A CRITICAL INVESTIGATION ON THE IMPACT OF E-NAIRA ON POS BUSINESS IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1 Background of the study 

In recent years, rapid technical advancement and new business models have led in a slew of novel retail payment options. These advancements are raising the possibility of significant changes in the retail payment environment, including a decline in the usage of currency. The Point of Sale terminal (POS) is one of the most important developments in retail payment and financial transaction mechanisms. Point of Sale is defined by academic works such as Amaefule, I. & D, O. & Njoku, Donatus. (2019) as a device that allows local debit cardholders to make withdrawals or make payments for items and services. This machine is mostly utilized in retail stores where consumers use their ATM cards to pay for products and services. Some utility bills, such as energy, airtime, cable or decoder subscriptions, are also paid with the POS machine.

The implementation of point-of-sale (POS) in Nigeria by the Central Bank of Nigeria (CBN) in 2012 made it easier to do business without having to carry large sums of cash. Since then, the number of active POS terminals offered by banks to mobile money businesses has steadily increased. In the first three months of 2018, for example, it was reported that banks in Nigeria registered a total of 17,193 POS terminals for cashless transactions (CBN 2011). According to statistics from the Nigeria Inter-Bank Settlement Scheme (NIBSS), there were 164,607 operational POS terminals in Nigeria as of 2018.

Following the introduction of POS, the push for the promotion of cashless economic policies grew in intensity across the world, leading to the birth of digital currencies. In recent years, digital currencies have gained a lot of attention and have the potential to become extensively used for payment purposes. Digital currencies (also known as digital money, electronic money, or electronic currency), whether privately or publicly issued, are a sort of cash available in digital form, according to Gilbert, Scott, and Loi, Hio. (2018). Virtual currencies, cryptocurrencies, and central bank digital currencies are examples (CBDC). The article goes on to say that digital money can be centralized, with a single point of control over the money supply, or decentralized, with power over the money supply coming from a variety of places. Around the world, governments and central banks are keeping a careful eye on advances in digital currencies and assessing their implications for the economy, financial system, and central banks.

Taking advantage of fast technical advancement and financial market growth, international economies have begun to transition from paper to digital money, with Nigeria not far behind. In his study, Emmanuel O. (2021) stated that about central banks around the world have been delicately working on their digital currency by gradually weaning themselves off rapidly-declining cash payments, which is why the Central Bank of Nigeria joined the fray so that Nigeria is not left behind, which led to the launch of her e-Naira, which comes after instructing banks to close cryptocurrency and crypto-related accounts in February 2021. (premiumtimesng.com).

According to Kalu Aja (2021), citing a CBN study, e-Naira aims to assist the apex bank in achieving its monetary policy and financial inclusion goals. It will make currency conversion and cross-border commerce more affordable, especially as more nations introduce their own digital currencies. However, the consequences of digital currency adoption as a payment mechanism have yet to be defined, particularly in terms of how it will effect POS firms. Due to a lack of literature on the subject, the researcher was forced to investigate how e-Naira will influence POS company owners when it is embraced by the general public, as well as any issues that may arise as a result of this new development.

1.2 Statement of the problem 

Digital currencies, particularly those with an inbuilt decentralized payment system based on the usage of a distributed ledger, are a disruptive technology that might have a broad range of effects on financial markets and the economy. These effects might include business model and system disruption, as well as the facilitation of new economic exchanges and connections (The Bank for International Settlements, 2015).

Although several reasons have been advanced as to why the Central Bank of Nigeria is considering the issuance of its own digital currency, according to Abdulkareem (2021), none of them have taken into account the implications.

One of the researcher's key arguments of contention is that the e-Naira wallet can be accessed by people who do not have a bank account. What does this mean for individual users who want to withdraw money from their e-Naira wallet or add money to their e-Naira wallet? Would this need the use of a third-party bank account (POS agents)? . Would the complexities of using the e-Naira have an impact on POS shops' operations? Would these rapid cashback agents, who rely on commissions from bank transactions to stay afloat, have to adapt to this new development? Will e-importance Naira's in business be affected if it is extensively accepted by both rural and urban users? Will it broaden their service offerings? Will it help POS shops make more money, or will it introduce new problems like network failures, additional costs, and debit without credit? The influence of e-naira on POS business in Nigeria is one of the many questions that the researcher wants to study attentively.

1.3 Objective of the study

The broad  focus of this study is to examine the  critical investigation on the impact of e-naira on POS business in Nigeria. Specifically the study seek to:

1. Examine if the launching of e-Naira will widen the scope of the services rendered by POS retailers.

2. Investigate if the launching of e-Naira will improve the profitability of POS business owners.

3. Ascertain if the public adoption of e-Naira will broaden the challenges of POS business

4. Determine if the public acceptance of e-Naira will threaten the survival of POS business since they serve only as Bank agents

1.4 Research Questions

1.        Will the launching of e-Naira widen the scope of the services rendered by POS retailers?

2.        Will the launching of e-Naira  improve the profitability of POS business owners?

3.        Will the public adoption of e-Naira  broaden the challenges of POS business?

4.        Will the public acceptance of e-Naira threaten the survival of POS business since they serve only as Bank agents?

1.5 Significance of the study

Findings from the study will be relevant to economic developers, policy makers, POS business owners and the public users. To policy makers and economic developers, the result of the study will enlighten them on the need to throw more on this new developement in other help the general public gain clarity and clear their doubts about e-Naira. To POS retailers, the result of the study will enable them to brace up to the challenges that will accompany the  launch of e-Naira and find a way to downplay it in other to remain in business. Finally findings from the study will add to the existing body of literature and serve as reference tool for both scholars and student who wishes to conduct further studies in related field.

1.6 Scope of the study

The scope of this study will cover the impact of e-Naira on POS business. It will ascertain if the launching of e-Naira will affect the profitability, scope of service and survival of POS centres. The study is however delimited Akwa Metropolis  of Anambra State.

1.7 Limitation Of The Study

Like in every human endeavour, the researchers encountered slight constraints while carrying out the study. The significant constraint was the scanty literature on the subject owing that it is a new discourse thus the researcher incurred more financial expenses and much time was required in sourcing for the relevant materials, literature, or information and in the process of data collection, which is why the researcher resorted to a limited choice of sample size. Additionally, the researcher will simultaneously engage in this study with other academic work. However in spite of the constraint all these constraint were downplayed to give the best.

1.8 Definition of Terms

POS: The full meaning of POS is “point of sale,” or, in other words, it’s where your transaction is finalized.The point of sale or point of purchase is the time and place where a retail transaction is completed.

POS business: POS business is a legitimate way to make money in Nigeria. It is also called agent banking business, and it’s an extension of the services offered by financial institutions to enable easy service offering to a wide range of customers

POS Agents/Retailers: This 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.

Digital Currency: Digital currencies are monies that exist not in physical form but only as electronic data, but perform the basic functions of money being unit of account, store of value and means of exchange.

eNaira: eNaira is the name given to the CBN's first proposed digital currency. eNaira is a central bank digital currency (CBDC) issued by the Central Bank of Nigeria as a legal tender. It is the digital form of the Naira and will be used just like cash.

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