CHAPTER ONE

INTRODUCTION

1. BACKGROUND OF THE STUDY

The use of PoS terminals to make financial payment in Nigeria was introduced by the Central Bank of Nigeria (CBN) in 2012 to promote its cashless policy with the aim of improving payment system. Ever since the introduction, there has been increasingly growth in the number of active PoS terminals provided by banks to mobile money merchants. In the first three months of 2018, for example, it was reported that a total of 17,193 PoS terminals were registered by banks for carrying out cashless transactions in Nigeria (Ogunfuwa, 2018). Statistical figures from the Nigeria Inter-Bank Settlement Scheeme (NIBSS) indicated that as of 2018, the number of active PoS terminals in Nigeria was 164,607. Also, in addition to this development, a record of 66.6% rise in transactions using PoS across the country was registered as at January, 2018 compared to the value registered using PoS for transaction in January, 2017. This trends was maintained in February, 2018 where an increase of 60.61% was registered compared to February, 2017. The attribution to this growth can be acceptance of PoS terminals for making payment and increasing ICT network penetration in Nigeria. However, the gain recorded, this paper examines the prospects and challenges of PoS terminals in Nigeria.

The use of POS terminals to make financial payment in Nigeria was introduced by the Central Bank of Nigeria (CBN) in 2012 to promote its cashless policy with the aim of improving payment system. Ever since the introduction, there has been increasingly growth in the number of active POS terminals provided by banks to mobile money merchants. In the first three months of 2018, for example, it was reported that a total of 17,193 POS terminals were registered by banks for carrying out cashless transactions in Nigeria (Ogunfuwa, 2018). Statistical figures from the Nigeria Inter-Bank Settlement Scheeme (NIBSS) indicated that as of 2018, the number of active POS terminals in Nigeria was 164,607. Also, in addition to this development, a record of 66.6% rise in transactions using POS across the country was registered as at January, 2018 compared to the value registered using POS for transaction in January, 2017. This trends was maintained in February, 2018 where an increase of 60.61% was registered compared to February, 2017. The attribution to this growth can be acceptance of POS terminals for making payment and increasing ICT network penetration in Nigeria.

The use of electronic payment (e-payment) system in carrying out financial services and transactions has taken a centre stage in the world economy with developing countries such as Nigeria harnessing it for growing their economic financial inclusiveness. These systems make use of Information and Communication Technology (ICT) network facilities. E-payment systems, as automated processes, are used to exchange monetary value among stakeholders doing business transactions and transferring this amount of money over ICT network (Ayo and Ukpere, 2010). E-payment can be done using Debit or credit cards, online portals, Point of Sales (PoS) terminals, Automated Teller Machines (ATMs), direct debit/deposit, and Real Time Gross Settlement (RTGS) system (Nnaka, 2009; Ayo and Ukpere, 2010).

1. STATEMENT OF THE PROBLEM

Adeoti (2013) examines the challenges to the efficient use of PoS terminals in Nigeria. The study indicated that the efficient use of PoS terminals in Nigeria is affected by issues such as unreliable network, power outage, limited number of PoS per merchant store, security of communication over transaction network.

Every business has its pros and cons as POS business is not exemption. According to Nzaro and Magidi (2014) who examined the role of e-payment, they observed that although the using of POS have been beneficial such as convenience, product and service variety, easy access to funds and speedy payment, issues such as high cost of charges, insecurity question over frauds via e-banking and the issue of being debit without credit have being the problem faced by POS users. Adeoti (2013) when he examined the challenges to the efficient use of POS terminals in Nigeria, the study indicated that the efficient use of POS terminal in Nigeria is challenged by issues such as unreliable network, power outage and security of communication over transaction network.

Cash based transaction has some advantages in that it is always valuable, provides full and final settlement of a transaction, allows for anonymity once issued, and regarded as a public good by its users (Yaqub et al., 2013). However, cash based economy is risky, cumbersome and not healthy for a nation economy. This is because money that is not in control of banks cannot be subjected to regulatory check and operational procedures (Adeoti 2013). Moreover, the cash carrying nature of developing countries has been discovered to be the reason for their lagging behind in development.

1. AIM AND OBJECTIVES OF THE STUDY

The aim of the study is to investigate the challenges and prospects of POS business in Nigeria.

Specifically, the study seeks to:

Specifically this study will also seek:

1. Examine the positive effective of using Point Of Sales machine in Nigeria.
2. Examine the negative effective of using Point Of Sales machine in Nigeria
3. Examine the challenges facing POS business in Nigeria.
4. Examine the prospects to the challenges faced by Point Of Sale business in Nigeria

1. RESEARCH QUESTIONS

1. What are the positive effective of using Point Of Sales machine in Nigeria?
2. What are the negative effective of using Point Of Sales machine in Nigeria?
3. What are the challenges facing POS business in Nigeria?
4. What are the prospects to the challenges faced by Point Of Sale business in Nigeria?

1. STATEMENT OF THE HYPOTHESIS

H0 there is no significant relationship between challenges and prospects of POS business

H1 there is significant relationship between challenges and prospects of POS business

1. SIGNIFICANCE OF STUDY

This research study would enlighten the stakeholders in the banking sector on the need to encourage more entrepreneurs by making setting up of POS business easier for them. It would be relevant to the general public, respective bank customers, banks regulatory authorities, the academia and interested persons and organizations on the adoption of electronic payment system.

1.7 SCOPE OF THE STUDY

The study shall examine the positive and negative effect of POS, problems and prospects of electronic payment system at the point of sale terminals in Nigeria. The study shall rely on empirical evaluation of the adoption of electronic payment system at the point of Sale terminal in Nigeria. However the study is delimited to Nigeria setting.

1. LIMITATION OF THE STUDY

TIME CONSTRAINTS: One the challenges experienced by the researcher is the issue of time; the research will simultaneously engage in departmental activities like seminars and attendance to lectures. But the researcher was able to meet up with the deadline for the submission of the project.

FINANCIAL CONSTRAINTS: Every research work needs funding; however lack of adequate funds might affect the speed of the researcher in getting materials for completion of the project.

1.9 DEFINITION OF TERMS

Challenges: This is the situation of being faced with something that needs great mental or physical effort in order to be done successfully.

Prospects: prospect is the possibility or likelihood that something will happen or something will succeed. It also means the chances and solution on which something or a course succeeds.

POS: The full meaning of POS is "point of sale," or, in other words, it's where your transaction is finalized. The point of sale or point of purchase is the time and place where a retail transaction is completed. 

POS business: POS business is a legitimate way to make money in Nigeria. It is also called agent banking business, and it's an extension of the services offered by financial institutions to enable easy service offering to a wide range of customers

POS Agents/Retailers: This any individual that has a POS business. They are agents who carry out financial and banking services on behalf of the bank while earning their own commission.