DETERMINANTS AND ADOPTION OF POINT OF SALES OF SELECTED BUSINESS ORGANISATIONS IN LAGOS STATE, NIGERIA

ABSTRACT
Nigerian payment systems are cash-driven because cash is the main mode of payments for several transactions. However, the Point of Sales (POS) Systems which is meant to encourage cashless economy as against the cash-centered operations is challenged with inadequate infrastructure such as network connectivity, lack of constant power supply systems, inadequate Internet, insufficient hardware and software needed to run POS, limited bandwidth for data passage, security issues, lack of trust, inadequate customer education and insufficient motivation to adopt POS. This study investigated determinants and adoption of Point of Sales of selected business organisations in the banking, Oil and Gas, retail and airline sectors of Lagos State.
The study adopted a cross-sectional survey research design. The population of the study consisted of individual SMEs who are users of POS in the selected sectors and business organisations in Lagos State with population figure of 11,663 and sample size of 2,059. The respondents were randomly sampled from the selected organisations where the data were collected. A validated questionnaire was used. A total of 2,059 copies of the questionnaire were administered, with a response rate of 77.1%. The Cronbach’s alpha coefficients for the constructs ranged from 0.719 to 0.810. The data were analysed using descriptive and inferential (Pearson Product Moment correlation and Regression) statistics.
The findings revealed that there was a significant relationship between availability of infrastructure and Adoption of POS (r=0.349; p < 0.01), POS security and Adoption of POS (r = .437; p < 0.01), Customer trust and Adoption of POS (r = 0.373; p < 0.01), Customer education and Adoption of POS (r = 0.477; p <0 .01="" 0.01="" 0.733="" adoption="" and="" customer="" effect="" from="" independent="" model="" motivation="" obtained="" of="" on="" p="" pos.="" pos="" r="" regression="" showed="" summary="" sup="" the="" value="" variable="">2
 suggested that the variance obtained from the adoption of POS can be explained by the identified variables, which are availability of infrastructure, POS security, customer trust, customer education and customer motivation.
The study concluded that availability of infrastructure; POS security; customer trust; customer education and customer motivation had significant and positive relationship with adoption of POS in the selected business organisations who are SMEs in Lagos State Nigeria. The study thus recommended that stakeholders should ensure that infrastructure; POS security; Customer trust; Customer education; and Customer motivation are in place to enhance the adoption of POS in selected business organisations in Nigeria.

CHAPTER ONE
INTRODUCTION
1.1       Background to the Study                      
It is observed that following the global advancement in technological development, Nigeria is not left out of this advancement. Information and Communications Technology (ICT) has evolved and has become a vehicle for technological growth in the economy of many societies as it has unarguably made life easier (Indjikian, Rouben, Donald & Siegel, 2005; Okpaku, 2003; Paltridge, 2008; Zhen-wei, Pitt, & Ayers, 2004). The global acceptance of Information and Communications Technology as well as its usage have attracted and received the interest of researchers who are on regular basis out to proffer solutions for problems related to technology development for decades (Davis, 1989; 1993; Park, Yang, & Lehto, 2007; Shih, 2004; Venkatesh, 2000; Venkatesh, Thong, & Xin, 2012; Zhou, Lu, & Wang, 2010). This development had encouraged further research on the utilisation and benefits of ICT to several nations in order to improve their economic development (Indjikian, & Siegel, 2005; Venkatesh et al. 2012; Venkatesh, 2000).
In the work of Louho, Kallioja, and Oittinen (2006), technology acceptance is about how people accept and adopt some technology for use. The user acceptance of technology has further been explained as the willingness within a user group to employ IT for the tasks it is designed to support (Dillion, & Morris, 2001).
The problems arising from the use of several payments instruments have received the global attention and so also is the close monitoring of efficient payments instrument by various monetary authorities of the world (Adeoti, 2013). Omotayo and Dahunsi (2015) asserted that many nations of the world have developed an effective and efficient payments system whose transactions are required to guarantee and sustained their economic development.
Several countries of the world have adopted policies to accelerate the use of electronic channels and reduce the use of cash. The motivations for these policies vary from country to country but typically reducing the cost of banking, encouraging financial inclusion, increasing the amount of capital available for investments within the banking system, driving real economic growth and possibly reducing tax evasion (NIBSS, 2015).
