1.1 Introduction
An Electronic Payment System (EPS) refers to a digital infrastructure enabling the transfer of money electronically for the purchase of goods and services. It encompasses a wide array of technologies and methods, including online banking, credit and debit card transactions, e-wallets, and mobile payment solutions. The advent of EPS has revolutionized commerce by providing a convenient, secure, and efficient means of transaction, reducing the reliance on physical cash and traditional banking methods. Electronic Payment Systems have evolved significantly since their inception, driven by advancements in technology, changes in consumer behavior, and the growth of e-commerce. Initially rooted in the development of credit cards in the mid-20th century, EPS have expanded to include a variety of electronic and mobile payment solutions that cater to different user preferences and technological capabilities.
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Limitation of the study and Definition of technical terms.
1.2 Background of Study
The background of the study on Electronic Payment Systems (EPS) delves into the historical evolution, technological advancements, and socio-economic impacts that have shaped the current landscape of digital payments. The development of EPS is closely tied to the growth of the internet and information technology, which have facilitated new ways of conducting financial transactions electronically. The roots of electronic payment systems can be traced back to the mid-20th century with the introduction of credit cards in the 1950s. These early systems laid the groundwork for modern EPS by enabling consumers to make purchases without cash. The 1970s and 1980s saw the emergence of electronic funds transfer (EFT) systems and automated teller machines (ATMs), further advancing electronic banking capabilities.
The advent of the internet in the 1990s marked a significant turning point for electronic payments. The rise of e-commerce necessitated secure and efficient payment methods, leading to the development of online payment gateways and digital wallets. Companies like PayPal, established in 1998, pioneered online payment services, providing a secure platform for transferring money over the internet.
Mobile technology further revolutionized EPS in the 2000s and 2010s. The proliferation of smart phones and mobile apps enabled the creation of mobile payment systems such as Apple Pay, Google Wallet, and Samsung Pay. These innovations have made it possible for consumers to conduct transactions anytime and anywhere, increasing convenience and accessibility.
Electronic payment systems have had profound socio-economic impacts. They have streamlined the transaction process, reducing the time and costs associated with handling physical cash. EPS has also contributed to financial inclusion by providing unbanked and underbanked populations with access to financial services through mobile money platforms like M-Pesa in Kenya.
Additionally, EPS has facilitated the growth of global commerce. Businesses can now reach international markets with ease, and consumers can purchase goods and services from around the world. This globalization of commerce has spurred economic growth and created new opportunities for businesses and consumers alike.
The rapid growth of electronic payment systems has also raised concerns about security and regulation. Cyber security threats such as hacking, phishing, and identity theft pose significant risks to EPS. As a result, robust security measures, including encryption, multi-factor authentication, and tokenization, has been developed to protect transactions and user data. Regulatory frameworks have also evolved to address the challenges posed by electronic payments. Governments and financial institutions have implemented regulations to ensure the security, privacy, and integrity of electronic transactions. Compliance with standards such as the Payment Card Industry Data Security Standard (PCI DSS) is crucial for maintaining consumer trust and protecting financial information.
The challenges encountered that led to the execution of the research work is that, there is lack of standardization and compatibility between various EPS and traditional financial systems can lead to inefficiencies and increased costs. This fragmentation hinders the user experience and the potential for widespread adoption. It is against the background that the developments of this electronic payment software will provide opportunities for financial institutions to generate revenue through transaction fees, cross-border payments, and value-added services.
1.3 Statement of Problem
Investigation revealed that there is increasing prevalence of cyber attacks and fraud poses significant risks to the security of electronic payment systems. Electronic Payment System (EPS) are attractive targets for cybercriminals due to the high value of financial data they handle. Common threats include hacking, phishing, malware, and identity theft, which can lead to financial losses and erosion of consumer trust.
Additionally, ensuring seamless integration and interoperability among different electronic payment systems and traditional banking infrastructure remains a significant challenge. The lack of standardization and compatibility between various EPS and traditional financial systems can lead to inefficiencies and increased costs. This fragmentation hinders the user experience and the potential for widespread adoption.
Furthermore, the collection and use of personal data by electronic payment systems raise privacy concerns among users. EPS require the collection of sensitive personal and financial information, which can be misused or inadequately protected. This raises issues about data privacy and the potential for unauthorized data sharing.
1.4 Aim and Objectives of the Study
The aim of the study is to design and implement a Electronic Payment System using First Bank Plc Enugu as a case study. In achieving this aim, the following specific objectives were laid out as follows to develop an application software that will:
- Integrate the EPS with existing financial infrastructures and payment gateways, which will enable seamless transactions between different platforms and banking systems.
