CHAPTER TWO

LITERATURE REVIEW

2.0 INTRODUCTION

Our focus in this chapter is to critically examine relevant literature that would assist in explaining the research problem and furthermore recognize the efforts of scholars who had previously contributed immensely to similar research. The chapter intends to deepen the understanding of the study and close the perceived gaps.

2.1 Conceptual Framework

CORONAVIRUS

Corona virus is a large group of viruses that resemble a crown. The word corona is a Latin word meaning crown (https://www.cdc.gov/coronavirus/types.html). There are different types of corona viruses and people around the world commonly get infected with human corona viruses 229E, NL63, OC43, and HKU1. The Middle East Respiratory Syndrome or MERS-CoV; Severe Acute Respiratory Syndrome or SARS; and novel Corona virus or SARS-CoV-2 are all caused by corona viruses and result in severe respiratory illnesses.

THE BREAKOUT OF CORONAVIRUS DISEASE 2019 (COVID-19)

In December 2019, a doctor named Li Wenliang warned his colleagues about a possible outbreak of an illness in the Chinese city of Wuhan, in China's Hubei province, and spread globally, resulting in the 2019–20 coronavirus pandemic. The illness resembled severe acute respiratory syndrome (SARS), later recognized as coronavirus disease 2019 (COVID-19). The COVID-19 virus which belongs to a family of coronavirus is caused by SARS-CoV-2 (severe acute respiratory syndrome coronavirus 2)1 with various symptoms such as pneumonia, fever, breathing difficulty and lung infection. The World health organization announced the official name of this virus as coronavirus disease 2019 (COVID-19) and declared it a pandemic. Following the confirmation of the outbreak, the world health organization associated the outbreak of this pandemic disease to the Huainan South China seafood market place, although there is no specification as to the type of animal it is to be associated with . The WHO boss chief Tedros Ghebereyesus said despite its robust health system, China was concerned about the outbreak and found it difficult to detect and control its spread at the time and showed concern over it spreading to other countries with weak system(WHO 2020). Ghebereyesus concern became reality as many countries around the world began to record cases of the virus. Also, as time went by, it was discovered that there is human to human transmission through close contact (WMHC 2020). Within one month of the outbreak of this virus, it spread across the Wuhan city and beyond considering the New Year period and the high level of mobility of the Chinese people as at that time. As at 31st January 2020, about 11791 cases were confirmed and 17,988 cases were suspected in 34 provinces. The spread of COVID-19 to other countries was rapid and fast this is unavoidable because the world is interconnected and there was no restriction of movement to ensure less human to human contact.

CORONAVIRUS DISEASE 2019 (COVID-19) IN NIGERIA

On 31 January 2020, following the developments of COVID-19 pandemic in mainland China and other countries worldwide, the federal government of Nigeria set up a Coronavirus Preparedness Group to mitigate the impact of the virus if it eventually spreads to the country. On the same day, the World Health Organization listed Nigeria among other 13 African countries identified as high-risk for the spread of the virus.On 27 February 2020, Nigeria announced the first confirmed case of coronavirus disease 2019, when an Italian citizen in Lagos state tested positive for the virus. Nigeria subsequently saw an increase in confirmed cased afterwards. As of 11:25 pm 22nd April, Nigeria’s case count had hit 873 confirmed cases.

LOCKDOWN

A lockdown is a restriction policy for people or community to stay where they are, usually due to specific risks to themselves or to others if they can move and interact freely.

