos State has the appropriate structure to host journey

fare payment technology very effectively using Near Field Communication

technology (Discussed further in recommendations, 6)

1.26 Institutional

Institutional perspectives aims at identifying the players engaged in a NPS

modernisation project, highlighting their roles and responsibilities. CPSIPS VII

implies that retail payment systems should be supported by appropriate

governance and risk management practices.

1.26.1 FGN

Through the payment system vision 20:20, the FGN is committed to entrenching

ERPS use nationwide. The responsibilities of the government towards creating an

enabling environment for electronic ERPSs are enormous. These include ensuring

relevant physical infrastructure are in place, through the National Assembly

amend and provide appropriate legislation as well as enforcement of rights of

participating parties in retail transactions to name a few.

With regards electricity, the vertical and horizontal unbundling of the state

controlled Electricity Company into 18 subsidiaries now sees private sector

engagement in power generation, transmission and distribution. Although

dividends have yet to accrue, electricity conditions are set to improve in the

coming years. Electricity generation at this time has peaked 4300 from 2300 mega

watts in 2008 (Nnaji, 2012).

The Payments System Management Bill and Financial System Ombudsman Bill

are before the National Assembly for enactment. Evidence Act is also undergoing

review (CBN, 2012). Also, the Nigeria Identity Management Commission

(NIMC) is presently implementing unique bank customers’ identifiers within the

scope of the on-going National Identity Number project (NIMC, 2010).


1.26.2 CBN

The CBN is responsible for overall control and administration of the

government’s monetary and financial sector policies as provided by the CBN Act

of 2007.

Excerpts of Section 47: Payment and Settlement Systems of the CBN Act are

described hereunder,

(2).The Bank shall continue to promote and facilitate the development of efficient

and effective systems for the settlement of transactions (including the

development of ERPS). Appointment of other Bank as agents for payment and

settlement systems

(3).The Bank shall have power to prescribe rules and regulations for the efficient

Operation of all clearing and settlement systems.

(4).In furtherance of the objective of a sound financial system and

notwithstanding the provisions of the Evidence Act, any physical or electronic

record of transactions that is in a format approved by the Bank shall constitute

sufficient proof of such transactions

Implementing the retail payments system development agenda requires public

authorities, in particular the central bank, to take an active role in coordinating and

catalysing action from all the stakeholders. Besides the provision of the CBN Act

2007, CPSIPS IX (2.6.2) lays emphasis on fostering a competitive market

environment within the retail payment industry, balanced between cooperation

and competition.

The CBN has issued a policy circular to pattern the proper level of

interoperability of POS and ATM infrastructure. With 45% of survey

respondents in favour of debit cards for POS transactions, this could improve

ERPS adoption. Problems with standard settings might persist, as 4 manufacturers

have been selected for the provision of POS terminals.


Further, CBN mobile payment guidelines do not permit Mobile Network

Operators to offer mobile money services, either independently or as lead

syndicate partners. Market competition or contestability is the main route to

maintaining efficiency in dynamic retail payments markets (BIS, 2003); these

decisions among other reasons potentially restrict competition in the industry. The

main implication here is that the M-PESA model earlier described cannot be

implemented in Nigeria.

1.26.3 DMB

DMB’s are appointed by the CBN as agents for payment and settlement systems

in Nigeria. These Banks are the principal providers of accounts, instruments and

services directly to end users (BIS, 2002). The provision of payment cards and

internet banking portals form some of their complementary services to customers.

They are also responsible for issuing POS terminals to business clients.

Branches however are in short supply with a ratio of 23000:1; this is a major

hurdle for the “Cash-less” initiative. Low Interconnectivity of branches will also

reduce the speed of EFTs. Those most affected by this are rural inhabitants where

transfer incomes from contacts employed in cities are commonplace. Recently,

however, non-banks have begun to provide certain retail payment services to

augment the banks provisions even though their market shares are still low.

No of DMB’s 24

No of Branches 3190

Banking density 63%

Bank ratio 23000:1

Branch Interconnectivity 30%

Table 16 DMB facts Source: Nigerian Banks financial transparency report, 2011

1.26.4 Non-Banks


As Noted by the BIS (2012), the role of non-banks in retail payment innovations

has increased significantly, owing in part to the growing use of innovative

technology that allows non-banks to compete in areas such as mobile and internet

payments which are not yet dominated by banks. Non-bank payment providers are

set to play an increasingly important part of the Nigerian payments landscape in

coming years, especially in rural areas.

Further, the growing function as “consolidators” (intermediaries between payers,

payee and their account holding banks) and payment portals providers in EBPP

arrangements and internet shopping, of payment acquirers in ATM and debit card

networks shorten the line between the direct provision of retail payment services

to end users than in the past. Non-banks are also involved in provision of cross-

border instruments, provision of payment security services as well as providing

outsourcing services such as processing, accounting, the operation of data centres

and the operation of ATM and POS terminals (BIS, 2012; Tucker, 2012).

Towards the “Cash-less” initiative, the Nigerian postal services, NIPOST

developed a strategic alliance with NETPOST10 to modernise connectivity

between post office branches nationwide to cater for users, especially rural

dwellers. According to a Universal Postal Union (UPU) study, postal operators

provide some 1.5 billion people worldwide with access to basic financial services

such as payments, money transfers, and savings.

With only 3955 branches, a national coverage of 20% would not seem to achieve

much considering the Nigerian population. The UPU recommends 1 post office

for an average of 6000 persons. In line with this recommendation, Nigeria should

have at least 27,000 postal outlets. Postal establishments in Nigeria consist of

General Post Offices, Head Post offices, Departmental Post Offices, Sub-Post

Offices, Postal Agencies and mobile Post Offices.