In a recent study, evolution of technology for use in financial transactions poses a lot of challenges as questions arose regarding the stability of the instrument in guaranteeing the efficiency and effectiveness of monetary policies of nations worldwide (Odior & Banuso, 2012). From history, different payment systems have being in use e.g. barter system was common, but incidences of double coincidence of want necessitated the use of money. However, technological development gave rise to the use of superior instruments as the technology developed (Odior & Banuso, 2012). A little over three decades ago, the use of cash in making purchases in the United States of America has declined, and increasingly adopts the use of electronic payments systems. However, developing economy like Nigeria are still at the introductory stage of the use of alternative payments platform as recently introduced by the monetary policy maker of Nigeria, the CBN (Humphery, 2004).
According to Laudon and Laudon (1991), business organisations in similar industries especially the banking industry attempts to competitively outdo one another, this is done by embracing Information and Communications Technology (ICT), hence ICT becomes the absorber to provide the cooling effect of the competition, this also means that any banking industry who aspired to remain competitively relevant and continue in business in local or global arena must embraced ICT.
Similarly, studies have also shown that the use of cash for transactions made for payments of goods and services in many nations of the world is risky and complex, and is gradually giving way to alternative payments platform, this is because money outside the bank cannot be subjected to financial regulations and operational procedures by regulatory agency, and this limit the ability of the regulator to achieve the set objectives (Adeoti & Oshotimehin, 2011).
In Nigeria, to reduce the volume of cash in the economy and subsequently reduce the hazard associated with cash carrying, the Federal Government through the regulatory agency introduced several electronic payments systems which include payments cards and other paper-based monetary instruments. This then necessitates the establishment of companies involved in manufacturing of switches to facilitate interconnectivities of the various devices such as ATM, POS etc with financial transactions (Salimon, 2006).
As part of the National issues relating to the use of POS, Central Bank of Nigeria (CBN) recently came up with a new policy of cashless economy, focusing on the deployment of point of sales terminals in order to achieve among other things the reduction in the use of cash as a means of business transactions in preference to the use of other electronic payment system (e-Payment) and hence reducing the cost of managing cash. This policy is to address some of the challenges that accompanied over dependent on the use of cash to transact business in Nigeria, and particularly the cost of managing cash in Nigeria.
In the CBN (2011) reports cited in Adeoti and Oshotimehin (2011), the cost of cash management was huge and are as follow: in 2009, CBN was said to have spent the sum of N114.6b, this rose to N135b in 2010, and N166b in 2011, and an estimated sum of N196b was projected for 2012, to manage currency production and services, these amounts are substantially large and require an urgent attention to address the situation, and could be reduced to a minimal level should the economy embrace cashless and other alternative payments system especially POS. This would then reduce the cost of printing currencies, cost of transportation of cash, cost of sorting currencies, and also reduce security cost of managing the printed currencies. Although an average Nigerian businessman prefers cash transactions and will embrace an alternative if they are well informed or educated of its benefits.
In the light of the industry situations necessitating the introduction of POS, it is widely recognized that POS which is regarded as safe and efficient retail payment systems enhanced the effectiveness of the financial system, boost the consumer confidence and facilitated the functioning of commerce by Business Information System (BIS, 2003). Because Nigerian consumers largely depended on the use of cash to conduct transactions, the introduction of POS by organisations in the country is expected to ease the carriage of large sum of money by consumers and also to enhance the effectiveness of organisations. In this regard, it has been observed that funds that circulate outside the banking sectors are over 90% (Adeoti & Oshotimehin, 2011; Ojo, 2004; Ovia, 2003), reasons are attributable to poor awareness of e-payment solutions especially the POS, inadequate campaign on its existence and what it can do, ignorance of the benefits to be derived from keeping money in the bank, or poor banking culture (customer education), lack of trust, illiteracy and the love for the status quo.
The rapid growth of electronic methods of payment in developed and developing countries is being propelled by the use of payment cards (Credit or Debit) or contactless payment cards in physical store (POS terminals) or on the web. In Nigeria, Verve cards, Visa and MasterCard are issued by all the banks. These electronic transactions that are being carried out in physical stores are done via Point of Sale terminals. It allows for the merchant account to be credited while the customer’s account is debited, thereby enabling the capabilities of retailers to a high degree in accepting advanced electronic payment options such as contactless payment cards, multi-application payment cards that can either be debit or credit cards (Okechi & Kepeghom, 2013).
 Similarly, the growing use of payment cards as the preferred means of payment between business-to-consumer and business-to-business transactions is synonymous to the advancement in technology, e.g. the recent proliferation of internet has led to the development of internet based POS terminals which allows for fast end-to-end transactions that supports always on connectivity and at the same time lowering the cost per transaction processing (Odlyzko, 2003).
