ELECTRONIC PAYMENT SYSTEM IN NIGERIA: IMPLEMENTATION,CONSTRAINTS AND SOLUTIONS

Since the overcoming of barter in the history of mankind, trade usually involve the exchange of goods and services and an equivalent abstract value such as money. (Sadeghi & Schneider, 2011). Ever since money was invented as an abstract way of representing value, system for making payments have been in place. In the course of ime, new and increasingly abstract representations of value were introduced. A corresponding progression of value transfer systems, starting from barter, through bank notes, payment orders, cheques and later credit cards, has finally culminated in electronic payment systems. As the transition to electronic payment systems take place, the stock of currency held outside the banking system which constitutes a potential source of unproductive economic resources because they are not available for credit expansion is integrated into it thereby expanding the deposit base of the monetary system. Nigeria payment system has been predominantly cash-based for both positive and negative reasons: positive because of its instant convertibility to other forms of value without intermediation of any financial institution and negative because of its anonymity and un-traceability in unethical transactions. Electronic payment was introduced because government was inundated with allegations of corruption in the Federal Civil Service. The Federal Government through its treasury circular reference No TRY/A8 & B8/2008 of 22ndOctober, 2008 directed that payments from all funds from it be made electronically as from 1stJanuary, 2009. The policy has been condemned by all and sundry for lack of planning, inefficiencies and delay in the payment for goods and services, hence this article extends and contributes to the body of knowledge to assess the implementation and constraints of the system with a view to proffering solutions to them.
Statement of the Problem With the rapid growth of Information and Communication Technology (ICT), electronic commerce is now acting as a means of carrying out business transactions through electronic means such as internet connections (Anik and Pathan, 2012). E-commerce is the most recent step in the evolution of business transactions as it replaces or augments the swapping of money or goods with the exchange of electronic payment system in Nigeria. The study investigates the Federal Government of Nigeria electronic payment system implementation and the constraints confronting it with a view to providing solutions to the constraints so identified. The study is motivated by the apparent low level of satisfaction with the level of e-payment system in Nigeria. In carrying out the study, government agencies, contractors and the banks formed the population witha total of 200 respondents sampled through convenient sampling method and the analysis is based principally on the primary data collected from the respondents. The study identified constraints that are bedeviling the system and also suggested recommendations for effective implementation of the system.
Though, e-commerce sounds like a great opportunity, it greatly needs new payment systems that will support its further development (Abrazhevich, 2012).A critical challenge for many economies is drawing more people and their capital into the banking system. The question for policy maker is: how do we get people into the big economic tent?. According to the research conducted by Global Insight Inc., and VISA in 2013, e-payment reduces the amount of currency outside the banking system for the advent of a more effective monetary policy management that will bring about stability in prices and interest rates. The research further stated that e-payment products can act as gateways into the banking system for the unbanked segments which makes up as much as seventy percent of the world‟s population, this undoubtly creates a potentially powerful engine for growth –drawing cash into bank accounts where it can provide low-cost funds for lending and investment (VISA, 2013).
The introduction of e-payment in Nigeria was done initially to eliminate the un-acceptable delay in the paymentof government contractors by minimizing interaction between contractors and government officials who have role to play in the payment system but was later extended to cover all payments from any government fund effective 1st January, 2009. Concerns have been raised on the payment system implementation and concerns. The paper will therefore identify the constraints in the payment system and proffer solutions to same.
The study specifically identified the following objectives:
(i)Assess the effectiveness of the implementation of e-payment system in Nigeria
(ii)Identify the constraints in the implementation of the system
(iii)Proffer solutions to the identified constraints in the implementation of the system
The research questions are as follows:
(i)How effective is the implementation of e-payment system in Nigeria?
(ii)What are the constraints bedeviling the implementation of the system in Nigeria?
(iii)What are the solutions to the constraints so identified?