Project – The role of ATM and POS machine in financial and economic growth in Nigeria

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CHAPTER ONE

INTRODUCTION

• Background to the Study

The role of Automated Teller Machines (ATMs) and Point of Sale (POS) machines in Nigeria’s financial and economic growth is significant. ATMs and POS machines have revolutionized the banking sector, providing convenience and efficiency in financial transactions. According to a study by Ogbuji, Uche, and Anichebe (2013), the introduction of ATMs in Nigeria has significantly reduced the cost of banking operations and increased banking profitability. The study also found that ATMs have improved the accessibility and availability of banking services, contributing to financial inclusion.

The use of POS machines has also contributed to Nigeria’s economic growth. A study by Olatokun and Igbinedion (2010) found that the use of POS machines has increased the volume of electronic transactions, reduced the use of cash, and improved the efficiency of retail businesses. The study also found that POS machines have contributed to the growth of the retail sector, which is a significant contributor to Nigeria’s GDP.

ATMs and POS machines have also contributed to job creation in Nigeria. According to a report by the Nigerian Inter-Bank Settlement System (NIBSS), the deployment of ATMs and POS machines has created jobs in the areas of machine maintenance, software development, and customer service. The report also noted that the use of ATMs and POS machines has stimulated the growth of related industries, such as telecommunications and information technology.

However, the impact of ATMs and POS machines on Nigeria’s economic growth is not without challenges. A study by Akinola and Adekunle (2014) found that issues such as machine downtime, network failure, and fraud are significant challenges affecting the use of ATMs and POS machines in Nigeria. The study recommended that banks and other stakeholders should invest in infrastructure and security measures to mitigate these challenges.

Despite these challenges, the future of ATMs and POS machines in Nigeria’s economic growth looks promising. According to a report by the Central Bank of Nigeria (CBN), the use of ATMs and POS machines is expected to increase in the coming years, driven by the growth of the digital economy and the government’s financial inclusion strategy. The report also noted that the CBN is committed to promoting the use of ATMs and POS machines as part of its efforts to modernize the banking sector.

ATMs and POS machines play a crucial role in Nigeria’s financial and economic growth. They have improved the efficiency of financial transactions, contributed to financial inclusion, and stimulated job creation. However, there is a need for continuous investment in infrastructure and security measures to ensure the sustainable growth of ATMs and POS machines in Nigeria.

• Statement of the Problem

The problem statement for the role of Automated Teller Machines (ATMs) and Point of Sale (POS) machines in Nigeria’s financial and economic growth is a complex issue that requires a comprehensive understanding of the country’s banking and financial systems. Despite the significant increase in the number of ATMs and POS machines in Nigeria, there are still numerous challenges that hinder their full potential in contributing to the country’s economic growth (Adeyemi, 2012).

Firstly, the inadequate distribution of ATMs and POS machines across the country is a significant problem. Most of these machines are concentrated in urban areas, leaving the rural areas underserved. This uneven distribution limits the accessibility of banking services to a large portion of the population, thereby hindering financial inclusion and economic growth (Oluwatolani, 2018).

Secondly, the frequent breakdown of ATMs and POS machines due to poor maintenance and lack of spare parts is another problem. This often leads to long queues at the ATMs and POS terminals, discouraging many people from using these services. The unreliability of these machines also affects the confidence of consumers in the banking system (Adeyemi, 2012).

Thirdly, the high cost of transactions on ATMs and POS machines is a significant deterrent for many Nigerians. The charges for withdrawals, balance inquiries, and other transactions on these machines are often considered too high by many users. This discourages the use of these machines and limits their contribution to financial inclusion and economic growth (Oluwatolani, 2018).

Fourthly, the lack of adequate security measures on ATMs and POS machines is a significant problem. Cases of fraud and theft are common, which discourages many people from using these machines. This not only affects the confidence of consumers in the banking system but also limits the potential of these machines in promoting financial inclusion and economic growth (Adeyemi, 2012).

Lastly, the lack of adequate power supply in many parts of Nigeria is a significant problem. This often leads to the unavailability of ATMs and POS machines, thereby limiting their contribution to financial inclusion and economic growth (Oluwatolani, 2018).

