An Evaluation for the Use of POS Machine for Skeletal Banking Service by AFIT Student

Introduction

1.1 Background of the study

The financial institutions and telecommunication companies’ worldwide are facing new loop on the Information and Communication Technology convergence curve. Point of sale [POS] terminal has emerged as a promising new application of the next generation e-payment system. The role and importance of efficient payment system has been closely monitored and promoted by monetary authorities in all countries. The Nigerian payment system that is cash- driven cannot and has not guaranteed the much needed efficient and effective payment platform required for a sustainable economic development, (Adeoti, 2013).

The Nigerian economy being largely cash-based is associated with high cost of cash management. Reliance on cash based payment platform has been found to be risky and cumbersome. Carrying cash in the economy is responsible for large pool of money being found in the hand of the unbanked citizens. In an effort to reduce the volume of cash in circulation and reduce the risk of going about with huge cash, the CBN introduced electronic payment system such as point of sale (POS) terminal, automated teller machine (ATM), payment cards [Smart card] etc into the Nigerian economy. This has given rise to the introduction of switch companies that facilitate interconnectivity (SalimoandAdeoti, 2013).

A point of sale/ service (POS) terminal is used to conduct retail transactions. It can provide many services including credit card processing check reading and transactions depending on the model. These devices can be found virtually anywhere, from grocery stores to gas stations. The technology used in POS machine results in a speedy and secured transaction.

Based on CBN policy on cash lodgments and withdraws all businesses that accept cash up to N0.5m for individuals and up to N3m for corporate customers for their daily business transactions require a POS terminal to avoid being charged from 2% in excess of the approved free lodgment limit. These include supermarkets, hotels and restaurants, electronic shops, pharmacies, boutiques, Hospitals, Distributorships, Airlines, etc.

The role and importance of efficient payment systems has been closely monitored and promoted by monetary authorities in all countries. However, the Nigerian payment system that is cash-driven cannot and has not guaranteed the much needed efficient and effective transactions required for a sustainable economic development. Among the problems often associated with cash transactions are armed robberies, use of counterfeit bank notes, frauds, inconveniences of carrying large quantities of currency notes, long period of waiting in bank halls, frequent trips to banks, frequent printing of bank notes (Nnanna and Ajayi, 2005). However, schools in Nigeria are beginning to key in into this cashless system of payment byincorporating modern and cashless method of payment especially the use of PoS.

Point-of-sale (PoS) systems have always been around in many forms for a number of years now. Many businesses use these systems not only to accept payment, but to provide other operational information such as accounting, sales tracking, and inventory management. Thus far, this system has gone a long way in improving customer’s experience through customer loyalty programs and suggestions in businesses (Ojo, 2004). Nowadays, the use of POS system is not only available in business set ups but also in schools which have gone a long way in impacting schools.Therefore, this study evaluates the use of POS machine for skeletal banking service by Airforce Institute of Technology (AFIT) students.

1.2 Statement of the problem

Generally, electronic payment system (e-payment) refers to an electronic means of making payments for goods and services procured online or in supermarkets and shopping malls. It enables websites and shopping malls to securely process transactions in real time. It operates on a smartcard that stores information on microchips. The microchips contain a purse in which monetary value is held electronically.

The electronic payment system takes the following forms: electronic financial payment system, where payment is through some specific protocols, and smartcard payment system, where the information on the silicon is used to effect payment for services (Adeoti, 2013:2). This payment system provides a better audit trail than transactions that involve physical cash and thus reduces the amount of currency in circulation.

The adoption of this payment platform by the consumers has improved Nigeria’s payment system. This is evident in terms of the volume, value and level of adoption in the country. The level of adoption by the consumers has continued to increase significantly; and this accounted for the billions-worth of transactions as at 2008 (Adesina and Ayo 2010 in Adeoti 2013:1).

However, despite the general increase in the adoption of e-payment system, the rate and use of POS is relatively low when compared to the rest of e-payment platforms. Customers who prefer to use the POS find it difficult because most POS are not loaded with cash making them to travel from one POS to another. Merchants with POS terminals still prefer cash payment as this is the most frequently used payment option.

No research has been carried on evaluating the use of POS machine for skeletal banking service by AFIT students. However, the researcher is examining the use of POS machine for skeletal banking service by AFIT students.

1.3 Objectives of the study

The main objective of the study is to evaluate the use of POS machine for skeletal banking service by AFIT students.
Specific objectives include:

1. To assess the effectiveness of the implementation of POS payment system in Air force Institute of Technology, Kaduna state.
2. To identify perceived obstacles inherent with the implementation of POS payment system
3. To proffer solutions to the identified obstacles in the implementation of the system.

1.4 Research Questions

The following questions will guide the study:

1. How effective is the implementation of POS payment system in Air force Institute of Technology, Kaduna state?
2. What are the perceived obstacles inherent with the implementation of POS payment system?
3. What are the solutions to the identified obstacles in the implementation of the system?

1.5 Significance of study

The following are the significance of this study:

1. Findings from this study will educate school authorities and executives and the general public in Nigeria on how they can key in to the CBN cashless policy to promote efficiency in the schools.
2. This research will also serve as a resource base to other scholars and researchers interested in carrying out further research in this field subsequently, if applied will go to an extent to provide new explanation to the topic.

1.6 Scope of the study

This study will cover the existing payment structures in schools with comparison to the modern payment system of POS considering the use of POS machine for skeletal banking service. This study is solely focus on Air force Institute of Technology (AFIT), Kaduna state.

1.7 Limitations of Study

1. Financial constraint

Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

2. Time constraint

The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.8 Organization of Study

The study is organized into five chapters.

1. Chapter one deals with the study’s introduction and gives a background to the study.
2. Chapter two reviews related and relevant literature.
3. The chapter three gives the research methodology while
4. The chapter four gives the study’s analysis and interpretation of data.
5. The study concludes with chapter five which deals on the summary, conclusion and recommendation.