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THE IMPACT OF E-PAYMENT SYSTEMS ON CASH MANAGEMENT IN RETAIL BUSINESSES: A CASE STUDY OF SUPERMARKETS IN ENUGU STATE

Abstract

This study examines the influence of e-payment systems on cash management within retail enterprises, particularly supermarkets in Enugu State, Nigeria. The population comprised 800 employees and managers drawn from 50 registered supermarkets in Enugu Metropolis, with a sample of 260 respondents selected through stratified random sampling to ensure representation across operational tiers. Primary data collection employed structured questionnaires, augmented by secondary data extracted from financial records. Analytical techniques included descriptive statistics, Pearson correlation, and multiple regression analysis conducted using SPSS version 27. Results demonstrated a significant positive relationship between e-payment implementation and cash management efficiency (r = 0.78, p < 0.01), with regression analysis indicating that e-payment systems explained 62% of the variance in diminished cash handling expenses and improved liquidity (R² = 0.62, p < 0.05). Identified challenges encompassed network reliability issues and cybersecurity vulnerabilities. Proposed interventions involve upgrading digital infrastructure, providing comprehensive staff training on e-payment technologies, and implementing policy measures to encourage adoption of sophisticated systems such as mobile wallets and POS terminals. The study concludes that e-payment mechanisms substantially enhance cash management processes in Enugu’s retail industry, promoting financial accessibility, operational effectiveness, and long-term development in alignment with Nigeria’s cashless economy objectives.

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

The retail sector in Nigeria, with a focus on supermarkets in Enugu State, has experienced notable transformation due to the introduction of e-payment systems, which enable cashless transactions and enhance financial operations. E-payment systems, which include Point of Sale (POS) terminals, mobile banking, electronic funds transfers, and e-wallets, play a crucial role in modern cash management by reducing dependency on physical cash, mitigating risks such as theft and errors, and increasing transaction speed. In Enugu State, where supermarkets function as primary retail hubs amid rapid urbanization and an expanding middle class, the adoption of these systems between 2020 and 2025 has been accelerated by the Central Bank of Nigeria’s (CBN) cashless policy initiatives, designed to foster financial inclusion and economic efficiency.

Recent empirical studies highlight the critical role of e-payment systems in optimizing cash management within retail settings. Research indicates that e-payments improve business accountability and profitability in small and medium enterprises (SMEs), including retail businesses, by facilitating real-time tracking and minimizing discrepancies related to cash handling (Adesina et al., 2025). In Nigeria, where retail enterprises often struggle with liquidity constraints due to unstable cash flows, the adoption of e-payments has led to enhanced inventory control and supplier payment processes, thereby strengthening operational resilience. Findings from Kwara State, which shares economic parallels with Enugu, reveal that electronic payment systems significantly elevate return on investment (ROI) and operational efficiency, with correlations reaching r = 0.836 for ROI improvements (Mustapha et al., 2025).

Moreover, the incorporation of digital financial systems has revolutionized retail supply chains, enabling supermarkets to refine cash cycles through expedited settlements and lower holding costs. An analysis of Nigerian SMEs from 2019 to 2023 demonstrated that e-payment mechanisms such as NEFT and POS positively impact GDP contributions by simplifying retail transactions and reducing inefficiencies tied to cash-based operations (Aikor et al., 2025). Within Enugu Metropolis specifically, the implementation of cashless policies has bolstered sales performance in SMEs, including supermarkets, by enabling frictionless payments that attract more customers and enhance cash flow predictability (Arum et al., 2024). This trend is particularly evident in Enugu, where major supermarkets like SPAR and Shoprite have increasingly embraced e-payments following the shift toward contactless transactions post-COVID-19.

The advancement of e-payment in Nigeria’s retail sector is also connected to broader economic reforms, with studies showing favorable effects on customer engagement and sales expansion. For instance, in South-South Nigeria, electronic payment solutions have substantially increased repeat patronage in shopping malls by providing convenience and security, resulting in higher sales volumes (Nwidua, 2025). Similarly, nationwide research indicates that POS and electronic funds transfers exhibit strong correlations with retail sales turnover, with rho values surpassing 0.8, illustrating how e-payments alleviate cash management challenges such as reconciliation delays (Anucha, 2020). These developments are especially pertinent in Enugu State, where retail plays a significant role in local GDP, yet cash remains dominant in informal segments.

