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1.1 Background to the Study

A cashless economy describes an economic situation in which payments are carried out with a credit card or debit card fee (Taiwo, Oluwafemi, Evawere, and Agwu 2016) without transferring cash as an means of exchange or as transactional means. Nevertheless, the cashless economy is not a function of an absolute lack of cash payments in the economic environment, but of ensuring the lowest possible volume of money-based transactions. It is an economic system that does not mainly carry out payments in exchange for money.


It is premised on the assertion that the cashless payment system is easier to purchase, and makes it easy for the consumer to acquire products in order to increase their shopping behaviour, promoting the adoption of cashless payment systems in Nigeria (Taiwo et al., 2016).


It is also clarified that the purchasing pattern, which includes the analysis of what, how, how, where and how much they buy and how they use the items chosen, implies determining how the consumer invests the available resources (time, energy, efforts) in consumption products. In addition the search, purchase, use, assessment and disposal of goods and services that consumer expectations will meet their requirements includes all behaviors (Adeoti & Oshotimehin 2011). It has been considered that easy and convenient charging can affect their behavior in order to increase the customer’s purchase decision.


It is noted that Nigeria is not left out of this progress as a result of the global advance in technological development. The Information and Communications Technology (ICT), which has certainly made life more simple (Okpaku and Joseph, 2003; Paltridge, 2008), has developed into a tool of technological growth in economies of many societies. Cashless strategies can be inspired by different countries, but they usually reduce the cost of finance, encourage financial inclusion, raise capital available for investment in the banking system, stimulate real economic growth, and possibly reduce tax evasion (CBN, 2015).


Recent research shows that the development of technology for financial transaction implementations is troublesome since there have been issues concerning the reliability of the instrument to insure that monetary policies in nations around the world are effective and efficient (Odior & Banuso, 2012). Different payment mechanisms have been in use from centuries, for instance the cash method is popular, but double coincidences of want have necessitated the use of credit. The use of superior instruments has been made, however, by technological development (Odior & Banuso, 2012).


Well over three decades ago, the use of money for shopping in the US has diminished and electronic payment services are becoming widely utilized. Developing economies like Nigeria are however currently approaching the introductory stage in the use of the Nigerian monetary policymaker’s (CBN) alternate paiement system.


The use of cash to buy goods and services is costly and complicated in many countries of the world and slowly gives way to an alternative payment system. The explanation is that outside the bank money is not immune to regulatory authority financial regulations and operating processes, and therefore reduces regulators ‘ ability to achieve defined targets.


The Federal Government introduced, through the regulatory agency, various electronic payment systems that include payment cards and other paper-based monetary tools in Nigeria, in order to cut down on the volume of cash in the economy, and subsequently reduce the danger associated with cash transport. This then includes the establishment of switch-making companies to promote interconnections between various devices such as ATM, POS with financial transactions, etc. (Odior & Banuso, 2012).


CBN reports (2011) quoted by Adeoti, Oshotimehin (2011) show that cash management expenses were tremendous and as follows: CBN invested the amount of N114.6b in 2009, N125b in 2010, N166b in 2011 and N196b in 2012 calculated to handle currencies and goods, which are substantial and demand urgent attention in terms of length. CBN reports (2011). This would minimize processing expenses, money transportation costs, storage costs and security costs for the handling of paper currency.


Although an ordinary Nigerian businessman favors cash transactions and takes an alternate by being well educated and knowledgeable regarding their advantages. Nonetheless, it is anticipated that Nigerian customers rely heavily on using money for payments, adopting POS, ATM, credit transfers through telephone and other cashless platforms in the country would make it easier for consumers to carry large funds and improve the effectiveness of the organisations.


It has also been found that a lack of awareness of e-payment solutions in specific POS, inadequate initiatives or what they can be achieved, misunderstanding of the benefits of keeping money on the deposit, and weak bank culture, a lack of trust, analphabetism and a preference of the status quo has led to the poor use of the cash-free system.


Throughout developed and developing countries, rapid growth in electronic payment systems is guided by the use of payment cards (credit or debit cards) and physical-store (POS terminals) or web-based contacts. In Nigeria, all banks that facilitate cashless payment issue Verve cards, Visa and MasterCards (Okechi & Kepeghom, 2013). The expanded use of payment cards as a favored means of payment for business and consumer purchases is also associated with innovation in technology, such as the increasing emergence of web sites, which have led to the development of POS terminal systems based on the internet.


The advent of GMS has contributed to the implementation of NFC, a Near Fields Communication device that allows the use of mobile phone as a bag containing cards (debit or credit), so that an owner doesn’t have to bring cards separately from the phone since the mobile phone is card prepared .. The new mobile communication systems have been introduced. Consequently, the role played at the retail location by the point-of-sale (POS) terminals is very significant since such terminals provide a more effective and often chosen way to pay consumers through payment cards to save some money, which the merchants sometimes lose in terms of low incomes while working by the company.

