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NOUN Journal of Physical and Life Sciences

Volume 1, PP137-159, 2017

ISSN: 2645-2480 www.njpls.nouedu.net [email protected]

135

E-BANKING: EVALUATING ELECTRONIC PAYMENT

CHANNELS IN SOUTHERN NIGERIA

Francis Bukie Osang

Computer Science Department, Faculty of Sciences, National Open

University of Nigeria

ABSTRACT

The advent of electronic payment system is a wonderful intervention in the

payment industry. Today, financial transactions are not necessarily done

using raw cash. However, while bank customers celebrate these

technological innovations, the attendant queues in the banking halls despite

the presence of ATM galleries and mobile internet penetration level in

southern Nigeria leaves so much to be desired. It appears that as the level of

sophistication increases, the risks of fraud and other challenges also

increases. Despite their critical role on the economy and national

development, there has been limited literature that examines each of these e-

payment channels as well as their collective efficiencies with respect to

security, reliability, convenience and accessibility to bank customers.

Through a carefully designed survey, the views of 273 bank customers from

three states in Southern Nigeria were analyzed using a targeted sampling

strategy and chi-square technique. The findings of the study revealed that

the current e-payment channels are viewed to be secured, convenient,

reliable and accessible but more still need to be done in terms of improved

security features, reliability of point of sales (POS) terminals as well as

accessibility of automatic teller machines (ATM) systems and web services.

The implications as it affect stakeholders (financial institutions, financial

regulators, product developers, customers etc.) are discussed.

Keywords: e-banking, electronic payment channels, Automatic teller

machines (ATM), Point of Sales (POS), mobile payment system etc.

The adoption of technology based

payments systems have impacted

positively on the efficiency and

convenience of most banks’

customers, staff and the society at

large (Kelvin, 2012). Compared

to the cash driven traditional

methods of payment

characterized by the

inconveniences and risk

associated with movement of

cash between locations with its

attendant consequences, the e-

payment system has made the

movement of large volumes of

transactions possible wirelessly.

Electronic payment is basically

concerned with the buying and

selling of goods or services

through the network (Internet)

medium. In other word, electronic

payment system is a way of

paying for goods or services

electronically, instead of using

cash or cheques, either in person

or by mail. Through this method,

customers carry out purchases

online through different methods

such as, Electronic Fund Transfer

(EFT), Credit cards, Debit cards,

etc.

The telecommunications

revolution from 2001 and

banking consolidation of 2005-

2006 added another strong

infrastructural foundation to the

growth of electronic payment

system in Nigeria. Statistics

obtained from the regulator of

telecommunications in Nigeria -

the Nigerian Communications

Commission, NCC, reported that

the tele-density of the country’s

telecommunications industry has

increased to 108.11 per cent in

January 2016, from 107.87 per

cent in the month of December,

2015 indicating an increase in

telephony penetration in Nigeria.

Realizing the unquantifiable

benefits of e-payment system to

the customers, financial

institutions and the entire

economy, the Central Bank of

Nigeria introduced the cashless

economy policy. Consequently,

payment and withdrawal of cash

in banks has been restricted to

N500, 000 (Five Hundred

Thousand Naira only) daily by

individual customers and N

3,000,000 (Three Million Naira

only) for corporate customers.

Lodgement of cash above these

limits attracts charges. On the

contrary, electronic

transfers/payments have no limit.

This policy among others and the

challenges associated with the

traditional methods of payment

has resulted to wider patronage of

e-payment methods in Nigeria.

Data from Central Bank of

Nigeria (2016) on non-cash retail

payment channels that ended June

2014 indicated that Automated

Teller Machines (ATM) remained

the most patronized channels

accounting for 85% of the total e-

payment transactions while web

payment was the least with 2%,


Volume 1, PP137-159, 2017


137

POS and mobile payment

recorded 7% and 6% respectively.

Several studies have investigated

the electronic payment systems

and channels. For example, while

evaluating the perceptions of

Automated Teller Machine

(ATM) users in comparison to the

human teller, Chinedu (2010)

reported that customers still

prefer the human teller to the

ATM due to the myriad of

problems associated with ATM

use in Nigeria.

Although a similar investigation

was carried out by Tijani and

Ilugbemi (2015), the views of 120

banks customers were sought

from one state from the south

west geopolitical zone (six banks

in Ado –Ekiti metropolis, Ekiti

State). Their findings revealed

that electronic payment channels

(EPC) have impacted on the

Nigerian economy and therefore

contributing positively to national

development (ND). There is little

or no research that focused on the

entire southern states in Nigeria

that assesses the various channels

being used by bank customers in

the country.