Another weakness is the negative effect for e-shopping, the non- availability of a

robust national mail system increases the cost of delivering items purchased

10 "NETPOST is a joint venture between NIPOST and two privates sector firms in Nigeria


online. As a consequence, the growth of e-commerce might be affected. Besides

e-commerce, user monthly bills and other electronic retail payment

correspondence which are statutory requirements to improve trust and

accountability cannot be delivered effectively. Alternative arrangements should be

set in motion in this regard, towards user protection.

More, in the desire to extend banking services to a wider segment of Nigerians, 14

Mobile payment service providers were licensed in 2011. With the ubiquity and

increasing acceptability of mobile telephony, financial inclusion of the unbanked

seems possible. M-payment mediums facilitate instant payments to end users,

allowing settlement of scheme providers in a T+1 cycle; meaning PSP’s funds are

settled on the second working day.

Minimum m-payment technology standards are also specified by the CBN to

ensure users confidentiality, security, and reliability to name a few. It is

important, however, that KYC11 procedures are appropriate for each user class to

reduce fraud-risks and money laundering.

Figure 36 Non-Banks and trust Source: Author design

An important user consideration for non-bank service providers is trust. Survey

analysis revealed most respondents who believe opinion of others on security is

“very important” and have used ERPSs in transactions assert that they “might”

11 Know your client


trust non-banks. It is essential that this trust once earned should be guarded, if

non-bank payment services are to diffuse across-the-board of users.

1.26.5 Telecommunications Networks

The Telcos’ are responsible for providing a secure communication path based on

the technological standards stipulated by the CBN. Agreements have been reached

between the CBN and Telco networks to provide dedicated channels for payment

related data traffic. This is to improve uptime and interconnectivity of payment

infrastructure.

As earlier mentioned Mobile Network Operators are not permitted to offer mobile

money services, either independently or as lead syndicate partners. Established

Networks have the capacity to provide a strong platform for innovations, but are

often also favourably positioned to create entry barriers which hinder competition

and innovation (BIS, 2012). These entry barriers could be either direct imposition

of access restrictions or through other indirect means, take for example by

adopting standards and principles that are difficult or costly for other innovative

payment options to take on (BIS,2003).

While the precise reason(s) for the CBN’s decision is not known, it might be to

foster competitiveness within the electronic retail payment industry, by allowing

the market grow unhindered, absent dominance by established players.

1.26.6 Switching Companies

Switching companies facilitate confidential exchange of proprietary data and

standardised financial messages among paying parties in Nigeria. There are

currently 9 licensed switching companies with the NIBSS serving as a central

aggregator for all electronic transactions. Transaction switching companies

facilitate the processing of online ATM transactions, online POS transactions and

e-purse transactions. In doing this, they interconnect parties to card scheme


operators' network, document transactions and generate reports to member banks

including transactions settlement reports, amongst other activities (CBN, 2012).

As identified from the World Bank Global Payment System Survey 2010, 90% of

Nigerian banks are connected to the SWIFT infrastructure, which improves cross-

border payments.

It is mentioned by the BIS (2012) that a degree of cooperation is crucial among

market players in certain infrastructure arrangements particularly those executing

payment clearing and settlement (as identified in section 2.5 mechanism of

ERPSs), where certain features of a public service nature are provided. The

consequence for users here is whether this cooperation translates into advances in

overall market efficiency and safety in the ever complex and dynamic ERPS

markets.

1.27 Legal And Oversight Landscape


This perspective translates the legal context in which the NPS operates. CPSIPS I

stresses retail payment systems should be supported by a sound, predictable and

proportionate legal and regulatory framework. It also recommends to relevant

regulatory authorities the need to exercise effective oversight over retail payment

markets and to consider proactive interventions where appropriate.

Irrespective of the particular technical or institutional features of ERPSs, complex

contractual and legal relationships exist between consumers, retailers, issuers and

service operators. With this noted, the legal framework specifies the rights and

obligations of engaged parties and institutions of a retail payment arrangement. A

key consideration is whether these rights and obligations considered are well

defined and transparent. The issue here is primarily concerned with the effect of

legal and regulatory provisions on retail ERPS and instruments, noting legal

provisions often lag in keeping up with market development, complemented by

various damaging effects—especially for competition, innovation and ultimately

user protection.

Such negative uncertainnesses impair efficiency as well as infix legal risk, not

least because a user’s notion perceives an ERPS as legally unsound can have a

holding on user trust and thus, acceptance. Say for example issues could come up

involving liability in the event of fraud, or the default by one or more participating

parties. The question arises as to what extent existing laws and central bank

regulations apply to electronic transactions.

In the oversight arena, regulatory activities can also stifle market development and

innovation through reduced competition. It is important for central banks to

ensure there is a well managed balance between oversight and enablement of a

competitive retail payments environment in the interest of end users. Many

actions often have well grounded rationales, however, differentiations in legal

provisions for banks and non-banks can impose differential costs and risk profiles,

distorting user incentives to adopt a particular ERPS instrument i.e. whether

instruments available represent the least cost and risk profile to intending users.


The Nigerian legal and oversight framework is assessed by the PSDG’s

methodology for measuring payment systems development and benchmarked

against Sweden as earlier mentioned (APPENDIX A1&A3).