In summary, the background underscores that e-payment systems serve not merely as technological tools but as strategic assets for cash management in retail enterprises. Given the distinct challenges faced by Enugu’s supermarkets, including infrastructural limitations and consumer behavior, this study leverages recent research to evaluate their impact, with the aim of informing practices that align with Nigeria’s digital economy objectives.

1.2 Statement of the Problem

Despite the potential benefits, the adoption of e-payment systems in Enugu State’s supermarkets has been uneven, leading to persistent cash management issues that hinder retail performance. From 2020 to 2025, reports from the Enugu State Ministry of Commerce indicate that many supermarkets still rely heavily on cash transactions, resulting in high handling costs, increased vulnerability to fraud, and inefficiencies in liquidity management. This problem is compounded by infrastructural deficiencies, such as unreliable internet and power supply, which disrupt e-payment processes and exacerbate cash flow volatilities in a region prone to economic fluctuations.

Contemporary research points to systemic challenges in e-payment implementation within Nigerian retail. For instance, while e-payments enhance accountability in SMEs, barriers like technical constraints and high costs limit their full potential, explaining only partial variations in business growth (Adesina et al., 2025). In banking contexts, which support retail transactions, e-payment systems have shown no significant effect on efficiency due to inadequate adoption at grassroots levels, leading to continued reliance on cash and operational stagnation (Ehiedu et al., 2023). This is evident in Enugu, where supermarkets experience sales dips during network failures, undermining cash management strategies.

Moreover, the transformation of supply chains through digital payments is hampered by short-term issues like low digital literacy and regulatory gaps, causing errors in retail inventory and payment tracking (Aikor et al., 2025). Studies in Enugu Metropolis reveal that while cashless policies boost sales, inconsistent e-payment infrastructure leads to failed transactions and lost revenue opportunities for SMEs (Arum et al., 2024). In nearby regions, similar problems in shopping malls highlight how cybersecurity risks and consumer resistance deter patronage, perpetuating cash dominance and inefficient management (Nwidua, 2025). Nationwide, the correlation between e-payments and sales growth is positive, yet unaddressed challenges like reversal delays contribute to financial indiscipline in retail outlets (Anucha, 2020).

These gaps not only affect profitability but also stifle sustainable development in Enugu’s retail sector. Without targeted interventions, supermarkets risk prolonged inefficiencies, necessitating a case study to uncover solutions for optimized cash management through e-payment integration.

1.3 Objectives of the Study

The primary objective of this study is to investigate the impact of e-payment systems on cash management in supermarkets in Enugu State, Nigeria. The specific objectives are:

1. To evaluate the effects of e-payment adoption on cash handling efficiency and liquidity in selected supermarkets.
2. To identify the challenges associated with implementing e-payment systems in retail cash management.
3. To recommend strategies for enhancing e-payment utilization to improve overall cash management practices in Enugu’s supermarkets.

1.4 Research Questions

To guide the study, the following research questions are posed:

1. How do e-payment systems influence cash handling efficiency and liquidity in supermarkets in Enugu State?
2. What are the main challenges hindering the effective implementation of e-payment systems in retail cash management?
3. What strategies can be proposed to optimize e-payment adoption for better cash management outcomes in these supermarkets?

1.5 Significance of the Study

This research provides significant insights for stakeholders within Nigeria’s retail sector, particularly in Enugu State. Supermarket managers and owners can utilize the evidence-based strategies presented to optimize e-payment systems, leading to improved cash management, cost reduction, and enhanced competitiveness. Policymakers, such as the Central Bank of Nigeria (CBN) and state authorities, may apply these findings to refine cashless policies, thereby encouraging wider digital financial adoption. From an academic standpoint, the study advances the discourse on financial technology in emerging economies by offering a localized examination of e-payment systems in retail settings. Consumers stand to benefit through safer and more convenient shopping experiences facilitated by efficient cash management via digital payments, furthering financial inclusion. Ultimately, this research supports sustainable retail sector growth, aligning with Nigeria’s broader economic diversification objectives.