While further investigating the

perception of over 200 bank

customers in Abeokuta (Ogun

state) in Nigeria using a survey

instrument and technology

acceptance model (TAM) as the

theoretical framework, Odiboh,

Oresanya, and Ekanem, 2016)

concluded that low awareness of

e-payment channels is a major

problem. The results further

indicated that the productivity

expected by respondents as a

result of e-banking patronage is

unimpressive owing to

infrastructural deficit, insecurity,

illiteracy and a weak legal

system.

This study therefore provided a

body of knowledge created by

such gap by reporting the

perception of bank customers

regarding e-payment channels in

Southern Nigeria with respect to

perceived level of security,

convenience, reliability and

accessibility of ATM, POS, web

and mobile payment channels.

Statement of the Problem

The adoption of electronic

payment system has brought

remarkable improvements in the

payment industry. As reported by

by Tijani and Ilugbemi (2015) the

advent of electronic payment

system has drastically reduced

long queues, delays in the

confirmation of the validity of

transactions by customers

specifically for overseas

transactions, delays in transaction

time, inefficiencies experienced

over the years with the Nigerian

banking sector etc.

Unfortunately, the payment

industry and bank customers are

today being confronted with a

myriad of challenges even with

the advent of these emerging

technologies in the banking

industry. In fact, while bank

customers celebrate these

technological innovations, the

attendant queues in the banking

halls despite the presence of

ATM galleries and mobile

internet penetration in Nigeria

leave so much to be desired

(Adewuyi, 2011; Omotayo and

Dahunsi, 2015). It appears that as

the level of sophistication

increases, the risks of fraud and

other challenges also increases.

For example, the Nigerian

Interbank Settlement system

(NIBSS) company in its 2014

fraud at a glance report, declared

that internet banking accounted

for a loss of over $3.2 Billion to

fraudulent transactions in terms

of value NIBSS (2014). These

colossal loses by unsuspecting

legitimate bank customers are not

unconnected to internet based

identity theft and other heinous

activities of fraudsters.

Broadly speaking, a critical view

on the possible causes of these

challenges revealed three types of

categorizations namely: the

machine-caused deficiencies; the

operator-caused deficiencies and

the externally-caused

deficiencies.

Machine-caused deficiencies:

This category deals with

deficiencies posed in the cause of

designing a technology. For

example, the lack of highly

secured platform for electronic

business transactions, has also

contributed immensely to the

current challenges of e-payment

system in developing countries

like Nigeria. As reported by PCI

Security Standard Council

(2015), intelligent look at a

number of e-payment sites in

Nigeria reveals that many of them

still use secure socket layer

protocol which is pruned to

attacks.

Operator-caused deficiencies:

This category of deficiencies

results from attitudinal challenges

of e-payment systems caused by

operators of e-payment channels.

For example, as reported by

Bajulaiye & Ekundayo (2009) in

their interview with a senior bank

official who pleaded anonymity,

it was confirmed that most of the

ATMs in use in Nigeria where

procured second-hand which

partly explains the reason for its

malfunctioning.

Externally-caused deficiencies:

These are deficiencies caused by

third parties by interfering with

established systems. Issues of

fraudsters stealing ATM owner’s

card numbers and PINs using

software, cloning of ATM cards

to be used with stolen PIN in


Volume 1, PP137-159, 2017


139

stealing funds from victim’s

accounts, armed robbers

accompanying users to ATM

locations to collect all cash

withdrawn from ATM machines,

password sniffing, long queue at

some ATM centres among others

calls for attention. Similarly, the

work of Olesin (2006) reported

that the dwindling image and the

eventual rejection of payments

cards issued by Nigerian banks on

the international arena are not

unconnected to the level of

internet fraud experienced in

Nigeria.

At a keynote address at the 8th

Annual Conference of the

Chartered Institute of Bankers of

Nigeria in Abuja, the Central

Bank of Nigeria Governor

enlisted some challenges

affecting usage of e-payment

system in Nigeria to include

security issues, resistance of

target customers to patronize and

embrace new products among

others. Issues of fraudsters

stealing ATM owner’s card

numbers and PINs using

software, cloning of ATM cards

to be used with stolen PIN in

stealing funds from victim’s

accounts, armed robbers

accompanying users to ATM

locations to collect all cash

withdrawn from ATM machines,

long queue at some ATM centres

among others calls for attention.

