Challenges And Prospects Of POS Businesses
(Case Study Of POS business owners in two selected Local Governments Areas in Anambra State)
Point of Sale (POS) businesses face a myriad of challenges and opportunities in today’s dynamic market landscape. Amidst increasing competition and rapidly evolving consumer preferences, POS businesses encounter hurdles such as technological obsolescence, rising operational costs, and the demand for seamless integration with e-commerce platforms. Ensuring data security and compliance with regulatory standards adds another layer of complexity. However, within these challenges lie promising prospects. The growing adoption of digital payment solutions presents an opportunity for POS businesses to enhance customer experiences and expand their market reach. Additionally, advancements in data analytics and artificial intelligence offer avenues for optimizing inventory management, personalized marketing strategies, and customer relationship management. By strategically navigating these challenges and capitalizing on emerging trends, POS businesses can position themselves for sustained growth and profitability in the dynamic retail landscape.
This study was carried out on the challenges and prospects of POS businesses in Nigeria using POS business owners in two selected Local Governments Areas in Anambra State as case study. To achieve this 3 research objectives were formulated. The survey design was adopted and the simple random sampling techniques were employed in this study. The population size comprise of all the POS business operators in the study area. In determining the sample size, the researcher purposively selected 65 respondents while 50 respondents were validated. Self-constructed and validated questionnaire was used for data collection. The collected and validated questionnaires were analyzed using frequency tables and percentage. The result of the findings reveals that; The very advantages of using POS includes; It’s convenience for performing transactions, Easily accessible, Availability and ability to perform variety of transactions, Speedy access to fund and payment; High cost of charges, Insecurity, Disclosure of account details, unreliable network, power outage, security of communication over transaction network are the identify disadvantages of using POS machine in Nigeria; the challenges the facing Point Of Sale retail business in Nigeria are; Robbery, Irregular Connectivity, Transactional Insecurity, High Cost of POS terminal, power outage, and transaction irregularities.The paper recommends that all the relevant authorities should ensure that there is an improvement of National security, Provision of Connection and network infrastructure to strengthen connectivity, Digital or internet Security should be enhanced; Reduction of POS terminal cost and Adequate power supply, meeting the above listed will help to expose the potentials of POS business to Nigeria economy.
TITLE PAGE
Certification
Dedication
Acknowledgement
Table of ContentList of Tables
ABSTRACT
CHAPTER ONE: INTRODUCTION
1.1 Background of the study
1.2 Statement of the problem
1.3 Objective of the study
1.4 Research Questions
1.5 Significance of the study
1.6 Scope of the study
1.7 Limitation of the study
1.8 Definition of terms
CHAPTER TWO: REVIEW OF LITERATURE
Literature Review
CHAPTER THREE: RESEARCH METHODOLOGY
3.1Research Design
3.2Population of the study
3.3Sample size determination
3.4Sample size selection technique and procedure
3.5 Research Instrument and Administration
3.6 Method of data collection
3.7 Method of data analysis
3.8 Validity and Reliability of the study
3.9 Ethical Consideration
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.1 Data Presentation
4.2 Answering Research Questions
CHAPTER FIVE: SUMMARYCONCLUSION AND RECOMMENDATION
5.0 Summary
5.1 Conclusion
5.2 Recommendation
References
Appendix
INTRODUCTION
1.0 BACKGROUND OF THE STUDY
With the increasing use of advanced electronic technologies for e-funds worldwide, the introduction of POS into the Nigeria economy has facilitated the ease of doing business without necessarily going about with huge cash in wallet.
The use of POS terminals to make financial payment in Nigeria was introduced by the Central Bank of Nigeria (CBN) in 2012 to promote its cashless policy with the aim of improving payment system. Ever since the introduction, there has been increasingly growth in the number of active POS terminals provided by banks to mobile money merchants. In the first three months of 2018, for example, it was reported that a total of 17,193 POS terminals were registered by banks for carrying out cashless transactions in Nigeria (Ogunfuwa, 2018). Statistical figures from the Nigeria Inter-Bank Settlement Scheeme (NIBSS) indicated that as of 2018, the number of active POS terminals in Nigeria was 164,607. Also, in addition to this development, a record of 66.6% rise in transactions using POS across the country was registered as at January, 2018 compared to the value registered using POS for transaction in January, 2017. This trends was maintained in February, 2018 where an increase of 60.61% was registered compared to February, 2017. The attribution to this growth can be acceptance of POS terminals for making payment and increasing ICT network penetration in Nigeria.
Point of Sale also called Point of Purchase, is a device that allows local debit cardholders to make withdrawals or make payment for product and services.
This machine is mainly used in retail shops where customers pay for good or services using their ATM cards. POS machine is also used to pay some utility bills like electricity, airtime, cable or decoder subscription etc.
However, because the services of the banks does not serve everybody in Nigeria especially those in remote village. Banks created POS business as a terminal to bring financial services closer to the unbanked and under banked segment of the society. Hence this is a huge relief to decongest the already crowded banks in the rural areas and the often crowd witnessed at ATM spots and also encourage entrepreneur who would be interest to be bank agent while earning their own commission.