NIGERIA SWEDEN

Legal Framework

1. Key legal concepts covered by the existing legal framework2 8

2.Central Bank Legal Powers to Oversee Payment Systems2 2

LEVEL OF DEVELOPMENT Medium-low High

Oversight Scoring

1. Organizational Arrangements for Payment System Oversight 6 6

2. Objectives of Payment System Oversight 2 2

3. Cooperation with other relevant Authorities 1 2

4. Cooperation with other stakeholders 2 2

5. Scope of payment system oversight 1 4

LEVEL OF DEVELOPMENT High High

Table 17 Legal and oversight scoring Source: Author design

Results (table 17) show the legal framework is scored medium-low and high for

Sweden. Although noted previously that certain laws are being reviewed by the

Nigerian National Assembly, investigations reveal electronic evidence is not

admissible in Nigerian courts, the laws do not provide consumer protection for

retail payment services, no competition laws exists to provide fair and contestable

retail payment markets, and finally no payment system specific laws are yet in

place.

Whilst S.47(3) of the CBN Act provides that the Bank shall have power to

prescribe rules and regulations for the efficient operation of all clearing and

settlement systems, an impending risk exists, as contractual and legal

relationships are not expressly defined with consumers being most disadvantaged.

On the oversight spectrum, a High score is attained. Although favourable,

attention needs to be paid to the scope of payment system oversight. This might


not be an issue now; however, it does have implications for the efficiency of the

payment landscape in the long run. We go on to explore the technological

infrastructure.

1.28 Technological

This defines the technological infrastructures that support the payment system.

CPSIPS VIII implies that retail payments require a reliable underlying

communications infrastructure

In section 4.2.2, we explored communications infrastructure from the users-end.

Here we look at the supporting infrastructure on which payment services are

established.

1.28.1 Infrastructure and Application

i) NIGCOMSAT-1R

Nigerian communication satellite successfully launched, orbited and tested

in December 2011 to provide a robust ICT infrastructure.

ii) GLOBACOM-1

Is a 9800km submarine communications cable system between Nigeria

and the UK. It became operational in 2011 with a minimum capacity of

640 Gbit/s, now advertised as 2.5Tbit/s. This initiative was launched by

Globacom Telecommunications and Main One Cable Company—both

private companies—to provide 99.9% reliability and high speed data

connectivity.

iii) GALAXY BACKBONE

Is an ISO IEC 27001:2005 certified data security infrastructure owned by

the FGN. It assures security of public data and information.

While the stock of teleco infrastructure might seem impressive, a good a structure

is only as good as those who manage it. Africa remains at an early stage of ICT


development as affirmed by the ICT Development Index (IDI) 2010. Technical

knowledge and man power remain very scarce and expensive in Nigeria and if the

industry were to attract, reward and retain necessitated skills internationally, the

current risky political climate might serve as a deterrent.

In addition, the underwater cable system, even where at optimum performance,

lacks a National Transmission Backbone to transmit digital links to sub-regional

and regional carriers in the hinterlands for end-user consumption.

Approaches of these technologies though commendable, will take time for full

optimisation and until then, users will continue to suffer slow payments and

downtimes with detrimental implications for trust and reliability.

1.28.2 Development and Deployment of Technology

This section is also assessed by the PSDG’s methodology (APPENDIX A2).

NIGERIA SWEDEN

Infrastructure and Policy

1. Deployment of POS infrastructure 0 4

2. Interoperability of Infrastructure -2 0

Extensiveness and Inherent Efficiency of Retail Payment Instruments Used

1. Extensiveness of usage of cashless instruments 1 4

2. Efficiency of payment instruments used 0 4

LEVEL OF DEVELOPMENT low High

Table 18 development and deployment scoring Source: Author design

Findings here seem to say it all about development and deployment of technology

(Table 18). And for this reason, the researcher proceeds to identify actions of

regulators towards mitigating identified deficiencies. Contained in this section are

excerpts of newspaper interviews and articles from relevant stakeholders.


Head, Shared Services at the CBN, Mr Chidi Umeano was quoted as saying:

"Banks have continued to roll out more innovative electronic payment platforms

to meet customers’ expectations. Currently, banks have deployed about 100,000

POS terminals and before the end of the year, if things go as planned, about

150,000 POS terminals will have been deployed”.

He added, “The aim is to penetrate Urban and semi urban areas with mass

market appeal while communicating in local languages, create and generate

excitements for everyone to embrace cashless transactions, stimulate interests and

intent to embrace e-banking and raise awareness at the grass roots level for the

new policy”

Umeano further added “The CBN was set to acquire a new fraud prevention

system, payments system oversight and anti-fraud system, to tackle fraud in the

electronic payment (e-payment) system”

(Source: www.thisdayonline.com, 11.June. 2012)

Meanwhile, the Association of Corporate Affairs Managers of Banks (ACAMB)

has urged merchants, traders, supermarket operators, and filling station owners to

hurry to their banks and collect POS terminals to facilitate e-payments

nationwide. It assured bank customers and other related parties to avail

themselves of the friendly environment Nigerian banks have provided to promote

businesses and personal banking experience. ACAMB’s President, Tunde

Shofowora said.

(Source: www.vanguardngr.com, 12.June. 2012)

At a stakeholder roundtable conference in Lagos, Omokehinde Ojomuyide,

Country Manager, West Africa, MasterCard Worldwide


“MasterCard envisions a world beyond cash, a goal that mirrors the Cashless

Policy conceptualized by the CBN,”

“We support this policy that aims to modernise the country’s payment systems”

“More Nigerian businesses are accepting MasterCard payment cards than ever

before, and we acknowledge the support of the country’s financial institutions

who have committed to educating their customers about the security and

convenience of accepting cashless payments,” says Ojomuyide.

“MasterCard will continue to create an environment for discussions with

financial institutions and merchants at our regular training workshops.”