Related Literature

The banking industry has in

recent years embarked on series

of revolutionary measures aimed

at enhancing banking operations

and services. The introduction of

electronic payment system has

impacted greatly on the

convenience and efficiency of

bank customers, staff and the

generality of the society in

carrying out financial

transactions. Today, bank

customers have options other than

movement of physical cash from

one location to the other or

issuance of cheques before

completing any financial

transaction. Payments can today

be carried out using electronic

payment options such as ATM,

internet banking, point of sales

terminals, mobile banking and so

on via the internet.

Generally, the internet is regarded

as an unsecure environment.

Hence, in order to guarantee the

security of online transactions,

the concept of the payment

gateway was introduced as a

replacement for the traditional e-

payment strategy. By this model,

all online transactions and

payments are processed through a

payment gateway. Payment

gateway do not only act as

mediator between customer bank

and merchant bank in making

online transactions, the

verification of customer details

and appropriate messages are also

communication through the

tunnel.

Electronic Payment System in

Nigeria

Basically, e-Payment system is

classified into: (a) Online credit

card payment system (b)

Electronic cheque system (c)

Electronic cash system, and (d)

Smart card-based electronic

payment system. Payment Cards

for example were introduced into

Nigeria some years ago, but

suffered low acceptability at the

initial stages due to a number of

factors which included amongst

others: lack of shared network,

epileptic services, limited ATM

and Point of Sales (POS)

Terminals and high cost of

operations.

The Central Bank of Nigeria in an

attempt to promote the use of

cards for making secured

payments in Nigeria, issued the

guidelines on e-banking in

Nigeria in 2003 and subsequently

issued guidelines on transaction

switching services, guidelines on

ATM operations, Guidelines on

Direct Debits, Guidelines on

Stored Value Card, Regulatory

Framework on Mobile Payments,

amongst others. These have

encouraged e-payment initiatives

such as the establishment of

switching companies that

facilitate interconnectivity,

introduction of shared ATMs and

the establishment of Independent

Service Operators (ISO) for

massive deployment of ATMs

and POS, which culminated to a

significant growth in the use of

payment cards (CBN, 2014).

According to the Nigerian Bureau

of Statistics (2012) as reported by

Agbaje and Ayanbadejo (2013),

between 2010 and 2012, there

was a continuous decline in the

volume and value of cheque

clearing since the introduction of

electronic payment channels in

Nigeria. Cheque clearing in the

first half of 2011 declined by

12.30 percent and 4.74 percent to

N16, 188,775 billion and N9,

919.05 billion respectively from

N18, 458,480 billion and N10,

412.12 billion recorded in the

second half of 2010. The decline

was attributed to increase in the

use of other modes of payment,

such as RTGS, NIBSS interbank

Funds Transfer (NEFT),

automated Teller Machines

(ATMs), mobile banking, and

Internet payments among others.

On the other hand, the volume

and value of electronic card

payments transactions increased

to N167, 962,665 billion and

N764.14 billion during the first

half of 2011, from N106, 739,822

billion and N610.22 billion

respectively during the second

half of 2010, reflecting an

increase of 57.36 percent and

25.22 percent respectively. The

growth was attributed to the

public confidence in card


Volume 1, PP137-159, 2017


141

payments, following the

enhanced security features in the

cards and adoption of stringent

measures to combat frauds and

deepens the use of electronic

payments. Available data showed

that among the e-payments

channels the most popular was

the ATM (98.09%) followed by

web (internet) (0.72%) and

mobile (0.71%). The least

patronized was the Point of Sales

(POS) terminal accounting for

0.48% of the total e-payment

transactions.

Similarly, the direction of

patronage of electronic payment

system between 2013 and 2014

and their respective percentage

increases among the different

payment channels are captured in

the Table 1.

Table 1: Volume of e-payment transactions

Application 2013 2014 Percentage

Increase

ATM 12755 14,764 15.75

POS 120,191 121,886 1.4

Mobile Payment 9,832,224 12,575,523 27.90

Web Payment 1,791,988 2,230,353 24.46

NIP Instant Pay 16,839,648 11,186,930 50.53

NEFT Fund

Transfer

14,260,732 16,115,171 11.51 (decline)

Cheques 7,144,340 8,257,330 13.48 (decline)

Source: CBN 2015 report

Challenges of electronic

payment system in Nigeria

In identifying the challenges

facing e-payment in Africa,

Ugwu, Eze, and Ugbene (2012)

reported that issues associated

with infrastructural deficits

resulting to epileptic power

supply, connectivity failure, high

cost of internet bandwidth among

others are major factors militating

against the success of e-payment

systems in Nigeria. Their research

also identified poor regulatory

policy framework as a mitigating

factor against the wide spread

adoption and acceptance of e-

payment system in Africa. The

introduction and implementation

of available options such as

public-key cryptography, digital

signature, secure socket layer,

secure electronic transaction were

canvassed.

