DETERMINANTS AND ADOPTION OF POINT OF SALES OF SELECTED BUSINESS ORGANISATIONS
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ABSTRACT
Nigerian payment systems are cash-driven because cash is the main mode of payments for several transactions. However, the Point of Sales (POS) Systems which is meant to encourage cashless economy as against the cash-centered operations is challenged with inadequate infrastructure such as network connectivity, lack of constant power supply systems, inadequate Internet, insufficient hardware and software needed to run POS, limited bandwidth for data passage, security issues, lack of trust, inadequate customer education and insufficient motivation to adopt POS. This study investigated determinants and adoption of Point of Sales of selected business organisations in the banking, Oil and Gas, retail and airline sectors of Lagos State.
The study adopted a cross-sectional survey research design. The population of the study consisted of individual SMEs who are users of POS in the selected sectors and business organisations in Lagos State with population figure of 11,663 and sample size of 2,059. The respondents were randomly sampled from the selected organisations where the data were collected. A validated questionnaire was used. A total of 2,059 copies of the questionnaire were administered, with a response rate of 77.1%. The Cronbach’s alpha coefficients for the constructs ranged from 0.719 to 0.810. The data were analysed using descriptive and inferential (Pearson Product Moment correlation and Regression) statistics.
The findings revealed that there was a significant relationship between availability of infrastructure and Adoption of POS (r=0.349; p < 0.01), POS security and Adoption of POS (r = .437; p < 0.01), Customer trust and Adoption of POS (r = 0.373; p < 0.01), Customer education and Adoption of POS (r = 0.477; p <0.01), and Customer Motivation and Adoption of POS (r = 0.399; p < 0.01), Model summary of the regression showed the effect of independent variable on adoption of POS. The value 0.733 (73.3%) obtained from R2 suggested that the variance obtained from the adoption of POS can be explained by the identified variables, which are availability of infrastructure, POS security, customer trust, customer education and customer motivation.
The study concluded that availability of infrastructure; POS security; customer trust; customer education and customer motivation had significant and positive relationship with adoption of POS in the selected business organisations who are SMEs in Lagos State Nigeria. The study thus recommended that stakeholders should ensure that infrastructure; POS security; Customer trust; Customer education; and Customer motivation are in place to enhance the adoption of POS in selected business organisations in Nigeria.
TABLE OF CONTENTS
ABSTRACT
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
1.2 PROBLEM STATEMENT
1.3 STUDY OBJECTIVES
1.4 SIGNIFICANCE OF THE STUDY
1.5 STUDY QUESTIONS/HYPOTHESES
1.6 SCOPE AND LIMITATION OF THE STUDY
1.7 DEFINITION OF TERMS
CHAPTER TWO
REVIEW OF RELATED AND RELEVANT LITERATURE
2.1 INTRODUCTION
2.2 CONCEPTUAL CLARIFICATIONS
2.3 THEORETICAL STUDIES
2.4 EMPIRICAL STUDIES
2.5 RELATED LITERATURES
CHAPTER THREE
RESEARCH METHODLOGY
3.1 RESEARCH DESIGN
3.2 STUDY AREA
3.3 SOURCES OF DATA
3.4 POPULATION OF THE STUDY
3.5 SAMPLE SIZE DETERMINATION
3.6 INSTRUMENTATION
3.7 RELIABILITY AND VALIDITY OF INSTRUMENT
3.8 METHOD OF DATA ANALYSIS
CHAPTER FOUR
DATA PRESENATATION, ANALYSIS AND INTERPRETATION
4.1 DATA PRESENTATION
4.2 DATA ANALYSIS
4.3 DATA INTERPRETATION
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 SUMMARY
5.2 CONCLUSION
5.3 RECOMMENDATION
REFERENCES
CHAPTER ONE
INTRODUCTION
Background to the Study
It is observed that following the global advancement in technological development, Nigeria is not left out of this advancement. Information and Communications Technology (ICT) has evolved and has become a vehicle for technological growth in the economy of many societies as it has unarguably made life easier (Indjikian, Rouben, Donald & Siegel, 2005; Okpaku, 2003; Paltridge, 2008; Zhen-wei, Pitt, & Ayers, 2004). The global acceptance of Information and Communications Technology as well as its usage have attracted and received the interest of researchers who are on regular basis out to proffer solutions for problems related to technology development for decades (Davis, 1989; 1993; Park, Yang, & Lehto, 2007; Shih, 2004; Venkatesh, 2000; Venkatesh, Thong, & Xin, 2012; Zhou, Lu, & Wang, 2010). This development had encouraged further research on the utilisation and benefits of ICT to several nations in order to improve their economic development (Indjikian, & Siegel, 2005; Venkatesh et al. 2012; Venkatesh, 2000).