LOCKDOWN STRATEGY BY NATIONS AROUND THE WORLD

Coronaviruses may be carried among animals however this type of virus does not spread among humans, although with an exception to the SARS and MERS which usually spread through close contact with infected people. This is evident in the later discovery of cases among medical staffs with no linkage with the seafood market thus an indication that there is a human to human transmission of the virus. The Chinese authority resorted to the lockdown strategy to prevent the spread o this virus this is because there are three main routes for transmitting the COVID-19 i.e droplet transmission, contact transmission and aerosol transmission. This method of transmission makes the spread of the virus wild and the situation that accompanies it a pandemic. The transmission through droplets occurs when someone infected with the virus coughs or sneezes and a non-infected person in close environment inhales it(Ezigbo, Onyebuchi; Ifijeh, Martins 2020). Also, the COVID-19 may be contacted when an infected person touches a surface or comes in contact with a non-infected person who ends up touching their mouth or nose. Thus, it may be contacted when respiratory droplets mix with air and inhaled into the lungs in a closed environment14,15 . This transmission method has warranted the restriction of gatherings and close contact, these gatherings which usually occur in places of worship, banks, parties, beach, malls, offices, schools, and airport e.t.c. These activities contribute to the economic activities of countries therefore, their restrictions are an automatic lockdown in affected countries. The lockdown is necessitated due to how fast the virus spreads and because there is no specific antiviral treatment effective against the COVID-19 virus. Apart from the preventive measures such as the use of face mask, avoid contact with infected individuals, using disinfectants, coughing or sneezing into a tissue or a flexed elbow, avoid touching the face or nose. The best way of preventing the virus is to avoid coming in contact with it and this can only be achieved when people are restricted from coming in contact, thus, the lock down.

The lockdown strategy can be said to be as a result of the need to ensure that people do not come in close contact with each other. Social distancing is efforts made towards reducing the level of transmission of COVID-19 in a country by minimizing the number of contacts between infected and healthy individuals. The unavoidable effect of such social distancing measures is a lockdown of all activities in the country to ensure the COVID-19 transmission is reduced drastically.

LOCKDOWN STRATEGY IN NIGERIA

On the 19 of March 2020, the Federal Government of Nigeria announced a restriction of entry into Nigeria for travellers from the following high incidence countries: China, United States of America, United Kingdom, Italy, Spain, Japan, France, Germany, Iran, Norway, South Korea, Netherlands, and Switzerland which was effective from 21st of March 2020 for an initial period of four weeks. These were countries with over 1,000 cases domestically at the time. On March 29, President Buhari announced a cessation of movement in the Federal Capital Territory and in Lagos and Ogun States to reduce the spread of COVID-19.19 The lockdown went into effect at 11:00 pm on March 30 and remained in place for an initial period of fourteen days, but was however extended for another fourteen days due to increasing cases. Just before the end of the federal government extended lockdown, Nigeria Governors’ Forum (NGF) which held on Wednesday decided to ban inter-state movement for two weeks as part of efforts to curb the spread of the virus. From the initial announcement of March 2020, the lockdown extended to July and gradually the Lockdown ban was lifted.

POINT OF SALE(POS)

According to Rose et al (2008:113), point of sale terminals are computer facilities in stores that permit a customer to instantly pay for goods and services electronically by deducting the cost of each purchase directly from his/her account. The customer presents an encoded debit card to the store clerks who insert it into a computer terminal connected to the financial firm’s computer system. The customer’s account is charged for the purchase and funds are automatically transferred to the store’s deposit account. Adeoti et al (2012:10) described a POS machine as a terminal, a box that allows a merchant to accept payments by means of cards from his customers. It works almost like an ATM machine except that in this case, the machine is designed to accept payments only on behalf of the merchant which is mostly the registered company which has an account with bank. Rose and Hudgins (2008:113), state that current Point-of-Sale network are divided between online and offline POS systems. The offline accumulates all of the customer’s transaction until day’s end and then the total of all transactions is subtracted from the customer’s account. In contrast, online system deducts each purchase from the customer’s account as that purchase is made. Customers and financial firms would generally prefer offline POS system, but online system appears to reduce the frequency of customer overdrafts and, thus may be less costly in the long run.

EVOLUTION AND OPERATION OF POS BUSINESS IN NIGERIA

The Nigerian economy being largely cash-based is associated with high cost of cash management. Reliance on cash based payment platform has been found to be risky and cumbersome. Carrying cash in the economy is responsible for large pool of money being found in the hand of the unbanked citizens. In an effort to reduce the volume of cash in circulation and reduce the risk of going about with huge cash, the CBN introduced electronic payment system such as point of sale [POS] terminal, automated teller machine (ATM), payment cards [Smart card] etc into the Nigerian economy. This has given rise to the introduction of switch companies that facilitate interconnectivity (Salimo in Adeoti 2013;2). A point of sale/ service [POS] terminal is used to conduct retail transactions. It can provide many services including credit card processing check reading and transactions depending on the model. These devices can be found virtually anywhere, from grocery stores to gas stations. The technology used in POS machine results in a speedy and secured transaction. Based on CBN policy on cash lodgments and withdraws all businesses that accept cash up to N0.5m for individuals and up to N3m for corporate customers for their daily business transactions require a PoS terminal to avoid being charged from 2% in excess of the approved free lodgment limit.