Ayo (2006) researched the

prospects of e-commerce in

Nigeria based on ability,

motivation and opportunity

(AMO model) and noted that,

majority of companies in Nigeria,

have online presence. However,

142

lack of e-payment infrastructure,

access to ICT facilities in urban

and majorly rural areas, the fear

of fraudsters perpetrating

cybercrimes on electronic

payment system, low level of

internet penetration were equally

identified as major limitations to

the full optimization of e-

commerce opportunities, strength

and potentials.

While contributing to the issue,

Auta (2010) posited that over

50% of respondents in their

research agreed that e-payment is

relatively new but has made

access to savings and transactions

easier, faster and more

transparent. It has also

contributed in no small measure

to employment generation in

diverse ways. The research

however identified network

problems, perceived risk, frequent

system breakdown and poor

awareness as key challenges to e-

payment systems.

The work of Ayo and Ukpere

(2010) reported that Sumanjeet

(2009) summarized the

challenges confronting e-payment

as resolving around issues such

as:

a. Integrity: to ascertain that

transmitted financial

information is unchanged

in transit.

b. Non-repudiation: to

ascertain that all parties

have non-deniable proof

of receipt.

c. Confidentiality: to

ascertain that transactions

are protected from

possible eavesdroppers.

d. Reliability: to ascertain

that there is reduced

possibility of failure.

e. Authentication: to

ascertain that there are

reliable proofs of

identities of all parties

involved.

f. Authorization: to

ascertain that individuals

are recognized and

granted the desired rights

and privileges.

The result of the research showed

that 50% of the respondent

attested to the convenience of

ATM services as against the 69%

on its simplicity. In addition to

these factors, the desire for a

unified single ATM card for all

banking transactions attracted

36.8% support while the inclusion

of fingerprint reader on all ATM

machines was supported by

66.9% of the respondents.

However, the respondent failed to

support the reliability, safety and

privacy of using ATM services by

25%, 16.3% and 31%

respectively.

While quoting Interswitch

network company, Falaye,

Adepoju, Yakubu, & Oludare,

(2013) reported that only 9,000


Volume 1, PP137-159, 2017


143

ATM terminals are serving

30million customers accounting

for 100 million transactions

monthly. This has resulted to the

elimination of long queues that

characterized commercial

banking halls in Nigeria (Jegede,

2014). Similarly, Ogbuji,

Onuoha & Izogo, 2012, Adeoti,

2011, Jegede, 2014) all

recognized the significant impacts

the adoption of ATMs have

created on both the financial

institutions, the bank customers

as well as the Nigerian economy

as a whole. On the contrary,

Adeoti (2011) and Omankhanlen

(2009) held a strong view that the

adoption of electronic payments

technologies and their resultant

aftermaths are great treats to the

payment systems in Nigeria.

Similarly, the work of Tijani

(2013), observed that the

accessibility of payment system

are measured in terms of its

reliability, transaction costs and

risks. The researcher posited that

prevention of regular breakdown

increases its reliability factor.

Uwah (2011) examined the

various categories of payments

systems ranging from: cash-

paper-based instruments,

paperless or electronic

instruments, and other payment

instruments. Paper based

instruments include cheques,

bank drafts, debit cards, credit

cards, and traveller’s cheques.

Although, cheque is a major

payment instrument in Nigeria,

they are not popular for day to

day payment because of high

incidence of dud cheques and

forgeries, a safe financial system

is thus hedged on effective

payment infrastructure which are

core to the financial stability of a

country Ibrahim (2009).

In a survey to investigate the

effects of ATM on the

performance of Nigerian banks,

Jegede (2013) collected data from

a convenience sample of 125

employees of five selected banks

in Lagos State with interswitch

network. The results indicated

that the deployment of ATMs

terminals have averagely

improved the performance of

Nigerian banks because of the

alarming rate of ATM fraud.

Similarly, ATM service quality is

less correlated to security and

privacy of users and providers.

In a related survey targeted at

current and savings account

customers conducted at Ado-Ekiti

metropolis in Nigeria by Tijani

and Ilugbemi (2015), the views of

98 respondents were analyzed.