The POS essentially guarantees the collection, through the retail environment, of credit or debit card payments and other electronic transactions and has thus made a major contribution to the growth of the global economy (Ebietomere & Ekuobase 2014). The POS device is the main source of information.


In order to reduce the amount of cash in circulation, the potential failure to account and the cost of the time lost in carrying out cash payment transactions. It is seen as a contribution to reducing the challenges associated with cash payments by introducing a cashless payment system, such as POS Terminal, mainly dedicated to the payment of quickly moving consumer goods.


Nonetheless, given the value of the cashless payment process, there has been inadequate consideration to boost its design for the payment of smaller retail transactions, especially with regard to quickly moving consumer goods (FMCGs). Sufficient work has not been carried out in this area, which causes a research hole and therefore this study focuses on the impact of the cashless payment systems on consumers ‘ fast-moving consumer goods purchasing actions.


1.2 Statement of the Problem

Although the Federal Government of Nigeria has accomplished its previous achievements in enforcing its cashless plan it has been noticed it is especially difficult to maintain its consumers ‘ use of cashless systems. This refers to data extracted from the e-payment statistics of CBN for 2012-2016 (CBN, 2016), which indicate that the following data reflect the low penetration of the uses of the cashless platforms, notably the POS, which is mainly used in transactions of FMCGs, given the adoption of the cashless economy with its associated benefits. This shows that for the chosen e-payment channels the number of payments are: ATM  =  470,894,452;  Cheques, 9,764,546  Web = 10,499,911 and POS  = 47,743,919 (CBN, 2016).


Connectivity and Networking problems, insufficient data, safety and confidence issues are the reasons given by CBN for weak POS adoption. This study also showed that many goods and services purchasers still do so in cash, resulting in enormous risk and high cash management costs, which are also responsible for inefficiency and bribery (Omotayo & Dahunsi, 2015). Similarly, as stated in the study of Adeoti and Oshotimehin (2012) the general increase in the rate of adoption of electronic payment instruments and the rate of growth in POS adoption are still small, with low customer awareness, suggesting the advantages of using a cashless system and the absence of adequate infrastructure, being responsible for the low level of adoption of POS in Lagos state; weak internet penetration, sporadic network connectivity failure, lack of open rules and trust among banks and suppliers, frequent power loss, insufficient retail POS and network security (Ayo & Babajide, 2006).


However, an Nigeria Inter-Bank Settlement Systems (NIBS) survey on the difficulties of POS adoption and use in Lagos reveals that, from a traders ‘ point of view, the main challenge in terms of acceptance and use of POS is technological, i.e., that 79.5% cites connection issues as a major challenge. The use of money as Nigeria’s main exchange mechanism has become a major problem for the country, and is associated with much danger and expense (CBN, 2011).


The investigation problem found in this study is the absence of a cashless payment mechanism for the purchase of small retail goods by consumers that are perceived as having an insufficient understanding of the nature of a transactions substitute or of the context of doing so in the past.


1.3 Objectives of the Study

The main objective of the research is to examine the impact of cashless payment method on consumer buying behavior of fast moving consumer goods in Cadbury Nigeria Plc in Lagos State. The specific objectives are to:

  1. determine the impact of POS on customer buying behavior of FMCGs in Lagos State;
  2. examine the impact of ATM on customer buying behavior of FMCGs in Lagos State;
  • determine the impact of cashless system infrastructural facilities on customer buying behavior of FMCGs in Lagos State;
  1. investigate the impact of telephone cashless system on customer buying behavior of FMCGs in Lagos State.


1.4 Research Questions

In order to achieve the objectives of the study, the following research questions have become imperative:

  1. To what extent do POS impact customer buying behavior of FMCGs in Lagos State?
  2. In what ways does ATM impacts customer buying behavior of FMCGs in Lagos State?
  • To what extent does cashless system infrastructural facilities impact customer buying behavior of FMCGs in Lagos State?
  1. What are the ways does telephone cashless payment system impact customer buying behavior of FMCGs in Lagos State?


1.5 Hypotheses

In an attempt to come up with acceptable conclusions the research tested the following null hypotheses from the stated research questions:


Hypothesis One

H0:  POS has no significant impact on customer buying behavior of FMCGs in Lagos State.

Hypothesis Two

H0:  ATM has no significant impacts customer buying behavior of FMCGs in Lagos State.

Hypothesis Three

H0:  Cashless system infrastructural facilities have no significant impact on customer buying behavior of FMCGs in Lagos State.


Hypothesis Four

H0:  Telephone cashless payment system has no significant impact on customer buying behavior of FMCGs in Lagos State



1.5 Significance of the Study

Most FMCGs customers, suppliers and dealers of FMCGs, Cadbury Nigeria Plc and researchers would benefit from the study. The findings of the study will boost the adoption and understanding of the use of the cashless payment system in Nigeria.