(Source: www.vanguardngr.com, 19.October. 2012)

In addition, 14 Mobile payment operators earlier mentioned have recorded 35,971

transactions valued at $1.4m in January 2012. Nigerian analysts expect this to

grow as awareness increase. However, a MasterCard Mobile Payment Readiness

Index (MPRI) reveals otherwise, scoring Nigeria 31.3 which is said to be below

world averages. The MPRI identifies Canada, Singapore, USA and Kenya as

better prepared. It says Singapore has the highest score at 45.0

(Source: www.Punchng.com, 4.June. 2012)

From these views, it is apparent stakeholders are committed to the “Cash-less”

policy’s success; however, infrastructural bottlenecks identified thus far, remain

major hurdles. From this point we shall proceed to analyse the Business and

Finance perspectives.

1.29 Business Environment


This perspective considers current and future business trends in ERPSs. CPSIPS

VII connotes retail payment markets should be transparent, have adequate

protection for paying parties interests and be cost effective.

The importance of creating an enabling competitive environment cannot be over

emphasised. To guarantee consumers get sufficient, relevant and appropriate

“value for money”, competitive forces have to be in place. The CBN has the

power to licence PSPs through its oversight functions, albeit, it is important

barriers to entry and thus innovation, among other standards are set to protect

interests of paying parties. One other issue is whether the pricing structure

effectively apportions price to risk and rewards from payment instruments sought

by consumers.

As for security of cards, Nigerian banks became CHIP+PIN compliant in 2010

and arrangements are said to be in place for Biometric authorisation from 2015.

This development is welcome taking the high fraud-risks environment which

Nigeria presents (Agbasi et al, 2010; Olorisade and Azeez, 2012). Fraud-risks in

Nigeria are internationally acknowledged; the UKTI, in its Doing Business in

Nigeria guide advises British nationals not to use their credit cards at specific

locations in Nigeria.

This noted, most other ERPS instruments face huge risks (some identified in

2.3.2), take for instance, Mobile phone hacking12( Adepoju and Alhassan, 2010;

Obot, et al 2012) and phishing13(Lau, et al 2004; Antiphishing Workgroup 2011) –

Nigerian consumers are increasingly losing money to international and local fraud

syndicates, owing to illiteracy and naivety of ERPSs regulations. Awareness of

risks inherent in their preferred payment choices is necessary to build trust and

confidence in the ERPSs.

1.30 Financial

This perspective identifies financial considerations associated with ERPSs.

12 Someone who accesses a computer system by circumventing its security arrangements (Wikipedia, 2012)

13 Phishing is a fraudulent attempt to acquire personal sensitive information by masquerading as a trustworthy entity in an electronic communication (ibid)


The current payment regime makes POS payments free for consumers which is

good as most survey respondents indicate they will avoid ERPS use where costs

are high. However by charging merchants 1.25% of the transaction value, these

merchants will logically prefer cash based transactions to avoid additional

business related costs. Although benefits to merchants include reduce cash

handling costs, reduced risk of robbery and loss of cash through pilferage and fire,

nonetheless, noting the view of Ovia (2009), merchants will prefer traditional cash

based systems where proper incentives are absent.

More even, the settlement cycle for merchants is T+1, just as for mobile payment

operators. While this favours PSPs due to their relatively strong liquidity

positions, the average Nigerian business faces tight liquidity constraints as early

sales proceeds are often used to set the business in motion for the day. This comes

in line with facts such as low GNI earlier stated, as well as the need to fuel their

backup power generators every day. Factoring in POS merchants’ liquidity need is

important to the success of the “Cash-less” project. Regardless merchant’s needs

are not considered as part of this research, it is a fact they are users too.

As detailed stocking and analysis have been completed, a strengths, weaknesses,

opportunities and threats summary of the current NPS is undertaken using a

SWOT grid. This will ensure the final section of the discursive, “Conclusions and

recommendations: implications for user acceptance” is substantially concluded.

1.31 SWOTs GridSTRENGHTS WEAKNESSES


1. Telecommunications penetration

2. Technology Infrastructure

3. Oversight function

4. Commitment of Institutions

5. Young population

6. Zero charges for consumers

1. Deployment of technology

2. Legal framework

3. Electricity infrastructure

4. High risk business environment

5. High business liquidity constraints

6. Low consumer protection

7. Low Banking density and interconnectivity

8. Technical skills shortage

9. Narrow post office network

10. Insufficient technical skills

11. Low awareness among citizenry

12. Religious and cultural beliefs

13. Non-integration of national database

14. Big-bang approach

OPPORTUNITY THREATS

1. Financial inclusion for the unbanked

2. Drive economic development

3. Reduce cash dependence

4. Employment creation

1. Low literacy rates

2. High Unemployment

3. Political instability

4. Lack of Trust

5. Low awareness levels

Table 19 Swots Grid Source: Author design

Now that the grid is populated, it is obvious the current NPS is faced with a lot of

weaknesses. Strengths, although partially healthy, would require a lot more

commitment from regulatory authorities and participating stakeholders alike to

minimise the impact of weaknesses and threats.

6. Conclusions And Recommendations

: Implications for User Acceptance


In setting out the aims, strategy and design of the NPS, the goal is to ensure the

retail payment systems are available without interruption, meet extensively all

users' needs, and functions at minimum risk and sensible cost (SADC 2002, BIS

2006,ECB 2008)

This section attempts to conclude findings from previous chapters of this paper.

As depicted by Figure 6 (Literature map), this phase fuses earlier findings to

answer question 6 (i.e. what else can be done?) This represents research

recommendations.