The study revealed the following:

(a) that electronic payment

channels (EPCs) have impacted

on the economy and therefore

contributing positively to national

development (b) that (EPCs) are

accessible to customers (c) that

(EPCs) are very convenient to

144

customers compared to

conventional banking practice

where customers must be

physically be present at the point

of requisition for banks services.

(d) that (EPCs) are reliable.

A critical look at the previous

studies reveal a clear absence of

studies that examines each of the

e-payment channels as well as

their collective efficiencies with

respect to their security,

reliability, convenience and

accessibilities to the bank

customers in the southern part of

Nigeria.

METHODOLOGY

The study captureed the

experiences of bank customers on

the current e-payment platforms

deployed by financial institutions

in Nigeria. The data employed for

the analysis were obtained

through a well-designed

questionnaire based on survey

method carried out in three major

cities in Southern Nigeria (Enugu,

Calabar and Lagos). Southern

Nigeria comprises of three

geopolitical zones namely south

east, south-south and south west.

Enugu, Calabar and Lagos states

were selected from each of these

zones using stratified sampling

technique. Stratified sampling

technique was adopted due to its

capacity to ensure that specific

groups are represented, even

proportionally, in the sample(s)

by selecting individuals from

strata list Black (1999).

This study used a descriptive

research design, which is a

process of collecting data from

the members of a population in

order to determine the status of

the subject under study with

respect to one or more variables

to determine the frequency of

occurrence or the extent to which

variables occurs.

The respondents were chosen by

purposeful sampling focusing on

students, bankers, traders and

civil servants. Respondents

surveyed in this study were asked

to complete the questionnaire on

a voluntary basis. The

questionnaire was divided into

two sections which focused on

respondents’ demographics and

questions on the usage of e-

payment channels. The data

collection exercise was carried

out within a two months period.

Out of the three hundred and fifty

four (354) questionnaires

distributed, a total of two hundred

and seventy three (273)

questionnaires were returned

representing 77.1% returned rate.

The data collected were analysed

using inferential statistics using

chi-square represented as (fo-fe)2

/fe Where- fo is the observed

frequency. Fe is the expected

frequency.


Volume 1, PP137-159, 2017


145

Statement of Hypotheses H1: Bank customers believe that

e-payment systems like ATM,

POS, mobile payment systems

and web payments systems in

Nigeria are not very secured.

H2: Bank customers believe that



and web payment systems in

Nigeria are not very convenient.



POS, mobile payments system

and web payment systems in

Nigeria are not very reliable.




and web payments systems in

Nigeria are not very accessible.

RESULTS

From the table 2 below, 62% of

the respondents were males while

38% were females. Ages of

respondents ranged from 18 and

above. However, ages between

31- 40 recorded the highest

percentage of respondent’s

participation, followed by 21-30

as well as 41-50 respectively.

37% of respondents that

participated in the survey have

first degrees from universities

while 24.5% and 21.2% of the

respondents possesses

diploma/NCE and post graduate

certificates respectively. From the

table, 97.8% of the respondents

operate bank accounts while only

1.5% (4) respondents did not

disclose their ownership status of

bank accounts.

Demography of Respondents

Table 2: Demography of Respondents

Gender of Respondents Frequency Percentage

Male 170 62%

Female 103 38%

Total 273 100%

Age of Respondents

Below 20 years 8 2.9%

21 – 30 72 26.4%

31 – 40 98 35.9%

41 – 50 54 19.8%

51 – 60 21 7.7%

Above 60 4 1.5% Others

16 5.9%

146

Highest Qualification of Respondents

Primary 6 2.2%

GCE/SSCE 18 6.6%

Diploma / NCE 67 24.5%

First Degree 101 37.0%

Post Graduate 58 21.2%

Others 23 8.4%

Ownership of Bank Accounts

Yes 267 97.8%

No 2 0.7%

No Response 4 1.5%

Safety and Security of

e-payment channels

The research considered four

popular channels of electronic

payment system in Nigeria

namely: the automatic teller

machine (ATM), point of sales

terminal (POS), mobile payment

system and the web payment

system. From table 3 below,

66.5% of respondents believes

that ATM machines are very safe

and secured compared to 48.0%

views on POS terminals. On the

contrary, 80.0% and 66.0% of

mobile and web payment systems

respectively are perceived to be

less safe and secured by the

respondents. On the aggregate,

table 4 confirmed that the

empirical value (88.608) is

greater than the critical value

(0.352), hence the null hypothesis

which state that e-payment

channels like ATM, POS, mobile

and web services are not secured

was rejected. It implies that on

the aggregate, e-payment

terminals are considered safe and

secured.