In the work of Louho, Kallioja, and Oittinen (2006), technology acceptance is about how people accept and adopt some technology for use. The user acceptance of technology has further been explained as the willingness within a user group to employ IT for the tasks it is designed to support (Dillion, & Morris, 2001).
The problems arising from the use of several payments instruments have received the global attention and so also is the close monitoring of efficient payments instrument by various monetary authorities of the world (Adeoti, 2013). Omotayo and Dahunsi (2015) asserted that many nations of the world have developed an effective and efficient payments system whose transactions are required to guarantee and sustained their economic development.
Several countries of the world have adopted policies to accelerate the use of electronic channels and reduce the use of cash. The motivations for these policies vary from country to country but typically reducing the cost of banking, encouraging financial inclusion, increasing the amount of capital available for investments within the banking system, driving real economic growth and possibly reducing tax evasion (NIBSS, 2015).
In a recent study, evolution of technology for use in financial transactions poses a lot of challenges as questions arose regarding the stability of the instrument in guaranteeing the efficiency and effectiveness of monetary policies of nations worldwide (Odior & Banuso, 2012). From history, different payment systems have being in use e.g. barter system was common, but incidences of double coincidence of want necessitated the use of money. However, technological development gave rise to the use of superior instruments as the technology developed (Odior & Banuso, 2012). A little over three decades ago, the use of cash in making purchases in the United States of America has declined, and increasingly adopts the use of electronic payments systems. However, developing economy like Nigeria are still at the introductory stage of the use of alternative payments platform as recently introduced by the monetary policy maker of Nigeria, the CBN (Humphery, 2004).
According to Laudon and Laudon (1991), business organisations in similar industries especially the banking industry attempts to competitively outdo one another, this is done by embracing Information and Communications Technology (ICT), hence ICT becomes the absorber to provide the cooling effect of the competition, this also means that any banking industry who aspired to remain competitively relevant and continue in business in local or global arena must embraced ICT.
Statement of the Problem
In spite of the achievements recorded so far in the implementation of the cashless policy of Federal Government of Nigeria, it is observed that to sustain customer usage of e-payments platform especially POS has been difficult. This is in reference to data obtained from CBN releases e-payments statistics for the period 2012 – 2016 (CBN, 2016) which indicates that despite the introduction of cashless economy with its attendant benefits the following data representing low penetration of POS compaired to ATM was given:
Table 1.1: Volume of transactions for selected e-payments platform
| Payment Channel | Transactions Volume |
| 1. ATM | 470,894,452 |
| 2. Cheques | 9,764,546 |
| 3. Web | 10,499,911 |
| 4. POS | 47,743,919 |
Source: CBN, 2016
Reasons as given by CBN for low adoption of POS include connectivity and network challenges, inadequate enlightenment, security and trust issues. This observation also indicated that many buyers of goods and services still do that by cash, this brings about enormous risk and high cost of cash management it also brings about inefficiency and corruption (Omotayo & Dahunsi, 2015).
Similarly, as reported in Adeoti and Oshotimehin (2012), the general increase in the adoption rate of electronic payments instruments and the rate of growth of adoption of POS are still low, among the factors identified as responsible for this low adoption of POS in Lagos state is low level of consumer education stating the benefits of using POS, lack of adequate infrastructure required to run POS, low level internet penetration, intermittent failure of network connectivity, absence of open standards or trust among banks and providers, frequent power outage, insufficient number of POS available per merchant store and security of network communications (Ayo & Babajide, 2006).