- Implement advanced security features such as encryption, multi-factor authentication, and real-time fraud detection;
- Enable iterative improvements and refinements to the electronic payment system design and functionality;
- Create an intuitive and accessible user interface for the Electronic Payment System; and
- Document the design and implementation process comprehensively, which will enable future developers and researchers to understand and build upon the work conducted.
The significance of Electronic Payment Systems (EPS) can be understood from the perspectives of various stakeholders involved:
CONSUMERS
- Convenience and Accessibility: EPS offer consumers the convenience of making transactions anytime, anywhere, reducing the reliance on physical cash and providing seamless payment experiences.
- Security and Trust: Enhanced security measures in EPS, such as encryption and fraud detection, build trust among consumers, ensuring the safety of their financial transactions.
- Financial Inclusion: EPS enable broader access to financial services for underserved populations, including those without traditional bank accounts, promoting financial inclusion and economic empowerment.
BUSINESS OWNERS
- Increased Sales Opportunities: EPS facilitate online and mobile payments, expanding businesses' customer reach and enabling sales beyond geographical boundaries.
- Efficiency and Cost Savings: Electronic payments streamline transaction processes, reduce cash handling costs, and improve cash flow management for businesses.
- Customer Loyalty: Offering secure and convenient payment options through Electronic Payment System that enhances customer satisfaction and loyalty, driving repeat business and positive brand perception.
FINANCIAL INSTITUTIONS
- Market Competitiveness: Embracing EPS enables financial institutions to stay competitive in a rapidly evolving digital economy, attracting tech-savvy customers and businesses.
- Revenue Generation: EPS provide opportunities for financial institutions to generate revenue through transaction fees, cross-border payments, and value-added services.
- Compliance and Risk Management: Understanding and adhering to regulatory requirements surrounding EPS ensures compliance and mitigates risks associated with financial transactions.
POLICYMAKERS
- Economic Growth: Promoting the adoption of EPS can stimulate economic growth by fostering innovation, enhancing financial inclusion, and supporting small and medium enterprises (SMEs).
- Consumer Protection: Developing policies that ensure the security and privacy of electronic payments protects consumers from fraud and abuse, fostering trust in digital financial services.
- Regulatory Frameworks: Establishing clear regulatory frameworks for EPS promotes a stable and transparent financial ecosystem, attracting investment and supporting sustainable development goals.
TECHNOLOGY PROVIDERS
- Innovation Opportunities: Developing and integrating new technologies, such as blockchain and artificial intelligence, into EPS enhances functionality, security, and user experience.
- Market Expansion: Providing scalable and interoperable payment solutions allows technology providers to tap into global markets and serve diverse customer needs.
- Partnerships and Collaborations: Collaborating with financial institutions and businesses to deploy EPS solutions strengthens market presence and drives technological advancements in payment systems.
Finally, this study will be of immense benefit to other researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. This study contributes to knowledge and could serve as a guide for other study.
1.6 Scope of Study
The scope of the research is focused on the Design and Implementation of an Electronic Payment System using First Bank Plc Enugu as a case study.
1.7 Limitations of the Study
During the course of this study, many things militated against its completion, some of which are:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Establishment Policies: Establishment policies posed a serious limitation as most staffs are not ready to release information needed for this research work. There were lots of information needed from the staffs of this institution to enhance the study which took them time to release or they did not release at all for security purposes, hence the scope was reduced.
- 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).
1.8 Definition of Terms
Electronic Payment (e-payment):
The transfer of value from a payer to a payee, executed through digital means without the use of physical cash (Turban et al., 2015).
Payment Gateway:
A service that authorizes and processes credit card payments for online retailers and e-businesses, acting as an intermediary between the merchant and the financial institutions (Laudon et al., 2020).
Digital Wallet (e-wallet):
An electronic device or online service that allows an individual to make electronic transactions, store payment information, and facilitate online purchases (Wang et al., 2016).
Crypto Currency:
It is a digital or virtual currency that uses cryptography for security and operates independently of a central bank (Narayanan et al., 2016).
Two-factor Authentication (2FA):
It a security process in which the user provides two different authentication factors to verify themselves, enhancing the security of electronic payments (Aloul, 2010).
Near Field Communication (NFC):
It is a set of communication protocols that enable two electronic devices to communicate when they are within close proximity, often used in contactless payment systems (Want, R. 2011).
Payment Processor:
A company appointed by a merchant to handle transactions from various channels such as credit cards and debit cards, ensuring the smooth execution of electronic payments (Laudon et al., 2020).
Secure Sockets Layer (SSL):
It is a standard security technology for establishing an encrypted link between a server and a client, ensuring that all data passed between them remain private and integral (Rescorla, E. 2001).
