Effect of Electronic Payment System on Economic Growth in Nigeria

Abstract

This study examines the effect of the electronic payment system on economic growth in Nigeria. Here electronic payment system was denoted as the transactions through the point of sales, web pay channel and mobile payment channel, while economic growth was denoted as gross domestic product. Quarterly time series data were collected from the Central Bank of Nigeria statistical bulletin between 2012Q1and 2021Q4. Philip Perron test was used to test the stationarity of the data and the Johansen cointegration test was utilized to determine the presence of along-run relationship. Vector Error Correction Model (VECM) was used for analysis since cointegration was established in the series. Dynamic Ordinary Least Square regression was used to test the effect of the electronic payment system on economic growth in Nigeria. The findings showed that point of sales and mobile payment channels are significant drivers of economic growth in Nigeria, while web pay channels had an insignificant effect on economic growth in Nigeria. It was recommended that government should subsidise the purchase of points of salesuch that most traders, vendors and business people will be able and willing to own one. There is a need for more investment to be made in the internet network by the government of Nigeria and to also make favourable policies that will entice more private sector-driven investment in the industry. More neo-banks should be licensed and encouraged to drive the cashless policy which will promote healthy competition with the commercial banks.