This paper sought to answer the following research questions:

1. What are electronic retail payment systems? (Chapter 2)

2. What types of ERPSs exist in Nigeria? (Chapter 2)

3. What ERPS characteristics drive the Nigerian consumer’s behaviour

towards its adoption? (Chapter 4)

4. What are the infrastructural constraints to implementing efficient ERPS in

Nigeria? (Chapter 5)

5. Have any arrangements been made by Nigerian stakeholders to contain

these challenges? (Chapter 5)

6. What else can be done? (Chapter 6)

In chapter 2, ERPSs was defined; classified and identified based on both

operational and product characteristics. The survey (Chapter 4) helped provide a

picture of ERPS characteristics significant to users. In hierarchical order, these are

Trust, Security, Cost, Reliability and Usability. It was discovered, whereas, that

arrangements have been made by regulators to ensure Interoperability and

Acceptability, therefore releasing them off our list. Confidentiality and Reward

are least rated. Added, the young population are quicker to adopt ERPSs, there is

low awareness amongst users of the benefits, risks and functionality of ERPSs


and, as at the time of the survey, October, 2012, cash continues to be the most

preferred payment medium.

Although these characteristics do not have an authoritative appreciation on the

design of ERPSs or its instruments, all the same, they could aid understanding of

user acceptance in general. As stated, the “Cash-less” project is ongoing, and

while the researcher has attempted to constantly update research findings, it is

admitted regardless, some of the facts adopted in infrastructure analysis might

have changed. SWOTs Grid (5.8) attempts to answer question 4 of the research

paper.

Discursive first considers users requirements (i.e. for safety, trust, reliability,

usability, etc.) and in the light of infrastructure constraints discovered, enumerates

action plans in the form of recommendations (i.e. what else can be done?).

1.32 TRUST

Confidence in retail payment systems is the foundation of trust which is one of the

major drivers of user acceptance (Lee et al. 2010; Adepoju and Alhassan, 2010).

Wierzbicki (2010) defines trust as the relationship between a “trustor” and a

“trustee” in a context. This definition is enhanced by Efendioglu (2005), who goes

further that trust goes beyond direct paying parties but to all institutional

stakeholders involved in the ERPS process. All stakeholders thence, have a role

to play towards building trust in the payment system.

They need to ensure users believe:

i. The Legal framework to be in their favour.

ii. That risks inherent in the business climate have been significantly reduced

iii. That their rights will be expediently exercised in the occurrence of fraud

iv. That they (Institutional) care.

1.33 SECURITY


Security can be viewed from the legal and oversight, technological, Institutional

as well as business perspectives. Users need to be convinced that the designs of

payment instruments are resistant to any form of breaches (Pennanen et al., 2008;

Susanto and Zo, 2011; Pan and Zinkhan, 2006), since inadequate security,

whether perceived or real will undermine public confidence in the ERPSs.

. For its high importance, like trust, stakeholders must ensure:

i. Security arrangements are in line with changing technological

advancements; these include authentication, integrity, authorisation, and so

on.

ii. Leveraging on the CBN’s oversight powers, DMBs and merchants adhere

to physical safety procedures such as PIN shields at ATMs and POS

iii. There is in place, a flexible regulatory regime which reduces barriers to

innovations in security

iv. The Media reports objectively on system breaches

v. Constant user education on types of fraud, for example how to identify

ATM Skimming devices14

vi. Stricter legislations are in place against ERPS related offences to serve as

a deterrent

vii. Visible law enforcement

1.34 COST

Based on regulatory, technological and institutional perspectives, ERPS’s should

have the ability to process retail payments, absent high transaction costs (Low,

Maxemchuk and Paul 1994, Humphrey et al 2001, BIS 2012). Costs here are two-

fold. One side is for both user and the merchant. The other is for the user alone.

Although transaction costs are free for customers, they notwithstanding, face high

internet broadband costs. More, some DMBs charges high fees for EFTs. On the

merchant’s side, there is a 1.25% charge on every transaction. This presents a

possibility where the merchants attempt to transfer or avoid these charges, which

will ultimately affect user acceptance.

14 Device affixed to an ATM machine which records details of unsuspecting ATM users


Regulators need to ensure

i. Payment markets are fair, transparent and contestable to drive competition

and innovation

ii. Through oversight powers, enter arrangements with telecommunication

companies to reduce internet costs

iii. Inter-charge fees among switching companies are kept at the barest

minimum to accommodate only fixed and marginal costs absent abnormal

profits.

iv. Intervention for introducing Straight Through Processing15 (STP) to reduce

merchants liquidity risks

v. Create incentive schemes for merchants and promotions for users

1.35 RELIABILITY AND USABILITY

Reliability relates to the smooth running of payment infrastructure (Min.& LI

2008; Lipson and Fisher 1999; Dawodu and obi 2012) while usability stresses

ease of use and friendliness i.e. not sophisticated or complex (ISO 9241, 1996;

Miyazaki and Fernandez, 2001). These characteristics are grounded on

technological and institutional perspectives. Reliability is particularly dependent

on ICT delivery channels through the internet which bank on efficient electricity

infrastructure. Major operational risks include transmission capacity and

continuity which are a function of the volume of data traffic (BIS, 2005). With the

CBN rolling out approximately 130,000 battery-driven POS systems this year

alone, enforcing earlier described arrangements with telecommunications

companies will remain key critical success factors.

Concerning usability, systems’ design should excogitate the current literacy levels

and English language deficiencies. In another light, the use of POS and Mobile

payments require basic numeric skills for “Money” which Nigerians humorously

possess in abundance. Integrating local language options as part of systems design

will be advantageous.15 Same day settlements of transaction value


1.36 CONFIDENTIALITY AND REWARD

As noted, confidentiality (knowledge of purchases by others) (Olorisade and

Azeez, 2012; Belovin, 2006) and Reward (incentives for ERPS use) (BIS, 2012)

were rated low by users. These characteristics are grounded on institutional and

finance perspectives. Regulators should ensure details of users are protected

against exploit, especially from direct marketing which constitutes a nuisance to

most consumers. As earlier noted adequate incentive schemes should be in place

to encourage merchants’ adoption.