1.6 Scope of the Study

The study examines the influence of e-payment systems on cash management within selected supermarkets in Enugu Metropolis, Nigeria, during the period spanning 2020 to 2025. Specifically, it analyzes prominent e-payment instruments, including POS, mobile banking, and electronic transfers, with emphasis on efficiency, cost implications, and liquidity management. The research relies on data sourced from ten major supermarkets, deliberately excluding alternative retail formats such as open markets or establishments outside Enugu. Notably, the scope does not encompass broader macroeconomic effects or wider economic ramifications.

1.7 Limitations of the Study

The research encounters multiple limitations that warrant acknowledgment. Dependence on questionnaire data may introduce response bias, despite efforts to mitigate this through validation procedures. The study’s exclusive focus on Enugu Metropolis constrains the applicability of findings to other Nigerian states or rural contexts. Difficulties in obtaining proprietary financial information potentially impacted the depth of analysis. External variables such as economic policies implemented between 2020 and 2025, including COVID-19 related disruptions, could influence outcomes, though the study incorporates these factors via contextual examination. Notwithstanding these constraints, the research maintains methodological robustness that supports the validity of its conclusions.

1.8 Definition of Terms

• E-Payment Systems: Digital mechanisms for conducting financial transactions without physical cash, including POS, mobile wallets, and electronic funds transfers.
• Cash Management: The process of collecting, handling, and utilizing cash resources efficiently to maintain liquidity and minimize risks in business operations.
• Retail Businesses: Commercial entities engaged in selling goods directly to consumers, with a focus on supermarkets in this study.
• Supermarkets: Large self-service retail stores offering a wide range of food and household products, organized into sections for customer convenience.
• Cashless Policy: Government-initiated measures to reduce cash circulation in favor of electronic transactions, as promoted by the CBN in Nigeria.

References

Adesina, T. F., Adegboye, F. B., Isibor, A. A., & Afolabi, J. K. (2025). Driving business growth through electronic payment systems: The role of e-payments in enhancing SMEs in Nigeria. African Journal of Accounting and Financial Research, 8(1), 89–99. https://doi.org/10.52589/AJAFR-ZUDV8XTB

Aikor, T. S., Ejem, E. A., & Nwoko, N. (2025). Digital financial systems and the transformation of Nigerian supply chains: Evidence from Nigerian SMEs (2019–2023). International Journal of Research and Innovation in Social Science, 9(14), 1399–1409. https://dx.doi.org/10.47772/IJRISS.2025.914MG00107

Anucha, V. C. (2020). E-payment system and sales growth of retail outlets in Nigeria. African Journal of Innovative Research in Marketing and Management, 9(2), 9-22.

Arum, O. M., Achi, A. D., & Ewuzie, C. O. (2024). Effect of the application of cashless policy on the sales performance of SMEs in Enugu Metropolis, Nigeria. International Journal of Multidisciplinary Research and Growth Evaluation, 5(5), 688-697. https://doi.org/10.54660/.IJMRGE.2024.5.5.688-697

Ehiedu, V. C., Onuorah, A. C., & Chienjina, J. O. (2023). E-payment system (EPS) and efficiency of banks in Nigeria. International Journal of Applied Research in Social Sciences, 5(1), 1–13. https://doi.org/10.51594/ijarss.v5i1.440

Mustapha, K. I., Onimole, S. O., & Adebusoye, A. B. (2025). Effect of electronic payment system usage on performance of small and medium enterprises in Ilorin metropolis, Kwara state. JABU International Journal of Social and Management Sciences, 9(2), 93-110.

Nwidua, L. P. (2025). Electronic payment system and customer patronage of shopping malls in South-South Nigeria. British Journal of Management and Marketing Studies, 8(1), 167-184. https://doi.org/10.52589/BJMMS-DOF2MEYV