Objective of the Study
The main objective of the research is to examine the determinants and adoption of POS of selected business organisations in Lagos state (Lagos). The specific objectives are to:
- evaluate the relationship between availability of infrastructure and the adoption of POS of selected business organisations in Lagos;
- determine the relationship between POS security and adoption of POS of selected business organisations in Lagos;
- investigate the relationship between customer trust and the adoption of POS of selected business organisations in Lagos;
- assess the relationship between customer education and the adoption of POS of selected business organisations in Lagos; and
- Investigate the relationship between customer motivation and the adoption of POS of selected business organisations in Lagos.
Research Questions
In order to achieve the objectives of the study, the following research questions have become imperative.
- How does availability of infrastructure relate with the adoption of POS of selected business organisations in Lagos?
- What is the relationship between POS security and the adoption of POS of selected business organisations in Lagos?
- What is the relationship between customer trust and the adoption of POS of selected business organisations in Lagos?
- How does customer education relate with the adoption of POS of selected business organisations in Lagos?
- What is the relationship between customer motivation and the adoption of POS of selected business organisations in Lagos?
Hypotheses
In an attempt to come up with acceptable conclusions the research tested the following null hypothesis from the stated research questions:
H01: There is no significant relationship between availability of infrastructure and adoption of POS of selected business organisations in Lagos.
H02: POS security does not have significant relationship with adoption of POS of selected business organisations in Lagos.
H03: Customer trust does not have significant relationship with adoption of POS of selected business organisations in Lagos.
H04: Customer education does not have significant relationship with adoption of POS of selected business organisations in Lagos.
H05: Customer motivation does not significantly relate with adoption of POS of selected business organisations in Lagos.
Scope of the Study
The study examined the determinants and adoption of POS of selected business organisations in Lagos state. While previous studies have examined different topics related to this study, this study concentrated on determinants of POS which is the independent variable with five factors which are availability of infrastructure, POS security, customer trust, customer education and customer motivation (independent sub-variables) and their relationship with adoption of POS (dependent variable).
Significance of the Study
A system that involved reduction in the use of cash by introducing alternative platform for payments in business transactions reduced the danger inherent in carrying cash in Lagos. The role and relevance of efficient payments systems have been closely monitored and promoted by various monetary agencies of the world and including Nigeria. There is a gap between the use of cash for payments and efficient electronic payment systems which the study attempted to fill.
The Nigeria payment system is basically cash driven and does not guarantee the much needed efficient and effective transactions required for a sustainable economic development. Among some of the challenges identified are armed robberies, fraud, use of counterfeit bank notes, inconveniences of carrying large notes, long period of waiting in banking hall and frequent visit to banks (Nnanna & Ajayi, 2005). The research when implemented would address some of these challenges enumerated above and improving the social-economic life of individual, and the nation.
With the growing popularity of e-commerce, there is a global trend which involves the use of electronic payments system particularly; there is the need for a study such as this to contribute to the technological development of the state with payments system in focus. However, the empirical studies that relates to the use of debit card as payment instrument are foreign researches conducted in advanced economy (Adeoti, 2013), this study may therefore becomes a reference point in Lagos hence significant.
As the world moves further and faster into a thriving technological age, so must the way businesses are conducted. POS systems are fast becoming the technology of choice and here’s why. No matter what type of retailer you are, adopting a POS (point of sale) system can turn your business around by providing an all-in-one solution to a multitude of everyday issues this explained the significance of this study. This will certainly reduced the volume of cash carrying by merchants, customers and even the financial regulator – Central Bank of Nigeria. Foreigners will then be encouraged to do business much more in Lagos as the fear of attack by robbers will be reduced.
The knowledge gained will help the owners, the marketers and the managers to appreciate the competitive advantage that accrued to the organisations with the promotion of POS among their customers. In addition, the knowledge would inform the customers, who traditionally carry large cash to avoid carrying cash and get protected from criminals.
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