Innovation! Innovation! Innovation!—A case for public transportation

Near field communication is a set of standards for devices to establish radio

communication with each other by bringing them to centimetre proximity (NFC

forum, 2011). NFC builds upon RFID systems by allowing two-way

communication between endpoints (Nosowitz, 2011). NFC can be used in

contactless payment systems similar to those currently used in electronic bus

ticket smartcards. According to the BIS (2012), since 1990, public transport

companies began implementing smartcard bus ticketing for its convenience and

efficiency. The first was the Octopus Card in Hong Kong, 1997 next was

SmarTrip in Washington DC 1999, fast forward to 2003 with London’s Oyster

Card. Other world cities like Seoul and Rotterdam have joined in its use.

Figure 37 Innovations in smartcard technology Source: www.google.com

An opportunity presents here for the Lagos BRT as earlier mentioned,

transportation smart cards can be integrated with individuals’ national database

ID, payment details and medical records amongst others. This will increase


convenience for users, save lives in emergencies, whilst in the process reduce

crime.

Other important recommendations include:

a. Targeting the youth population through incentives schemes

b. Furtherance of awareness campaigns (communicating progresses achieved

through pre-recorded voice calls and bulk sms will assure user “buy-in”)

c. Creating more user-institution platforms for interaction (Setting up a

dedicated internet radio channel for training and dialogue will improve

outreach)

d. Engaging religious institutions as active stakeholders of the “cash-less”

initiative since they play an increasingly important role in the Nigerian

society.

e. Increased publications and communication to ensure transparency in

payment markets, and

f. Improved ERPSs data availability to encourage analysis and discussions

On a final reflection, this study settles on the future of ERPSs Globally. In a

decade, Biometric authentication of transactions will be wide spread (Mordini,

2012). Regulatory authorities in Nigeria, peculiarly the Nigerian Identity

Management Commission (NIMC) should therefore ensure adherence to industry

standards of compliance, regarding unauthorised access to sensitive data. This

would protect Nigerian citizens’ personal information against abuse in the future.

This study managed to reveal:

1. There is a slow but growing trend in electronic payment systems adoption

in Nigeria which creates opportunities for investment, innovation and

employment.

2. ERPSs characteristics of importance in the Nigerian e-payment landscape.

3. The Big-bang approach is a limitation to the successful implementation of

the “cash-less” project. Bearing in mind the BIS (2006) recommendation –

modernisation projects should first, fix key problems such as education,


awareness and technological infrastructure etc. This should be followed by

incremental updating of the current system to meet basic standards of

timeliness, reliability and security after which long term advancements can

be considered.

The objectives of this research have been achieved by answering stated research

questions. Future work will seek to understand and explore the bigger picture of

Electronic payment systems, including implications for Nigerian businesses and

the government.


7. Researcher’s Reflections on

LearningThis final chapter provides the opportunity to return to the research work and,

look back on the cognitive operations engaged by the researcher through the

process of this research work. With a threefold focus, this chapter identifies (1)

what has been learnt, (2) how the learning has occurred and finally, (3) how

lessons learnt will be applied to future endeavors.

1.37 Introduction

The Oxford dictionaries define learning as “the acquisition of knowledge or skills

through study, experience, or being taught”. Rijcke (2012) takes this further,

maintaining, learning is a process that incrementally builds upon and is modeled

by existing knowledge, as against a collection of factual and procedural

knowledge. To sum these definitions up, David Kolb (1984:41), Professor of

Organizational Behavior at Case Western Reserve University posits “learning is

the process whereby knowledge is created through the transformation of

experience. Knowledge results from the combination of grasping experience and

transforming it”.

1.38 What Has Been Learnt?

The more you know, the more you realise you know nothing.

– Socrates (nd)

This saying best describes the researcher’s first lesson through the course this

undertaking. Beginning from the researcher’s topic choice decision, through

research proposal and final write up; the continual process of illumination lead the

researcher to unknown pockets of knowledge alien to the researcher’s world.


In the view of Wertenbroch and Nabeth (2000), we learn from experiences that

allow us to Absorb (read, hear and feel), Do (Activity) and Interact (socialising).

In addition, learning also occurs through reflection—taking time to think, whilst

through the process, seeking to connect recent and previous experiences to form a

sound mental schema (Dewey, 1933).

With the need to review and absorb a wide array of literature, the researcher

sought to learn speed reading—a collection of reading techniques directed at

increasing rates of reading without greatly reducing comprehension or retention

(Buzan, 1991). The researcher’s use of language has also improved. Repetitive

learning (Poldrack, 2001) has helped develop researchers grammar, spelling,

knowledge of new words and context of its use. Writing skills for an academic

audience have also been developed.

Besides sharpening existing ICT skills (Activity) such as use of Microsoft Word

and Microsoft Excel, the researcher also learnt how to employ Adobe Photoshop16

(infographics: Figure 34) and SPSS statistics for data analysis and presentation.

Searching skills on the internet have also improved, the researcher found, using

specific words streamline search results, improving quality of information

obtained, as against quantity.

Other areas of learning and improvement include inter-personal skills—tactical

skills in dealing with persons. This was necessary when interacting with survey

respondents, tutors, dissertation supervisor and so on. Effective planning and time

management skills were also polished.