According to Central Bank of Nigeria (2013:3) the approved minimum standard for POS card acceptance services include that all industry stakeholders who process and /or store cardholder information shall ensure that their terminals, applications and processing systems comply with the minimum requirements of the following standards and best practices (for PCI, the minimum requirement will be level 2.1). In addition, all terminals, applications and processing systems should also comply with the standard specified by the various card schemes. Each vendor must provide valid certificates showing compliance with these standards and must regularly receive status of all its terminals to ensure they are still compliant as standards change. There will be a continuous review and recertification on compliance with these and other global industry standard from time to time.

When the POS machine is activated a buyer is able to use his ATM or acceptable debit card to make payment by using his Personal Identification Number (PIN). The merchant’s account gets credited and there is no notification while the payer’s account at the same time gets debited. The machine has a power source with a battery that needs to be charged before use. So it works like a phone, uses a special SIM Card from any of the supporting networks like MTN or GLO in Nigeria for connectivity but the processing is made possible by inter bank transfer systems such as Interswitch or Etransact.Customer’s resistance to POS usage appears to be fading, and their future growth is expected to continue to be rapid. Service providers must work to overcome several disadvantages for the customer, such as loss of cheque book float (because loss of funds occurs the same day), computer problems that can generate costly mistakes, and the absence of canceled cheques or cheque images, which gives customers handy written receipts for tax purposes. However, chequeing account fees are on the increase at a rate that is faster than inflation rate, which eventually may make POS terminals more economically attractive for more customers.

ROLES AND RESPONSIBILITIES OF PARTIES TO POS E-PAYMENT SYSTEM

The various parties to the POS payment platform have roles and responsibilities imposed on them by statute. These include:

POS Merchant Acquirers; 

Only CBN licensed financial and non-financial institutions shall serve as merchant acquirer  Merchant acquirers can own POS terminals, but shall only deploy and support POS terminals through a CBN licenced Payment Service Provider (PTSP).  Merchant acquirers shall ensure that POS terminal purchase and deploy a merchant/retailer locations through CBN licensed payment terminal services provider(PTSP) shall accept all cards (card agnostic). Merchant acquirers shall enter into agreements/contracts with merchant for accepting payment by means of electronic payment instrument. All agreements/contracts shall clearly spell out the terms and conditions, including roles, responsibilities and rights of the acquirer and the merchant. The contract should also clearly spell out requirements for the merchant’s responsibilities in ensuring proper upkeep of the POS terminal. Every merchant acquirer shall connect all its POS terminals or other acquiring devices directly to the payments service aggregator. Merchant acquirers shall switch all domestic transactions through the preferred local switch of their choice for purposes of seeking authorization from the relevant issuer. All POS Terminals procedure should allow for implementation of biometric authentication by December 2015.Merchant acquirers in conjunction with their payment terminal service providers shall be responsible for ensuring that merchants are trained and made to put in place reasonable processes and systems for confirming cardholder identity and detecting suspicious or an authorized usage of electronic payment instruments where customer/card is physically present at point of sale.  Merchant deposit banks shall maintain and reconcile accounts on behalf of merchant acquirers (CBN 2013)

Payment Terminal Services Provider (PTSP)

To ensure effectiveness of POS operations and proper support/maintenance infrastructure, only CBN licensed payments terminal service providers shall deploy, maintain and provide support for POS terminals in Nigeria.  CBN shall license a limited number of payments terminals service providers, to enable the PTSP build scale and maximize efficiency. Criteria for PTSPs shall be defined by CBN, and the performance of licensed PTSPs shall be reviewed annually to confirm they meet defined performance targets. Licensee of PTSPs that fails to meet performance expectations can be withdrawn and fresh license issued to qualifying companies.  PTSPs can identify merchant opportunities and market potential merchants on behalf of acquirers.  Only PTSPs shall be allowed to deploy POS terminals in Nigeria. Any party, other than a PTSP that deploys POS terminals, shall be fined 50,000 Naira per day that terminal remains deployed. PTSPs shall clearly agree service level agreements (SLAs) on deployment timelines with acquirers to ensure efficient deployment of POS terminals.  PTSPs shall ensure that deployed POS terminals are functional at all times. Appropriate mechanism must be put in place to remotely detect failure which shall be rectified or replaced within 48 hours.  All terminals deployed by PTSPs must have stickers with the PTSPs support service contact information. Additionally PTSPs must have a support infrastructure that ensures support coverage for merchants 7 days a week