• Aim and Objectives of the Study

The aim of the study is to examine the role of ATM and POS machine in financial and economic growth in Nigeria. The specific objectives of the study are:

1. To examine the extent to which ATM and POS machines have contributed to the financial growth in Nigeria.
2. To analyze the impact of ATM and POS machines on the economic development of Nigeria.
3. To identify the challenges faced in the implementation and usage of ATM and POS machines in Nigeria’s financial sector.
4. To evaluate the relationship between the use of ATM and POS machines and the level of financial inclusion in Nigeria.

• Research Questions

The research questions are stated below:

1. How much have ATM and POS machines contributed to the financial growth in Nigeria?
2. What is the impact of ATM and POS machines on the economic development of Nigeria?
3. What are the challenges faced in the implementation and usage of ATM and POS machines in Nigeria’s financial sector?
4. What is the relationship between the use of ATM and POS machines and the level of financial inclusion in Nigeria?

• Research Hypothesis

The hypothetical statement of the study is buttressed below:

H_O: ATM and POS machines have no significant contribution to the financial growth in Nigeria

H₁: ATM and POS machines have significant contribution to the financial growth in Nigeria

• Significance of the Study

The significance of the study on the role of Automated Teller Machines (ATMs) and Point of Sale (POS) machines in financial and economic growth in Nigeria is multi-faceted. Firstly, these technologies have revolutionized the banking sector by providing 24/7 access to banking services. This has not only increased the efficiency of banking operations but also improved customer satisfaction. The convenience of withdrawing cash, transferring funds, or paying for goods and services at any time of the day has significantly reduced the need for physical banking.

Secondly, ATMs and POS machines have contributed to the growth of the Nigerian economy by facilitating a cashless policy. This policy, initiated by the Central Bank of Nigeria, aims to reduce the volume of cash in circulation, thereby reducing the cost of cash management and encouraging electronic transactions. The increased use of electronic transactions has led to a reduction in the informal economy, increased tax revenue, and improved economic growth.

Thirdly, the proliferation of ATMs and POS machines has led to job creation in Nigeria. The manufacturing, installation, maintenance, and operation of these machines require skilled labor, thereby creating employment opportunities. Additionally, the use of these machines has spurred the growth of related industries such as the telecommunication and power sectors, which are essential for their operation.

Fourthly, ATMs and POS machines have played a significant role in financial inclusion in Nigeria. They have made banking services accessible to the unbanked population, especially in rural areas where bank branches are scarce. This has led to an increase in the number of people participating in the formal economy, thereby promoting economic growth.

Fifthly, the use of ATMs and POS machines has improved the security of financial transactions in Nigeria. These machines use secure encryption technologies to protect users’ financial information, thereby reducing the risk of fraud and theft. This has increased public confidence in the banking sector and encouraged more people to use banking services.

Lastly, ATMs and POS machines have contributed to the digitalization of the Nigerian economy. They have paved the way for the adoption of other digital financial services such as mobile banking and online shopping. This digital transformation has the potential to drive economic growth by improving productivity, promoting innovation, and creating new business opportunities.

• Scope of the Study

The study examines the role of ATM and POS machine in financial and economic growth in Nigeria. The study is limited to Access Bank Plc, Lagos – Nigeria.

• Operational Definition of Terms

1. Role: In this context, the term “role” refers to the function or part played by a particular entity in a specific situation or system. It’s about the contribution or impact that something has on a particular field or area.
2. ATM: An ATM, or Automated Teller Machine, is an electronic banking outlet that allows customers to complete basic transactions without the aid of a branch representative or teller. This includes cash withdrawals, deposits, transfer of funds, or checking account balance.
3. POS Machine: A POS, or Point of Sale machine, is a device used to process card payments at retail locations. It allows customers to pay for goods or services by using their credit or debit cards. It’s an essential tool in the cashless transaction system.
4. Financial Growth: Financial growth refers to the increase in value of an entity over time. In the context of a country like Nigeria, it could refer to the growth in the value of its financial sector, which includes banks, insurance companies, and investment funds. It can be measured by various indicators, such as the increase in the number of financial transactions, the volume of loans provided by banks, or the amount of savings deposited by individuals.
5. Economic Growth: Economic growth is an increase in the production of goods and services in an economy. It’s usually measured as the percent rate of increase in real gross domestic product, or GDP. In simpler terms, economic growth represents the wealth of a nation, and it’s an indicator of the economic health of a country. It includes the improvement of the quality of life and living standards, job creation, and the reduction of poverty.

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Project – The role of ATM and POS machine in financial and economic growth in Nigeria

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