1.2 STATEMENT OF THE PROBLEM
Every business has its pros and cons as POS business is not an exemption. According to Nzaro and Magidi (2014) who examined the role of e-payment, they observed that although the using of POS have been beneficial such as convenience, product and service variety, easy access to funds and speedy payment, issues such as high cost of charges, insecurity question over frauds via e-banking and the issue of being debit without credit have being the problem faced by POS users. Adeoti (2013) when he examined the challenges to the efficient use of POS terminals in Nigeria, the study indicated that the efficient use of POS terminal in Nigeria is challenged by issues such as unreliable network, power outage and security of communication over transaction network. therefore it is on this note that this study seek to examine the challenges and prospects of POS Business in Nigeria.
1.3 OBJECTIVE OF THE STUDY
The purpose of this study is to examine the challenges and prospect of POS business in Nigeria. Specifically this study will also seek:
- To examine the relative advantage of using Point Of Sales machine in Nigeria.
- To examine the challenges facing Point Of Sale retail business in Nigeria.
- To examine the prospect to the challenges faced by Point Of Sale business in Nigeria.
1.4 SIGNIFICANCE OF THE STUDY
This research study would enlighten the stakeholders in the banking sector on the need to encourage more entrepreneurs by making setting up of POS business easier for them. , it would be relevant to the general public, respective bank customers, banks regulatory authorities, the academia and interested persons and organizations on the adoption of electronic payment system.finally this study will contribute to the general body of knowledge and give room for further studies.
1.5 SCOPE OF THE STUDY
The study shall examine the relative advantages, problems and prospects of electronic payment system at the point of sale terminals in Nigeria. The study shall rely on empirical evaluation of the adoption of electronic payment system at the point of Sale terminal in Nigeria.However the study is delimited to 2 local government in Anambra State.
1.6 RESEARCH QUESTION
- What are the relative advantages of using Point Of Sale Machine in Nigeria?
- What are the disadvantages of using Point of Sale machine in Nigeria?
- What are the challenges the facing Point Of Sale retail business in Nigeria?
- What are the prospect to the challenges faced by Point Of Sale business in Nigeria?
1.7 LIMITATION OF STUDY
In the course of this study, the researcher encountered few factors that posed to be a limitation. These include financial and time constrain
Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.
1.8 OPERATIONAL DEFINITIONS
Challenges:This is the situation of being faced with something that needs great mental or physical effort in order to be done successfully.
Prospects: prospect is the possibility or likelihood that something will happen or something will succeed. It also mean the chances and solution on which something or a course succeeds.
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.
SHARE PROJECT MATERIALS ON:
Point of Sale (POS) businesses refer to companies that provide hardware and software solutions for processing transactions and managing sales in various industries, such as retail, hospitality, and e-commerce. These businesses face both challenges and prospects, reflecting the evolving nature of technology and consumer behavior. Here are some of the key challenges and prospects for POS businesses:
Challenges:
- Competition: The POS industry is highly competitive, with numerous players offering various solutions. To stand out, businesses must continually innovate and provide unique features and value.
- Security: With the rise of cyber threats, ensuring the security of sensitive payment data is a significant challenge. POS businesses must invest in robust security measures to protect both themselves and their customers.
- Regulatory Compliance: Adherence to changing regulations and standards related to payment processing and data privacy, such as PCI DSS and GDPR, can be complex and expensive.
- Integration: Businesses often have existing systems and processes in place. Integrating new POS solutions with legacy systems can be challenging, requiring compatibility and custom development.
- Hardware Costs: The cost of POS hardware can be a barrier for small businesses. POS businesses need to find ways to make their solutions affordable and scalable.
- Customer Support: Providing excellent customer support is vital. Handling customer issues and inquiries in a timely and effective manner is a challenge for POS businesses, as their customers rely on their systems for smooth operations.
- Market Trends: Keeping up with changing market trends and technology advancements is essential. Businesses must adapt to shifting consumer preferences, like contactless payments, online ordering, and mobile POS.
Prospects:
- Evolving Technology: As technology advances, there are opportunities to provide more advanced and feature-rich POS solutions, including AI, analytics, and IoT integration.
- SaaS Models: Software as a Service (SaaS) models are becoming more popular, allowing POS businesses to offer flexible and subscription-based solutions. This can reduce the upfront costs for customers.
- Mobile Solutions: The growth of mobile devices offers prospects for POS businesses to develop mobile-based solutions, making transactions more accessible and convenient for both businesses and customers.
- Data Analytics: Collecting and analyzing transaction data can provide valuable insights to businesses. POS companies can offer analytics tools to help their customers make data-driven decisions.
- Global Expansion: Expanding into international markets can be a significant growth opportunity for POS businesses, as businesses worldwide require transaction processing solutions.
- Omnichannel Integration: Integrating in-store and online sales channels is essential for many businesses. POS companies that offer omnichannel solutions have a competitive advantage.
- Green Technology: Embracing eco-friendly practices and promoting energy-efficient hardware can attract environmentally conscious businesses and consumers.
- Partnerships: Collaborating with other technology providers, payment processors, and financial institutions can open up new markets and distribution channels.
In summary, the POS industry faces various challenges, including competition, security concerns, and regulatory compliance. However, there are also promising prospects, including technological advancements, SaaS models, mobile solutions, data analytics, and global expansion. POS businesses that can navigate these challenges while capitalizing on these prospects stand to thrive in the evolving market.