The FMCG producers or sellers in Nigeria, especially Lagos, would profit from the study by improving the application of the non-cash payment system to improve their consumer purchasing behaviour.


This research would allow the GSM providers to enhance their service quality, while improving their level of customer experience, resulting in customer loyalty, custody and retention. The profitability of the GSM companies in Lagos State could also be improved.


The knowledge will improve the quality of service provided by GSM providers to customers. It increases their competitiveness for GSM services ‘ value for money such as fast service, better interconnectivity, network services transparency, among others.

The state would benefit from an increase in the quality of the companies, which use cashless transactions, by increasing consumer sales, reducing their cash collection costs and raising investment returns. For other researchers who can perform similar research in this field, the thesis provides useful research materials for evaluating literatures.


1.6 Scope of the Study

This study covers the investigation of the impact of cashless payment method on consumer buying behavior of fast moving consumer goods in Cadbury Nigeria Plc in Lagos State. The study is limited to the determining the extent POS, ATM, cashless payment system infrastructural facilities and telephone cashless payment impact customer buying behavior of FMCGs in Lagos State.


1.7 Operational Definition of Terms

This work comprises of certain ideas that are important to effective research and understanding the nature of work. Consequently, in this analysis, the following research concepts are described according to their meaning:

Automated Teller Machine (ATM): The ATM is a device which can transport cash and conduct certain financial services including deposit, bank transfers, inquiries regarding specific accounts, etc. ATM can be described as a computer.


Cash-based economy: this may be described as an economic policy involving the regular use of cash for business in a state. For instance, almost e in Lagos until recently


Cashless paying system infrastructure: Infrastructure used to incorporate cash-free payment systems for the purpose of designing, evaluating, distributing, tracking, managing and maintaining IT services (such as integrated devices, software, network equipment, communications etc., including all peripherals for information technology).


Central Bank of Nigeria (CBN): The Nigerian Central Bank is an agency set up by the Lagos Federal Government to regulate and track banking operations in Lagos, including banks and other financial institutions. The power comes from a statute which establishes it.

Contactless payment cards: These are web payment cards used to process payments without direct phone communication. These are new technology to connect to the existing e-payment cards.

Customer Buying behavior: The customer’s disposition and the procedures were accompanied by a decision to purchase an item.

Customer Education: Consumer learning for cashless payment is knowledge formation of the nature of a product and its purpose in order to ensure its promotion or its acceptance.

Customer Trust in POS: This can be defined as a user’s ability to realize that the device is confidentially secure with a high degree of integrity and authentication prior to transactions.

Data Interchange (EDI): EDI includes the sharing of business information via the actual data layout and the exchanging of data between related entities, i.e. point-by-point connections, typically dialing up.

Debit and Credit Card:  Cards issued by a Bank to a client to enable financial transactions are a debit or credit card. Debit cards are given to a customer who has a balance of credit in a deposit to use a debit, the sum equivalent to the payments will be reduced to null and that loan will be repaid and a credit card will be charged, until a lender has funded it, with a maximum allowable credit limit for a cardholder. Description of the debit card is a debit card provided to ATM and POS use by the bank.

e-Commerce: E-commerce consists of the digital purchase and sale of products and services such as POS use. It covers the purchase or advertising by companies and consumers of products and services via an electronic medium.

POS security: It is the use of the following five structures: confidentiality, non-repudiation, encryption, and honesty, difficult to crack-before recognition or validation. Data protection requires that a third party must be confident that the information and other knowledge are not leaked to a client. Failure to repudiate implies that the payment done on the network can never, for instance, be refused by the sender of the message received. Integrity ensures that the device information can only be viewed and modified by authorized user. Similarly, before a payment can be done, authentication checks the identification of the cardholder, and approval assures the records and information is kept intact and requires only the cardholder to do so.

POS:  It is known as the system used for paying in electronic form in an organization for goods and services whereas implementing POS is described as the purchasing and use of POSs to pay for goods and services in an organization. Determinants POS Availability of infrastructures, POS security, consumer confidence, customer knowledge, and customer motivation can be described as the separate variables used in measuring the acquisition or acceptance of POS in an organism and as sub-variables used to measure it.

Telephone Cashless Payment System: The use of mobile handsets for money transfers to pay for goods and services.

Verve Cards: The combination of chips and pins provides additional security features, such that the data stored is not accessible for unauthorized users, including features such as identity cards, money watch, fraud watches etc. This is one of the newest used cards issued by banks on an Interswitch network that is either used in ATM, POS or KIOSKS or both with CHIP and PIN ..

Visa and Master Card: These are various credit and debit card types that are used for electronic payment on specific reclaimed machines such as POS terminals, ATM, etc.


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