Table 3: Respondent’s views on security

Channel Less Safe and

Secured

Safe and

Secured

I do not

know

Total

ATM 78 161 36 239

POS 106 98 69 204

Mobile 186 76 11 262

Web 167 86 20 253

Total 537 421 136 958


Volume 1, PP137-159, 2017


147

Table 4: Expected e-payment safety and security level

Parameter Fo Fe Fo - Fe (Fo– Fe)2 (Fo – Fe)

2 / Fe

S (78) 78 133.9 -55.9 3124.8 23.336893204

S (161) 161 105.0 56.0 3136.0 29.866666667

S (106) 106 114.4 -8.4 70.6 0.616783217

S (98) 98 89.6 8.4 70.6 0.787500000

S (186) 186 146.7 39.3 1544.5 10.528220859

S (76) 76 115.1 -39.1 1528.8 13.282450043

S (167) 167 141.8 25.2 635.0 4.478420310

S (86) 86 111.2 -25.2 635.0 5.710791367

88.607725667

At 95% confidence level and degree of freedom = Row – 1 * Column – 1 =

4 - 1 * 2 – 1 = 3 * 1 = 3 = 0.352.

Convenience using e-payment

channels

Respondents agreed that all the

listed e-payment systems are very

convenient compared to the

traditional payment system. From

table 5 below, 91.2%, 91.7%,

90.4%, and 91.3% of respondents

believed that ATM, POS, mobile

and web services respectively are

very convenient. Equally, table 6

confirmed that the empirical

value (15.369) is greater than the

critical value (0.352), hence the

null hypothesis which state that e-

payment channels are not very

convenient for bank customers

was rejected.

Table 5: Respondent’s views on e-payment convenience

Channel Less Convenient Convenient I do not

know

Total

ATM 23 237 13 260

POS 19 211 43 230

Mobile 25 235 13 260

Web 23 240 10 263

Total 90 923 79 1013


4 - 1 * 2 – 1 = 3 * 1 = 3 = 0.352

148

Table 6: Expected e-Payment Convenience Level

Parameter Fo Fe Fo -

Fe

(Fo –

Fe)2

(Fo – Fe)2 / Fe

S2 (23) 23 23.1 -0.1 -0.010 4.329004329

S2 (237) 237 236.9 0.1 0.01 4.219409283

S2 (19) 19 20.4 -1.4 1.96 0.096078431

S2 (211) 211 209.6 1.4 1.96 0.009351145

S2 (25) 25 23.1 1.9 3.61 0.015238497

S2 (235) 235 236.9 -1.9 3.61 0.015238497

S2 (23) 23 23.4 -0.4 0.16 0.006837609

S2 (240) 240 239.6 0.4 0.16 6.677796327

15.368954118

Reliability of e-payment

channels

Table 7 below showed that all e-

payment channels except POS

were perceived to be less reliable

by the respondents (54.7%). At

individual levels, 67.2%, 60.0%

and 81.6% of bank customers

respectively believe that ATMs,

mobile and web services are very

reliable. On the aggregate, table 8

confirmed that the empirical

value (58.755) is greater than the

critical value (0.352), hence the

null hypothesis which state that e-


reliable for bank customers was

rejected. The alternate hypothesis

H1 that e-payment channels are

very reliable is accepted.

Table 7: Respondent’s views on reliability of e-payment system

Channel Less Reliable Reliable I do not

know

Total

ATM 81 166 26 247

POS 123 102 48 225

Mobile 104 156 13 260

Web 48 213 12 261

Total 356 640 99 993


4 - 1 * 2 – 1 = 3 * 1 = 3 = 0.352


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149

Table 8: Expected e-Payment Reliability Level


Fe

(Fo –

Fe)2

(Fo – Fe)2 / Fe

S3 (81) 81 80.6 0.4 0.16 0.001985112

S3 (166) 166 159.2 6.8 46.24 0.290452261

S3 (123) 123 80.7 42.3 1789.29 22.172118959

S3 (102) 102 145.0 -43 1849 0.087942925

S3 (25) 104 93.2 10.8 116.64 1.251502146

S3 (235) 156 167.6 -11.6 134.56 0.802863962

S3 (23) 48 93.6 -45.6 2079.36 22.215384615

S3 (240) 213 168.2 44.8 2007.04 11.932461356

58.754711336

Accessibility of e-payment

channels

In order to access the perception

of bank customers regarding

accessibility of the four e-

payment systems, 51.7% of bank

customers believed that ATM

systems are very accessible

(Table 9). Similarly, 69.7% of

bank customers are of the view

that POS e-payment systems are

not very accessible, 71.5%

believe that web payment systems

are equally less accessible. On the

contrary, 83.3% of bank

customers believed that mobile

payment systems are accessible.