Payment Terminal Services Aggregator

Nigeria interbank settlement system (NIBSS)-owned by all Nigerian banks and the Central Bank of Nigeria (CBN) shall act as payments terminal services aggregator for the financial system.  As the payments terminal Services aggregator for the industry, NIBSS shall establish communication network for reliable POS data traffic that shall satisfy the services and availability standards and expectations of the industry on a cost effective basis.  As the payments terminal service aggregator for the industry, NIBSS shall on an annual basis or more frequently as may be required, on behalf of the industry certify POS terminals that meet the POS terminal standards approved for the industry.  As the payments terminal services aggregator, NIBSS shall participate on a joint committee of industry stakeholders, to negotiate a price list with 2-3 terminal equipment providers for bulk purchase of POS terminals for Nigerian market. It is expected that a bulk purchase agreement will enable cost reduction on POS terminals as well as the ability to define special requirements for Nigerian market and ensure sufficient support infrastructure from the terminal manufacturers. Any terminal owner may subscribe to the negotiated global price list for the purchase of POS terminals to take advantage of these benefits.  As the payment terminal service aggregator, NIBSS shall be the only entity permitted to operate a terminal management system. All POS terminals operating in Nigeria must be connected to the payment terminal services aggregator. This is to ensure comprehensive oversight, reporting/ performance monitoring, and also in line with our objective of shared industry infrastructure and best practices. NIBSS shall provide acquirers and payment terminal services provider and their merchant (where required) the ability to view transactions and monitor performance of their devices.  As POS terminal deployed it shall be technically enabled to accept all cards issued by Nigerian banks.

IMPORTANCE OF POS

POS payment platform confers several benefits to users. Some of these benefits are summarized thus:

1. It creates a better and faster way of making payments.
2. It is convenient to use for all amounts as cash payment could be bulky.
3. It helps to Deposits money electronically into your account without having to go to the bank.
4. It reduces risks of theft and cash handling.
5. Transactions can be monitored online real time.
6. MIS report can be generated anytime on the POS terminal for you.
7. It Increases sales as customers buy more with cards than cash at hand.
8. The economy now demands card payment as a preferred option to cash with large handling charges imposed on individuals and companies who withdraw and pay in cash.

POS CHARGES

A POS charge can also be an additional fee that your bank charges when you use your debit card. If you choose “Debit” at checkout and use your PIN, banks sometimes charge an extra fee. That charge is usually around one hundred naira or above depending on the amount the customer wants to withdraw.

Some retailers don’t build those fees into their pricing. Instead, they prefer to charge higher prices only to customers who create extra costs: those customers who pay through the more expensive credit card networks. For example, a merchant might charge a credit card surcharge to customers who pay with credit, or they might impose a minimum purchase requirement for credit card payments.

Surcharges and minimum purchase requirements are allowed in some states.10 But merchants sometimes charge consumers more than they're allowed to, and they may set minimums when they're not supposed to. Even when merchants aren’t breaking the law, they might break the rules established by their payment processor.

Point of Sale (PoS) machines deployment has increased in recent months to serve new entrants into the digital banking space. Many cardholders, especially at the grassroots, previously cautious about digital banking and safety of their funds have embraced the scheme as COVID-19 pandemic reduced cash demand and usage but there are challenges. COLLINS NWEZE writes that only 167,000 out of the 307,000 PoS machines deployed nationwide are active as cardholders tackle banks and regulators on rising charges for using the device. Banking is getting more interesting with discoveries made almost on daily basis. Digital banking is the new route that financial service providers and regulators are traveling to achieve better results, increase transaction speed and security.

Today’s reality demands that real-time payments and banking capabilities should be available whenever and wherever they are needed by customers. For Nigeria, the road to seamless digital banking and improved access to financial services is long and challenging. Improving financial inclusion, access to credit and getting transactions done at the lowest possible cost are challenges banks and other financial institutions should address. Still, banks and other financial institutions with eyes on the future are taking taking advantage of digital banking that is defining the sector’s successes and reach.