The emergence of Global Systems for Mobile Communications (GSM) has also led to the emergence of a technology called NFC, Near Fields Communication which involves the use of Mobile phone as a wallet containing different cards (Debit and Credit), with this, a holder need not carry cards separate from the phone as the phone would have been made card ready. Therefore, the role-played by the Point-of-Sale (POS) terminals at the retailers’ location is of great importance, because such terminals provide the most efficient and often preferred way of paying by the customers using payment cards which in turn save merchants some of the cash that are often lost to sales staff at the employment of the organisation especially the low income bracket. Essentially, the POS ensures the processing of credit or debit cards transactions and other electronically submitted transactions in the retail environment and by doing this the POS deployment has contributed immensely to the growth of the world’s economy (Ondrus & Pigneur, 2007).
To reduce the volume of cash in circulation, the risk involved with carrying it, and the menace described, the adoption of payment system (POS) terminal will help to curtail these challenges. It could also aid the integration of regional economy between Nigeria and other countries within the sub-region as this has become a global trends and acceptable form of payments. The adoption of this system can also encourage e-payment initiatives by setting up of switching companies to facilitate interconnectivity between the banking institutions and the payments systems such as Automated Teller Machine (ATM), Point of Sales Terminals (POS), as well as other add-on devices to be used to implement the POS device and thereby leading to efficiency in an organisations operations. 
The major factors of interest in the use of POS include the discussions on ICT infrastructure which has become an important element in the use and adoption of technology in an organisation. The infrastructure is composed of a set of hardware, software, services, and procedures, data security, power supply systems, processes and person, networking and peripherals and all the required devices to make it work, its continuous availability are key to the use of Point of Sales (POS) as they form the basis for their interconnectivity in an organisation, however this is inadequate, for example network failure, frequent power outage, unavailability of POS to merchants, and insufficient bandwidth are areas that needs improvement to encourage its adoption in an organisation as these have been inadequate and therefore slowdown its adoption (Adeoti & Oshotimehin, 2012; Adeoti, 2013; Aguilar, Baquero & Alejandro, 2004; Buabeng-Andoh, 2012; Ebietomere & Ekuobase, 2014;  Mohammed & Mohammed, 2012). The adoption of POS in an organisation with availability of infrastructure as measurable variable will make further contributions to the ongoing research and focusing specifically on the determinants and adoption of POS of selected business organisations in Lagos state.
Notable researchers have thoroughly examined the role of adequate infrastructure in the adoption of technology especially POS with the expectations that it would enhance the operation of an organisation’s financial transactions such researchers include (Adebayo, Balogun, & Kareem, 2013; Balanskat, Blamire, & Kafal, 2007; Buabeng-Andoh, 2012; Gulbahar, 2007; Ladokun, Osunwole, & Olaoye, 2013; Lawson, 2006; Plomp, Anderson, Law & Quale, 2009; Sajuyigbe & Alabi, 2012).
The policy through the use of advance information technology accelerate fund transfer, hence reduces time wasted in banks. Similarly, it was noted that the communications infrastructure necessary for the wireless Internet environment that will work with POS is quite complex and its complexity may have hindered its adequate deployment (Tarasewich, Nickerson, & Warkentin, 2001).
Electronic payments system (e-payment) refers to payments made electronically, that is paying for goods and services rendered without exchange of cash in any form. The success of the implementation would depends upon the infrastructure on ground to drive the system; this is because the communications protocol must be effective and efficient as customers would not condone excuses of network breakdown which customers do experience even with normal banking application. In order words infrastructure must be adequately enhanced for user acceptance of point of sales terminals in Nigeria. The infrastructures in addition to the one described above includes the physical environment, network connectivity, backup and disaster recovery plans, energy management (power supply systems) etc.
Security challenges arising from robbery attack of cash holders, and other vices are among factors of interest in the adoption of POS, as reported by the Central Bank of Nigeria (CBN, 2009; CBN,2010; CBN, 2011), to overcome the challenges and other vices associated with the use of cash for business transactions, this study has become imperative in order to reduce the stated challenges in an organisation, similarly, a recent study of challenges militating against adoption of on-line shopping in retail industry in Nigeria, fraud and security concern were identified as serious impediments to the adoption of the internet to make transaction in the retail industry (Aminu, 2012). Security is defined in that study as set of procedures, techniques and safeguards designed to protect hardware, software, data, and other system resources from unauthorised access, use, modification or theft (Davis, Bagozz, & Warshaw, 1989 as cited in Aminu, 2012).
Another issue of concern in the adoption of technology in an organisation is security; this has been stressed in an article challenges to the efficient use of POS terminals in Nigeria (Adeoti, 2013). The author asserted that the efficient use of POS terminals in Nigeria will reduce the security challenges arising from fraud, and robbery occasioned by withdrawal of cash by unsuspecting customers from the bank. The importance of security of communication over the network as the network becomes available to the public is also of immense importance, just like security on smart card a device used in POS terminal has become a critical issue as various transactions involving exchange of data and those through the internet must be well protected.