Although there were mixed

findings regarding the individual

percentages regarding each of the

four e-payment channels, the

overall inferential statistic failed

to support the hypothesis that e-


accessible.

Table 9: Respondent’s views on accessibility of e-payment systems

Channel Less Accessible Accessible I do not

know

Total

ATM 126 135 12 261

POS 182 79 12 261

Mobile 42 210 21 252

Web 183 73 17 256

Total 533 497 62 1030


4 - 1 * 2 – 1 = 3 * 1 = 3 = 0.352

150

Table 10: Expected e-Payment Accessibility Level


Fe

(Fo –

Fe)2

(Fo – Fe)2 / Fe

S4 (126) 126 133.3 -7.3 53.29 0.399774944

S4 (135) 135 125.9 9.1 82.81 0.657744241

S4 (182) 182 135.1 46.9 2199.61 16.281347150

S4 (79) 79 125.9 -46.9 2199.61 17.471088165

S4 (42) 42 130.4 -88.4 7814.56 59.927607362

S4 (210) 210 121.6 88.4 7814.56 64.264473684

S4 (183) 183 132.5 50.5 2550.25 19.247169811

S4 (73) 73 123.5 -50.5 2550.25 20.649797571

198.899002928

DISCUSSION

From the data presented in the

previous section, 66.5% of

respondents believe that ATM

machines are very safe and

secured. From one dimension, the

availability of ATM machines

especially in most urban parts of

the country has contributed

immensely to the ease with which

financial transactions are carried

out. This position has been

supported by CBN’s position that

Automated Teller Machines

(ATM) remained the most

patronized channels accounting

for 85% of the total e-payment

transactions.

On the other hand, that 32.6% of

bank customers also believe that

ATM transactions are less

secured remain a major source of

concern. As the highest

patronized channel of e-payment

system in Nigeria, (Nigerian

Bureau of Statistics (2012); CBN

website (2016)), the fear of

fraudsters cloning and having

unauthorized access into

electronic payment system remain

a major limitation to the full

optimization of these e-commerce

opportunities, strength and

potentials. Idolor (2010)

confirmed this position. As

reported by PCI Security

Standard Council (2015, April),

the current secure socket layer

(SSL) protocol 3.0 used in

OpenSSL and other products uses

non-deterministic CBC padding

which makes it easier for ‘man in

the middle’ attack. These if

successful, allow unauthorized

disclosure of information making

it possible to decrypt an

encrypted message secured by

SSL v3.0 and other lower

versions. Other potential fraud in

SSL might be caused through: the

misuse of credit card information

sent to merchants or users who

pretend to be cardholders by

presenting valid credit card and


Volume 1, PP137-159, 2017


151

other user information Bottoni &

Dini (2007).

As reported by Agbaje et al.

(2013) and CBN report (2015)

between 2012 to 2015, while the

amount of NIP transactions

increased by 50.53%, that of

ATM increased by 15.75%.

Sustained strategic and conscious

efforts must be made to improve

upon the several security

challenges being faced by ATM

users. Introduction and

implementation of available

options such as public-key

cryptography, digital signature,

secure socket layer, secure

electronic transaction, biometric

authentication etc. have been

canvassed by (Idilor, 2010; Ayo

and Ukpere, 2010), PCI Security

Standard Council (2015).

The findings also posit that

80.0% and 66.0% of mobile and

web payment systems

respectively are perceived to be

less safe and secured by the

respondents. This has great

implications for the relatively

poor usage of these platforms

despites the availability of mobile

phones and internet penetration in

Nigeria. The adoption and

utilization of mobile technologies

remains one veritable tool in the

banking sector. Financial

institutions in the last five years

have deployed several mobile and

internet banking platforms

ranging from text-based short

messaging systems to real time

online interactive platforms that

supports customers’ financial

transactions.

In response to the hypothesis that

e-payment channels are not very

convenient, 91.2%, 91.7%,

90.4%, and 91.3% of respondents

believed that ATM, POS, mobile

and web services respectively are

very convenient. The introduction

of these platforms have made

financial transactions more

convenient for bank customers as

activation of some of these

services provide options for

making financial transactions

from the comfort of customers’

homes, offices, shopping centres

etc. The risk involved in the

movement of large sums of cash

is avoided thereby keying into the

government cashless policy

regime and guaranteeing a safer

world. This finding is line with

the findings of previous research

work as postulated by (Ayo and

Ukpere, 2010; Tijani and

Ilugbemi, 2015) that (EPCs) are

very convenient to customers

compared to the conventional

banking practices where

customers must be physically

present at the point of requisition

for banks services.