Bank customers are also not left behind, as majority are now thinking and acting digital. There has been rise in Point of Sale (PoS), Automated Teller Machine (ATM), mobile and internet banking activation and usage across different segments of the economy, including among the unbanked at the base of the society but there are still challenges facing the sector. Nigeria Interbank Settlement (NIBSS) data showed there are about 307,000 Point of Sale (Pos) machines in Nigeria, 30,000 Automated Teller Machines, and over 6,000 bank branches. However, majority of the PoS machines, which are fast being accepted by cardholders are not active. Only 167,000 of the PoS are active and majority malfunction at the point of trial. Many merchants have continued to collect legal fees from cardholders who want to use their cards on PoS.

Many customers have shared their frustrations with the platforms. Michael Nwadike, a Lagos-based entrepreneur said he stopped using PoS after the merchants constantly asked him to pay N300 before for using the device. “I have decided to either make transfers or pay with cash for goods and services because of charges that come with using PoS. I was told by one merchant to add N300 to the cost of goods I bought to cover bank charges. It was not a good experience for me,” he said.

Many bank customers have shunned PoS transactions due to charges and regular failure by the device. For instance, NIBSS data showed that the volume of electronic payment transactions through PoS terminals dropped by 4.83 billion in one month as merchants demand for N50 fee for using the device leading transactions to dip from 46.13 billion deals in December 2019 to 41.3 billion in January. The PoS transaction drop in cash value is N60 billion in January, It was learnt that collection of the illegal N50 or above stamp duty charge by merchants – petrol stations, supermarkets and other business owners that deploy PoS machines for payment – has continued against the Central Bank of Nigeria’s (CBN’s) order that payment by customers should be stopped.

Although the CBN directed that the charge should be borne by merchants, not PoS users, there has not been any enforcement of the order and some merchants secretly add the fee to the cost of goods or outrightly refused to use the device where customers reject the charge. The President of the Bank Customers Association of Nigeria, Uju Ogubunka, condemned the continuous collection, in spite of the CBN’s directive that it should stop. He said: “I expect the CBN to move beyond its directive that bank customers reject the fee and fight for customers. Another option is for the customers to carry cash and avoid the fee where the risks are minimal.”

THE EFFECT OF COVID-19 LOCKDOWN AND POS WITHDRAWAL CHARGES IN LAGOS STATE

It is critical to consider that debit card payment markets function as networks and, therefore, the value of a network increases with every new consumer who uses cards at their own ATM or POS terminals and any other bank that accepts them at their ATMs or POS terminals. These networks are commonly organized as two-sided markets. In these markets, two (or more) parties interact on a “platform”, and the interaction involves network externalities. There are various parties involved including consumers, the banks that issue the cards (known as issuers), merchants, the banks that provide merchants with POS devices (known as acquirers) and a network operator or platform. A consumer makes a purchase from a merchant. Generally, the merchant charges the same price regardless of the type of payment instrument used to make the purchase (no surcharge rule). Consumers often pay annual membership fees to their financial institutions for cards and may pay service charges for a bundle of services associated with transactions accounts. Merchants pay fees known as merchant discounts. Acquirers pay interchange fees to issuers. In this type of market, the value of a network increases with every new consumer who uses cards, every merchant that accepts them at their point of sale and any other bank that accepts them at their ATMs.

Given the complexity of price structure, the debit card market is two-sided since prices and transactions on either side of the market (cardholders or merchants) significantly affect prices and transactions on both sides and not merely one of them (Rochet and Tirole 2006). Typically, pricing is asymmetric, one side paying a price substantially below the other. In any event, although conventional wisdom and theoretical contributions hold that payment cards display properties of two-sided markets, but in the case of Nigeria, due to the scarcity of funds during the Covid-19, POS operators increase their charges for each transaction hence making it hard for poor people to survice with the little cash they had on them