This is to prevent unauthorized access to critical data and other information of great importance by fraudsters and hackers who daily attempts breaking into systems, by the adoption of POS in an organisation (Taherdoost, Sahibuddin, & Jalaliyoon, 2011). Similar research work done by Ebietomere and Ekuobase (2014) also agreed that security has become an important issue in adopting technology, security by these authors involved access to the network resources since unauthorized access could impact negatively on the enterprise as well as the customers and therefore discourages its adoption. A study indicated that relying on traditional security control has become obsolete such as physical access controls, security guards at the gate of the organisation securing their assets, processes and communications (Tarimo, 2006).
The complex nature and the possible intelligence of hackers makes it mandatory for adequate security applications to be installed on each layers of POS operations, in order to discourage the misuse of the technology, so the device connected to it must be well secured. Other security issues to be considered and which are of immense importance for consumer adoptions are anonymous and privacy, which relate to use access to critical personal information of customers and purchase records (Jayawardhena & Foley, 1998; Shon & Swatman, 1998). 
Following issues raised above, it is also pertinent to consider trust which in previous research work plays a major role in the technology deployment. Geffen (2000) defined trust as a confident belief in favorable expectations about what the other party will do. In order words, a favorable expectation of the adoption of POS will encourage its use. Trust will have positive impact on a consumer’s intention towards using POS for financial transactions. Attempt to analyze the role of trust in the deployment of POS terminal in an organisation have been made, Dixit and Datta (2010) noted that factors like security and privacy and trust among other factors increase the acceptance of technology deployment in India. It is also argued that the face to face interaction in business transaction involving electronic payment has made the place of trust in its adoption important (Carter & Belanger, 2005; Gliber & Balestrini, 2004).
Trust may have positive impact on the customer’s intention towards using POS for financial transactions (Adeoti & Oshotimehin, 2011) which may in turn increase the customer base in an organisation in Nigeria. Creating an awareness of the importance of POS deployment in an organisation has become a major factor to encourage its use and especially in line with the high number of illiterate population within the Nigerian society and vast numbers of unbanked population and porous banking systems (Dada & Oronsaye, 2011). The majority of the unbanked population are illiterate and will therefore depends on the few literate for their transactions through the POS which may make them vulnerable on the scruples few literate therefore there is the need for serious customer assurance of non negativity in this respect (Ogu, 2011).
Every new technology into the market has to go through a proper introductory process for the populace to be able to adapt and then benefit from the use of such technology (Agboola, 2006; Amaoko, 2012; Ayo, 2006; Dixit & Datta, 2010; Nyangosi & Arora, 2009). The POS device should undergo proper introductory process through basic education and awareness creation just like ATM. Many of the consumers need to know what POS is, what it stands for or what it looks like and what its functions are. Prospective users need to be motivated to adopt the use of POS in an organisation.
As part of technological innovation, Humphrey, Pulley, and Vesala (2006) asserted that payment cards are considered as the main drivers of the shift from paper-based towards electronic-based payment instrument, which is commonly viewed as a significant socio-economic and welfare improvement in the society. Payment systems are going through a period of rapid change with paper-based instruments increasingly giving way to electronic forms of payment.
            For adequate deployment of electronic payments (POS) systems in Lagos state, variables that are needed to measure the adoption of POS of selected business organisations in Lagos state have been identified. This has become necessary because of the present government policy on the reduction of cash carrying for business transactions in Nigeria with its attendant costs and risks. The existing studies on the adoption of POS in the country have examined various aspects of POS adoption and other e-payment systems in Nigeria (Adeoti & Oshotimehin, 2011; 2012; Adesina & Ayo, 2010; Ayo, 2006; Ayo, Adebiyi, Fatudimu & Ekong, 2008; James, 2012). These studies include factors influencing customers’ adoption of point of sale terminals in Nigeria (Adeoti and Oshotimehin, 2011) and adoption of point of sale terminals in Nigeria, assessment of consumer’s level of satisfaction Adeoti & Oshotimehin. Others include an empirical investigation of the level of users’ acceptance of e-banking and commerce (Adesina & Ayo, 2010), framework for e-commerce implementation (Adebiyi, Ayo, Ekong, & Fatudimu, 2008), the prospects of e-commerce implementation in Nigeria (Ayo, 2006) and the acceptance of e-banking by customers in Nigeria (James, 2012).