Similarly, 67.2%, 60.0% and

81.6% of bank customers

respectively believe that ATMs,

mobile and web services are very

reliable. Despite identified

152

concerns raised by (Auta, 2010;

Adewunmi, 2010) such as

network problems, frequent

system breakdown and

insufficient disbursable funds on

cash withdrawal etc., respondents

believed that the systems are

reliable. 54.7% of respondents

believed that POS are less

reliable. This is in line with CBN

report (2015, 2012) that POS is

the least patronized, accounting

for 0.48% of the total e-payment

transactions between 2010 and

2012.

On accessibility of the four e-

payment systems, 51.7% of bank

customers believed that ATM

systems are very accessible. This

result agrees with the findings of

Tijani and Ilugbemi (2015) that

ATM systems are accessible at

least within one day. It also

implies that 48.3%, 69.7% and

71.5% of bank customers are of

the view that ATM, POS and web

e-payment systems are not very

accessible. This position agrees

with the submission of (Odiboh,

Oresanya, and Ekanem, 2016;

Ayo, 2006) that lack of e-

payment infrastructure and access

to ICT facilities in parts of urban

and majorly rural areas of Nigeria

remain major obstacles towards

the realization of the cashless

policy economy.

On the contrary, 83.3% of bank

customers believe that mobile

payment systems are accessible.

The high mobile penetration rate

in Nigeria provides opportunities

for organizations and institutions

to harness the potentials and

technologies for economic growth

and development.

CONCLUSION

Since the introduction of

electronic payment channels in

Nigeria, financial transactions are

experiencing relative ease and

convenience in their banking

operations. Compared to the

traditional methods of payments

that requires physical presence

and interaction between banking

staff and customers, modern e-

payment channels like ATMs,

POS, mobile and web payment

systems are today being carried

out at customers convenience.

Although the current channels are

viewed to be secured, convenient,

reliable and accessible; large

number of bank customers

believe that more still need to be

done in terms of improved

security features, reliability of

POS as well as accessibility of

ATM systems, POS and web

services.

A critical analysis of each of

these e-payment channels did not

only reveal the experiences and

weaknesses of the current

platforms and add to knowledge;

it expanded discussions on the

need for financial institutions, e-

payment channel developers as


Volume 1, PP137-159, 2017


153

well as financial regulators to up

their game if the sustenance of

the e-payment channels is

anything to go by.

The removal of vulnerabilities

which has resulted to colossal and

irrecoverable losses experienced

by the current users of the

existing systems and the quest for

a more secured, efficient, reliable

and accessible e-payment

channels would greatly impacts

on the utilization and efficiency

of the platforms.

The CBN policy directing

commercial bank customers to

have a unique Biometric

Verification Number (BVN) and

the PCI security standard council

instruction to migrate from SSL

(Secure Socket Layer) and early

TLS (Transport Layer security) to

a more secured communication

protocol are acknowledgement of

the current challenges being faced

by bank customers. By this

innovation, all bank customers in

Nigeria would have unique BVN

numbers for online electronic

transactions through any of the

banks. This is in line with the

CBN guidelines towards the

realization of the Vision 2020

aimed at achieving a cashless

economy.

Based on the findings of this

study, the following

recommendations are proffered:

i. Financial institutions

should intensify effort in

ensuring the deployment

of e-payment channels

especially ATMs and

POS to the nooks and

crannies of viable urban

and rural areas while

ensuring that already

installed ones are

properly serviced.

ii. On the security of e-

payment systems,

gateway companies and

online merchant should

be mandated and

compelled to upgrade to a

more secured layers like

the transport layer

protocol etc. The

integration of biometric

verification number

(BVN) into e-payment

channels especially ATM

and POS is

recommended.

iii. Minimal charges capable

of deterring bank

customers from using e-

payment platforms

should be discouraged by

the regulatory bodies.

iv. All cases of incomplete

transactions emanating

from the use e-payment

should be given urgent

attention and resolved on

time in order to improve

the level of confidence on

e-payment systems.

v. Future studies should

investigate the

154

effectiveness of the e-

payment channels in the

sub-urban and rural

communities where they

exist.

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