In Nigeria following the Covid-19-induced lockdown many Nigerians relied on point of sale (POS) machines, cash back mechanisms, Paga systems, and other mobile banking services in order to access funds, which redefined how people lived and did business (Adewuiyi 2020). This would not have been easy in the absence of business centre and retailers who run POS business even though 60% of them are bank agencies.However the shutting down of banks gave birth to the increase need for accounts holders to seek for alternative means of accessing and withdrawing of money as it is necessary for them to survive even during the lockdown. Thus the increase need to have access to cash gave retail business owners an opportunity to open more POS business centre especially those operating in remote areas where financial institutions are not operating due to lock down.Hence we can say that these POS retailers played significant role during the covid-19 lock down. Retail point of sale (POS) provides an easy-to-use tool for employees and customers, helping to complete retail transactions in physical locations (stores, showrooms, etc.). As a digital development in the umbrella of electronic banking, A Point of Sale(POS) terminal provides many services including credit card processing check, recharging of DSTV and decoders, reading and transactions depending on the model. These devices can be found virtually anywhere, from grocery stores, supermarkets to gas stations as it has been adopted by most retailers to enable easy,speedy and secured financial transaction.A POS system is a suite of technology used by retailers and restaurant owners to accept payments from customers, among other tasks.Most retailer go beyond performing debit transactions but also facilitates cashback transactions. A cashback reward program is an incentive program operated by credit card companies where a percentage of the amount spent is paid back to the card holder. Thus this helps the retailers to make additional interest/percentage from every transaction they performed for their clients and customers.

Collectively, it’s the software and hardware that a retail business needs to run their business. From ordering and managing inventory to processing transactions to managing customers and staff, the point of sale is the central hub that helps retailers run and grow their businesses. POS systems have enabled anyone, from business-savvy entrepreneurs to artisans who want to turn their passion into their profession, to opening a retail store and grow.By using POS software, retail employees can find information about products, create sales orders, accept payments, and deliver receipts in an expeditious manner. Furthermore, retail managers can use this type of software to monitor retail transactions and analyze sales or inventory data such as volume, amount, or frequency. Thus a POS retailers is any individual that has a POS business. They are agents who carry out financial and banking services on behalf of the bank while earning their own commission (Anyanwu E. 2020).

The Covid-19 crisis has compelled retailers to change at a pace that has never been seen before in the industry. The covid-19 pandemic threw the world into extremely difficult and largely unknown waters, and the banking sector, like other sectors of the economy, was put on lockdown, making it difficult for account holders to access their savings during this period. The consequence of this is negative for the survival of common man. As a result, citizens needed to find a different way to access and withdraw their money. Owing to this increase need for cash, business oriented individuals capitalized on that opportunity to open more POS terminals even though greater percentage of them are direct bank agents. On the positive POS retailers made cash accessible and easy financial transaction while most of them on the negative increased service charge when they perform any financial transaction.

2.2 THEORTICAL FRAMEWORK

The theory used for this study is the Health Belief Model and theory of Planned behavior theory.

The Health Belief Model (HBM) was developed to help understand why people did or did not use preventive services offered by public health departments in the 1950’s, and has evolved to address newer concerns in prevention and detection (e.g., mammography screening, influenza vaccines) as well as lifestyle behaviors such as sexual risk behaviors and injury prevention. The HBM theorizes that people’s beliefs about whether or not they are at risk for a disease or health problem, and their perceptions of the benefits of taking action to avoid it, influence their readiness to take action. Core constructs of the HBM: • Perceived susceptibility and perceived severity • Perceived benefits and perceived barriers • Cues to action • Self-efficacy (added more recently) The HBM has been most-often applied for health concerns that are prevention-related and asymptomatic, such as early cancer detection and hypertension screening – where beliefs are as important or more important than overt symptoms. The HBM is also clearly relevant to interventions to reduce risk factors for cardiovascular disease.

Source: Becker, M. H. & Maiman, L. A., (1975). Socio-behavioral determinants of compliance with health and medical care recommendations. Medical Care, 134(1), 10-24.

Theory of Planned Behavior (TPB)

The theory of planned behavior (TPB) is a psychological theory that links beliefs to behavior. The theory maintains that three core components, namely, attitude, subjective norms, and perceived behavioral control, together shape an individual's behavioral intentions. In turn, a tenet of TPB is that behavioral intention is the most proximal determinant of human social behavior.

The relevance of this theory to the study, showcased that in the wake of lock down pioneered by covid -19 crisis, people in response to prevent the disease were not able to go the bank in order to avoid it numerous crowd and possibly get infected, they opted for the services of POS operators who are agents to banks.