Researchers having examined the factors for motivating the adoption of technology in an organisation, that student motivation in adopting an e-learning technology is a product of the interest generated by the instructional medium used in the delivery of the subject matter (De-lange, Suwardy, & Mavondo, 2003; Hassenzahl, 2003, Hassenzahl & Allrich, 2007; Schalk, 2009; Sun & Zhang, 2008). Follows (1999) contended that innovative and high-level technology mediums can stimulate learners, increase motivation and enhance learning outcomes just as it is applicable to the adoption of technology in an organisation, customers’ involvement in technology adoption create a sense of joy in being part of introducing innovations to an organisation as motivating factors. Similarly, it has been posited that the mode of use of technology is closely related to motivation and motivation is of intrinsic or extrinsic (Sun & Zhang, 2008), while intrinsic motivation means performing an activity with inbuilt satisfaction and extrinsic motivation can be described as performing an activity in order to achieve a given objectives.
When an organisation acquires technology in order to enhance its operation, the overall objectives would be to achieve efficiency in the organisational operations and with right human resource in place, this objective could be achieved. In a recent research conducted in Nigeria, it is observed that technology acquisitions are essential for organisational efficiency (Anyadike, 2013).
The intention of the regulatory agency (CBN) as part of its strategic plan is to ensure that large chunks of the cash outside circulation are captured within the banking system. Some economists have even suggested that if less cash are allowed to float in the economy, social welfare will increase (De-Grauwe, Buyst, & Rinaldi 2000). Nigeria as a developing economy needs to learn from the success story of advanced nations that have gone far ahead in the deployment of this system, though  Adesina and Ayo (2010), found that all banking institutions in Nigeria uses one form of Information and Communications Technology for its services including ATM, and other e-payments solutions. The adoption of payment instruments such as Point of Sales Terminals (POS) could give rise to significant growth in the use of electronic payment systems (Salimon, 2006), and therefore improve the economy of Nigeria.
Finally, in summary, as an emerging problem around the use of POS necessitating this study, major challenges in this regard as examined by researchers includes inadequate infrastructure. Study conducted indicates that there are problems of low or none adoption of POS as a means of conducting financial transactions in Nigeria and Lagos state in particular as a result of inadequate infrastructure that is necessary to support the new and innovative payment system, NIBSS (2012) reported that telecommunications and network connectivity accounts for 58.5% of challenges merchants face in POS transactions which discourages its use and low adoption.
For effective electronic payments systems such as POS to be in place, infrastructure especially electricity which is not in adequate supply must improved (Odior & Banuso, 2012), this therefore explained the importance of continuous availability of electricity supply systems which will power the POS. Similarly, Security concern is another barrier to the adoption of POS in Lagos state and particularly Nigeria and several countries of the world (Alao, 2009; Aminu, 2012; Gefen, 2000; Siau, Sheng, Nah, & Davis, 2004; Shon & Swatman, 1998). For example, it is noted that the key requirements for securing financial transactions in electronic environment include confidentiality, data integrity, authentication, and non-repudiation (Shon & Swatman, 1998), all of which are concerned about security of electronic transactions. Siau et al. argued that lack of consumer perceived security and trust in vendors and payment systems in an electronic environment constitutes major barriers to electronic and mobile commerce transactions.
Furthermore, lack of trust arising from the security of data originating from the use of POS poses a problem to the adoption of POS in many countries (Ganesan, 1994; Currall & Judge, 1995; Friedman, Kahn, & Howe, 2000; Gefen, 2000). Currall and Judge (1995) defined trust as an individual’s reliance on another party under conditions of dependence and risk. Ganesan (2000) showed that trust is a necessary ingredient for long term orientation because it shifts the focus to future conditions. Also a new product must have through proper introductory stage which is done by adequate awareness creation which also limits the adoption of POS as enumerated by existing study. Finally, lack of motivation are also stated as one of the reasons for low adoption of POS in an organisation, for example it has been stated that there is high cost of acquiring of POS in Nigeria which discourages its adoption by merchants. Although the Federal Government had through the Central Bank of Nigeria (CBN, 2011) went into negotiations with the selected manufacturers of POS terminals to discount the cost of the equipments, installation and training so as to motivate its adoption, but they still need to do more as it has been seen to be inadequate.
           
1.2       Statement of the Problem
In spite of the achievements recorded so far in the implementation of the cashless policy of Federal Government of Nigeria, it is observed that to sustain customer usage of e-payments platform especially POS has been difficult. This is in reference to data obtained from CBN releases e-payments statistics for the period 2012 - 2016 (CBN, 2016) which indicates that despite the introduction of cashless economy with its attendant benefits the following data representing low penetration of POS compaired to ATM was given......

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