Finally, critical reflection skills—the process of analysing, reconsidering and

questioning experiences within a broad context of issues (Murray and Kujundzic,

2005) have been developed as it is a requirement for a Masters level paper.

16 Advanced software application for graphics design


1.39 How Has The Learning Occurred?

Although there is no mutually exclusive way to learn (Constantinidou and Baker,

2002), learning can be summarily based on different styles. Keefe (1979) defines

learning styles as the collection of characteristic cognitive, affective, and

physiological vectors that provide relatively consistent indicators of how a learner

perceives, interacts with, and responds to the learning environment.

Kolb's learning theory lays out four distinguishable learning styles, which are

based on a four-stage learning cycle. These are Concrete experiencing (CE) –

doing something; Reflective observation (RO) – assimilating what happened;

Abstract conceptualisation (AC) – making conclusions and Active

experimentation (AE) – deciding on future action plans.

Figure 37 Kolb learning style Source: Kolb, 1984

Peter Honey and Alan Mumford (1993) describe four distinct styles adopted by

learners. They indicate that most learners often assume more than one of these

styles. Adding, certain learning activities are more suited to particular learning

styles.

These styles are Activist—prefer new challenges, more inclined to group

involvement and prefer hands on approach to learning; Theorist—like to


understand theories behind actions, opting to analyse and synthesise based on

proven concepts and models; Reflectors—learn from activities which permit

observation, thought and review of what has happened and Pragmatist— enjoy

trying out “the new”, seek new ways to solve existing problems, practical

approach to learning.

Honey and Mumford (1993), pointed out the connection between Kolb’s model

and theirs stressing there exists more similarities than the differences. This can be

highlighted by the diagram below.

Figure 38 Kolb with Honey and Mumford combined Source: Author Design

Herein is how the learning has taken place:

When the researcher embarked on this academic endeavor, the initial concern was

about the subject being learnt. It however became apparent, that being aware of

the learning methods most applicable to the researcher’s personality and context

of the task being undertaken, were just as important.

Selecting an appropriate learning method is part of a concept called metalearning

—“being aware of and taking control of one’s learning” (Biggs, 1985:55). This

awareness made the researcher become a more effective and efficient learner.


The researcher found that it was important to take the Activist and Reflector stance

in the beginning of this research work; this was to ensure views of earlier

researchers in the field of study were thoroughly understood. By taking a deep

plunge into the world of the unknown, the researcher became confused as to the

right direction to follow in the course of the research. Choosing a descriptive topic

title was not easy either, as awareness of new information often steered the paper

in turbulent directions.

After the first researcher-supervisor meeting—about a month from the research

proposal results release, the researcher remained in the dark. The informed need to

break this cycle was the tipping point where critical reflection began to develop.

Awareness of the researcher’s physical environment suddenly grew in importance

as a composite of learning (Balsys, 2011). The researcher from then on ensured all

competing stimuli were mitigated or eliminated. In line with psychologist,

Mihalyi Csikszentmihalyi’s flow theory (2008), the researcher maintained intense

involvement in the dissertation and was able to remain focused for the length of

time needed to achieve constitutive activities within the overall research process

According to Bandura (1977), environments which promote interpersonal

interaction could improve reflection. And so, the researcher sought to engage

every person that bothered to listen with the issue of ERPSs—from discussing e-

payments with Tesco17 sales assistants during transactions; observing the speed of

transaction processing, up to joining online forums where e-payment discussions

are held.

Now equipped with relevant practical information and knowledge, it was time for

the researcher to take a break from the research work and reflect on what had been

done; thinking of relevance of materials held.

After a week’s break, the researcher read through the paper again and the aha!

Moment18 set in—the pragmatist learner was unleashed. The obvious link between

17 Retail Super and Hypermarket chain in Europe and Asia18 A moment of sudden insight or discovery (Oxford Dictionaries)


the topic and current need became apparent. Earlier models collected for

evaluation now had their precise functions. It was time to start writing.

The final journey of reflection had begun when the researcher sat long and quietly

to review details of all supervisor-researcher meetings. The researcher picked up

clues on the right directions to follow by recalling aspects of the research work-in-

progress which interested the supervisor, such as graphical representations. This

informed the need to improve the papers discursive with the aid of diagrammatic

representations among other feedbacks actioned.

1.40 Future Applications of Lessons Learnt

Looking into the future from this moment, the researcher has learnt valuable skills

too numerous to mention, some too abstract to quantify or identify.

In general, being able to think in a multifaceted manner will help in both life and

work engagements. Also, the ability to criticise others’ work, whilst also being

able to contribute own views towards the propagation of new thoughts and ideas

is a skill the researcher will apply to future work and research endeavors. More,

knowledge of researchers unique learning pattern discovered would ensure work

tasks and future research engagements will be completed to higher quality

standards on time.

The ability to relate with a wide array of persons will help improve networking

skills as well as understanding standpoints and opinions of other persons

objectively. Better use of English grammar will improve the quality of literature

to be produced by the researcher. Knowledge of new ICT skills will also not go to

waste, the researcher looks forward to applying the SPSS Statistics software in

undertaking more voluminous and technical analysis in the social science field.

Finally, this undertaken has revealed certain areas of improvement in the

researcher’s skills and knowledge set. By working on these, future engagements

would be better approached.


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APPENDICIES

Appendix A1


Appendix A2



Appendix A3



Appendix B

User Acceptance of e-payment in Nigeria

This survey is being carried out to find out how you feel about the Current CBN

“Cash-less” policy in Nigeria. Please answer the following questions freely. You

cannot be identified from the information provided. This exercise should take

about 5 minutes to complete. Thank you.

