ASSESSING THE ROLE OF PAYMENT GATEWAYS IN FACILITATING BUSINESS TRANSACTIONS IN NIGERIA. (A CASE STUDY OF INTERSWITCH WEBPAY)
CHAPTER ONE
INTRODUCTION
Recent development of Information and Communications Technologies including electronic data transfer, internet and World network has caused an increased complexity of system effectiveness on buyer-supplier relationships in a supply chain. This complexity of supply chain management makes companies to improve on on-line communication systems so as to gain a competitive advantage in the market. For Instance, the internet may be used to increase relations through increased interactions among companies and the customer. Supply chain management focuses on general and long-term benefits and advantages for all members which include improving efficiency in ordering, transfer of money, appointing of suppliers, reducing bureaucracy and short-term order flow, through increased cooperation of buyers-supplier, betterment of inter- organizational processes, removing the intermediates, receipt of consultants based upon buying and transfer of power from seller to buyer all of which are made possible through the use of payment gateways(Nikakhtar and Yang, 2011).
Globally MSEs account for eighty percent of a country’s economic growth and are therefore considered the engine of growth of the world economy (Bodorick, Dhliwal and Jutla, 2002). In some other countries however, they account for more than ninety percent of the total business. With this large number of MSEs, it is therefore very important that enterprises engage in the use of payment gatewaysas it allows them to expand to new geographic areas, increase effectiveness in cost within the supply chain and improves a firms visibility (Ericksson, Hultman and Naldi, 2008).
Electronic Commerce (payment gateways) is the process of buying, selling, transferring, or exchanging products, services and information based on conditions such as ease of internet and e-mail availability and the use of World Wide Web to enhance business activity (Turban, King, McKay, Marshall, 2008) Payment gateways allows enterprises to sell products, advertise, purchase supplies, bypass intermediaries, track inventory, eliminate paperwork, and share information, it helps in reducing the expenses, time, distance and space in carrying out business activities which leads to better customer service, increased efficiency, improved products and high profits for the enterprises. Through its use, many enterprises are able to gain a competitive advantage by selling their goods and services directly as well as for communicating with suppliers, customers, creditors, partners, shareholders, clients, and competitors around the world (Lee & Viehland, 2008).
The use of payment gateways is increasingly becoming important in many organisations due to the increased development of information and communication technologies and globalization of business. Many research findings point out that enterprises are very slow in adopting payment gateways applications to their business models (Simpson and Docherty, 2004). This is due to lack of exposure and experience with information systems (IS), by most enterprises, low investment in IS and the fact that most enterprises have to depend on third parties for technical support. The enterprises are also faced with fears such as employee’s fear of loosing their jobs as a result of technology, lack of the required information on the website as well as the fear of being disconnected from their customers (Eriksson, Hultman and Naldi, 2008). Despite these fears, some enterprises have been able to embrace payment gatewaysin their daily activities of buying and selling of their products with an aim of gaining a competitive advantage in the market place especially in the fashion industry where most enterprises have turned to the use of payment gateways to buy and sell their products, with an aim of improving productivity and increasing customer support.
According to Tasabehji (2003), e–commerce awareness and adoption and utilisation is determined by technological, political, social and economic factors where the technological factors refer to the degree to which telecommunication infrastructure is advanced which increases access to new technology for enterprises, and consumers. Technology provides a competitive advantage to firms by reducing costs, increasing innovations and ensuring quality of products and services. The political factors refer to the rules and regulations laid down by the government that all enterprises are supposed to abide by in order to operate in a particular country; other factors include funding, incentives and other initiatives that the government gets involved in to support the use and development of payment gatewaysand information technology while the social factors include cultural aspects and demographic variables which include age distribution, education, leisure activities, attitude towards career and gender role. Incorporation of a high level of advancement in IT education and training will ensure both buyers and sellers are able to utilize payment gateways as they will be able to understand the use of new technology.
Previous studies have indicated that MSEs achieve significant benefits by adopting and utilizing payment gateways which is a very powerful method or tool of doing business as its use enables enterprises to carry out their business from any location and penetrate new markets at a click of a mouse (Olson and Boyer, 2002). Despite this Micro and Small Enterprises in Nigeria do not appear to be utilizing its potential to the full to increase their productivity, improve customer support and reduce the overall costs with an aim of gaining a competitive advantage in the market. This study sought to unearth the factors that influence the awareness and adoption of payment gateways in formal Business transaction, Nigeria.
Micro and Small Enterprises (MSEs) are a significant component of many economies in the world (Mutula & Van Brakel, 2007). This is due to the contribution they make in creating employment and facilitating regional development and innovation thus impacting on the economy of their countries. There has been a lot of changes in both the developed and developing countries due to rapid developments in ICT especially the Internet (Looi, 2005). There is a great motivation to expand commercial activities beyond the physical boundaries of the organizations into distant geographical regions through the domains of computer networks telecommunications, satellite broadcasting, digital television (Chaston, 2004) and the Internet. The channels of these networks were mostly through personal computers (PC’s) but Internet technology more recently has facilitated the use of devices such as digital cell phones, smart phones, palm-pads, laptop computers and many similar devices.
A study by Wangechi (2006) found out that there was a correlation between awareness and adoption of payment gatewaysand costs of e- commerce. This study failed to cover other factors that influence the awareness and adoption of payment gateways in MSEs. A study carried out by Ocha (2011), found out that variable knowledge of benefits derived from payment gateways and infrastructure would enable businesses to actively pursue payment gateways. She also found out that the Cost of payment gateways implementation
within the business, technical skills and IT skills amongst owners and employees would additionally encourage businesses in venturing into payment gateways.
Mbuvi (2000) in his study found that most tour operators mainly used the internet for the purposes of gathering information as opposed to carrying out transactions and that the tour operators were prepared and had the potential to adopt payment gateways. Accordingly, there was need for further studies to investigate other factors that influence the awareness and adoption of payment gateways in Business transaction, Nigeria. Therefore, this research sought to answer the following research questions; what are the factors that influence the awareness and adoption of payment gateways in Business transaction? What is the level of awareness of payment gateways in Business transaction? and what is the level of usage of payment gatewaysin Business transaction?
The overall objective of this study was to identify the factors that influence the utilization of payment gatewaysin micro and small enterprises in North. Specifically, the study aimed at covering the following objectives:
- To determine the factors that influence the awareness and adoption of payment gateways in Business transaction.
- To establish awareness of payment gateways in Business transaction Nigeria.
- To establish levels of payment gateways usage in Business transaction.
Findings from this research will help managers of Business transaction to understand the factors behind use of payment gatewaysin carrying out their business activities.
Payment gateways has become a very important way of doing business and therefore so many enterprises have recognized the opportunities for gaining a competitive advantage as well as the risks associated with the performance of ICT. Considering this study looks at the utilization of payment gatewaysin Business transaction, it will carry the assumption that payment gateways represents both positive as well as negative implications hence the negatives will also be highlighted so that Business transaction can address these shortcomings.
The findings from this research will help researchers and academicians in developing and expanding the syllabus in respect to this study thus providing a deeper understanding of the factors that influence the utilization of payment gateways in Micro and Small enterprises and their
implications. Apart from this, the results of the findings may encourage other researchers to research more on the factors that influence the utilization of payment gateways in MSEs in developing countries.
Scope of the study
In Nigeria, the government has embraced a policy on Information and Communications Technology named e-government where all GoK agencies get up-to-date and authoritative e- Government information & resources. Hence the case study of the research is Interswitch webpay