Abstract
The electronic payment system is a platform that settles financial transactions between the buyer and seller. Payment systems are meant to ease the stress of both parties making an easy exchange or flow of money in a safe and secure environment. This study statistically estimated the relationship between electronic (e-payment) systems and economic growth in Nigeria. Monthly available Data for Nigeria on values of various payments systems were analyzed using Autoregressive Distributed Lagged regression (ARDL) method covering the period of (2012-2017). The result indicates a significant positive relationship between the electronic payment system and economic growth in terms of real gross domestic product (GDP) growth. Automated teller machines have a positive significant impact on economic growth, based on a probability of (0.06), but its contribution to the real GDP growth is negative (-5.0 percent). This means the ATM based transaction encourages more cash, possessions and may not yield the required goal of low cash based transactions within Nigeria’s banking populace. POS contributes 17 percent growth to the real GDP growth in Nigeria, web based transactions (WBT), contributes 2.3 percent to the real GDP growth, but INTERBANK transactions, has an insignificant impact on GDP growth while MOP has a negative contribution to the impact on real GDP growth. Point of Sales (POS) transactions is also the most patronized electronic banking tool and this is seen from the descriptive analysis, followed by web base transactions (WBT). POS and WBT have the highest average amongst all other variables. This implies that POS and WBT are significantly part of the major determining factors influencing and contributing to the real GDP growth output in Nigeria, while other variables such as INTERBANK transactions are although relevant but contributes minimally and drive real GDP output negatively down, as reflected in the results. Since the successful implementation of the e-payment systems which has much to do with internet connectivity and mobile banking, efforts should be made to design or improve on the internet security framework to check online fraud. There should be adequate legislation on all aspects of the operations of the e-banking and cashless system so that both the operators of the system and the public can be adequately protected.
Highlights
The evolution of technology with the rapid growth in Information and Communication Technology (ICT) across the globe, techniques for completing business transactions are quickly moving from a conventional system to an electronic payment system
The results of the Autoregressive Distributed Lagged regression (ARDL) regression show that at all levels of significance, the coefficients of the last two years real gross domestic product (GDP), Point of Sales (POS), Web Based Transaction (WBT) and INTERBANK lagged for the current year showing they are statistically significant
This implies that last year POS, WBT, and INTERBANK and other years lag identified above are part of the major determinant factor influencing real GDP growth of output in Nigeria, while other years not cited above are less important in driving real GDP output, as reflected in our results
Summary
The evolution of technology with the rapid growth in Information and Communication Technology (ICT) across the globe, techniques for completing business transactions are quickly moving from a conventional system to an electronic payment system. The payment system is an operational network governed by laws, rules and standards that links bank accounts and provides the functionality of monetary exchange using bank deposits [21]. The payment system is the infrastructure consisting of institutions, instruments, rules, procedures, standards and technical means established to affect the transfer of monetary value between parties discharging mutual obligations. Its technical efficiency determines the efficiency with which transaction money is used in the economy and risk associated with its use [6]. What makes it a “system” is that it employs cash substitutes with the use of electronic money and other ICT related equipment in its operations. Traditional payment systems are negotiable instruments such as draft cheques and
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