Please tick (✓) as appropriate.

1. Are you male? ❑ Female? ❑

2. Is your age between 18-25 ❑ 26-35 ❑ 36-45 ❑

46-55 ❑ 56-65 ❑ 66-70 ❑

3. Are you? Self employed ❑

Employed in public service ❑

Employed in private sector ❑

Unemployed ❑

Student ❑

4. What is your highest education qualification?

Junior Secondary ❑

Senior Secondary level ❑

Under Graduate ❑

Post Graduate ❑

Others ……………………………

5. Is your monthly household income above N10, 000 ❑ N50, 000 ❑

N100, 000 ❑N500, 000 ❑ N1m❑


6. Have you used e-payment in retail transactions? Yes ❑ No❑

7. How often do you use e-payment every week? Once ❑ Twice ❑ Many ❑ Never❑

8. Please select your favourite payment mediums (as many)

ATM machine ❑ Cash ❑

Debit Card ❑ E-fund transfer ❑

Credit Card ❑ Internet ❑

POS ❑ Prepaid card ❑

Mobile payment❑

9. From the options in question 8, which is your single most preferred?

………………................

10. Are you aware your transaction details are stored? Yes ❑ No❑

11. Is it important that your financial information is safe? (e.g. Name, account details)

Very important Quite important Neutral Quite unimportant Not important

12. Are you worried that things purchased are known by banks and shops?


13. How important is it that one particular e-payment system is generally accepted?


14. For POS transactions, what is your most preferred payment option?


Debit Card❑ Pre-paid Card❑ Mobile payment❑

15. Do you believe money from one payment medium should be easily

transferable to another? Please tick (✓) as appropriate.

Account to Cash Account to Mobile Mobile to AccountVery importantQuite important

NeutralQuite unimportantVery unimportant

16. Do you believe you should pay a charge to spend your money?

Yes ❑ No❑

17. Will the charge be an important part of your decision to use e-payment? Very important Quite important Neutral Quite unimportant Not important

18. How important is it to you that every system accepts your preferred e-payment choice?Very important Quite important Neutral Quite unimportant Not important

19. Is it important that e-payment options are always working well?Very important Quite important Neutral Quite unimportant Not important

20. Do you consider security when you pay electronically? Yes ❑ No❑

21. Is it important that you use a system which friends and family think is secured?Very important Quite important Neutral Quite unimportant Not important

22. If you believe a payment system is not secure, will you still use it?


Yes ❑ Maybe Never ❑ ❑

23. How important is it that other people trust the systems you choose to pay with?Very important Quite important Neutral Quite unimportant Not important

24. Will you trust payment systems issued by Non-banks?

Yes ❑ Maybe Never❑ ❑

25. If you feel a payment system is not trust worthy, will you still use it?

Yes ❑ Maybe Never ❑ ❑

26. How important is it to you that the current payment systems are not complicated? Very important Quite important Neutral Quite unimportant Not important

27. Where you feel payment method is hard to use, will you still use it?

Yes ❑Maybe Never ❑ ❑

28. Do you believe you should be rewarded when paying electronically? Very important Quite important Neutral Quite unimportant Not important

Appendix CBOX 1: WORLDBANK GUIDELINES FOR DEVELOPING A COMPREHENSIVE RETAIL PAYMENT


STRATEGYEfficient retail payments systems have a significant positive impact on the broader economy. There are a number of public policy objectives that need to guide the policies and actions of national authorities in countries with under-developed retail payments systems, the key public policy objectives being: (i) Safety and efficiency; (ii) Affordability and ease of access to payment instruments and services; (iii) Availability of an efficient infrastructure to process electronic payment instruments; and, iv) Availability of a socially optimal mix of payment instruments.These public policy goals should guide the actions of the public authorities, specifically the central bank, to positively impact the drivers of retail payments system development. In this regard, the following six guidelines can be used by the central bank to develop its national retail payments development agenda:

Guideline I: The market for retail payments should be transparent, have adequate protection of payers and payees interests and be cost-effective.Guideline II: Retail payments require a reliable underlying financial, communications and other types of infrastructure; these infrastructures should be put in place to increase the efficiency of retail payments. These infrastructures include, at a minimum, interbank electronic funds transfer systems, interbank card payment platforms, credit bureaus, data sharing platforms, interbank real-time gross settlement systems, reliable communications infrastructure and also a national identification system for individuals.

Guideline III: Retail payments should be supported by a sound, predictable, non-discriminatory and proportionate legal and regulatory framework.Guideline IV: Competitive market conditions should be fostered in the retail payments industry, with an appropriate bal-ance between cooperation and competition to foster, among other things, the proper level of interoperability in the retail payment infrastructure.Guideline V: Retail payment systems and services should be supported by appropriate governance and risk management practices.Guideline VI: Public authorities should exercise effective oversight over the retail payments market and consider proactive interventions where appropriate.Implementing the retail payments system development agenda requires public authorities, in particular the central bank, to take an active role in coordinating and catalyzing action from all the stakeholders including not only retail payments industry but also the other corporate and government authorities. Creating a national retail payment systems development plan and en-trusting its implementation to an energized National Payments Council (NPC) would ensure orderly and self-sustaining reforms. The key components of an effective plan would need to include: (i) stock-taking of current situation; (ii) establishment of internal organizational arrangements; (iii) development of a co-ordination framework to involve all stakeholders; (iv) development of a common vision, objectives and standards; (v) agreement on actions that need to be taken; (vi) development of an implementation plan; and, (vii) monitoring progress.

Source: World Bank

Appendix D




Documents

Dissertation Adeniyi Balogun Electronic Retail Payments System in Nigeria (Repaired)