INFLUENCE OF ELECTRONIC PAYMENTS ON SPENDING BEHAVIOUR OF UNDERGRADUATES IN NIGERIA (UNIVERSITY OF UYO)

CHAPTER ONE

INTRODUCTION

1.1   Background to the Study

Electronic payments, or e-payment services, include a variety of digital methods for transferring money between parties. These services make it possible for people, businesses, and organizations to conduct transactions electronically by eliminating the need for actual cash or checks. E-payment services leverage technology to enable secure and convenient payments across various platforms, including websites, mobile devices, and point-of-sale systems. Credit/debit card payments, electronic funds transfers (EFTs), peer-to-peer payment apps, online banking transfers, and mobile wallets are examples of e-payment services. These methods provide users with flexibility, speed, and efficiency in managing their financial transactions (Grouch et al., 2024; Alkhaffaf et al., 2024). These systems offer a practical and effective means of carrying out transactions.

Electronic payments offer many economic advantages in addition to convenience and security, such as facilitating the mobilization of savings and guaranteeing that the majority of the nation's cash is held in banks or other financial institutions (Okifo and Igbunu, 2015). This makes funds available to borrowers – both companies and private individuals. In addition, an electronic payment system provides the ability to track individual expenses to make it easier for banks to design products. This information could be helpful for the government and the central bank in making decisions.

The growth of e-payment solutions in recent years has provided consumers with numerous choices and the use of these systems has expanded as a result of technological advancements, greater internet usage, and a growing need for seamless transactions. According to Patnaik (2023), the adoption of mobile payment solutions is predicted to grow globally, a trend also noted by Bian and Ji (2023). This shift to digital transactions reflects broader global trends that prioritize the convenience and speed of financial transactions (Adebayo et al. 2021).

According to research, students who use electronic payment methods are more financially literate and encourage budgeting (Ojo and Adeola, 2020). Unlike traditional cash transactions, digital payment options make students less conscious of their spending because physical currency exchange is no longer part of the transaction. This lack of concrete commitment to their finances can lead to impulsive spending, due to the easy and instant accessibility of electronic payments (Nwokoma, 2019).

Additionally, the many discounts and promotions linked to these payment methods frequently tempt students to spend more than they had planned to (Chijioke et al. , 2022), thereby generating concerns regarding how digital financial tools affect students' financial discipline because their instant gratification can compromise prudent budgeting.

Furthermore, social dynamics have a significant impact on the adoption of digital payments. Peer pressure and social media trends have a significant impact on students' spending habits, encouraging them to use electronic payments for lifestyle purchases and social gatherings (Ogunsola and Afolabi, 2023). The complicated connection between technology, peer influence and student financial decision-making is highlighted by the fact that students may feel pressured to follow their peers' increasing reliance on digital platforms for transactions, leading to further normalization of electronic payments leads in their social circles.

This emphasizes the need of comprehending how these factors affect student's purchasing habits. It is essential for many stakeholders, including legislators, financial institutions, educators, and others – to gain a deeper understanding of how electronic payment systems influence the financial behavior of Nigerian students. By thoroughly investigating this dynamic, stakeholders may devise initiatives to encourage responsible spending and improve financial literacy among students.

Further research is needed to explore the long-term effects of digital payment systems on the financial well-being of Nigerian students (Ibrahim et al., 2023; Solomon & Adebayo, 2021). Such studies would provide valuable insights into how these payment systems shape students' financial decision-making and overall economic stability. Thus, this study's goal is to investigate how electronic payments affect this important population group's purchasing habits.

1.2   Statement of the Problem

The rapid adoption of electronic payment systems among undergraduates in Nigeria has raised significant concerns regarding their spending behavior. While these digital platforms offer convenience and accessibility, they also have the potential to promote impulsive spending and financial mismanagement. Research indicates that the ease of making transactions through mobile apps and digital wallets may lead to an underestimation of actual expenditures (Ojo & Adeola, 2020; Nwokoma, 2019). Consequently, many students find themselves grappling with financial challenges, as the immediacy of electronic payments can diminish their ability to budget effectively and make informed financial decisions (Chijioke et al., 2022). This issue is particularly pressing in a country where economic constraints and high unemployment rates heighten the need for prudent financial management among young adults (Adebayo et al., 2021; Ibrahim et al., 2023).

Moreover, the influence of social dynamics and peer pressure on spending behavior is exacerbated by the use of electronic payment systems (Ogunsola & Afolabi, 2023). As students witness their peers engaging in frequent digital transactions, they may feel compelled to emulate these behaviors, further normalizing impulsive spending patterns (Solomon & Adebayo, 2021). The lack of adequate financial literacy programs within educational institutions amplifies this challenge, leaving students ill-equipped to navigate the complexities of digital finance (Adesina & Alabi, 2022; Eze et al., 2020). Additionally, the psychological effects of digital transactions—such as the detachment from physical cash—can lead to a disconnect from financial realities, complicating the overall financial health of undergraduates (Adebayo et al., 2021; Ibrahim et al., 2023). This problem necessitates a comprehensive investigation into how electronic payment systems shape the spending behavior of Nigerian undergraduates, with the aim of informing effective financial education and support strategies.Top of Form

1.3 Objectives of the Study

The main objective of the study is to examine Influence of Electronic Payments on Spending Behaviour of Undergraduates in Nigeria. Specific objectives of the study are:

1. To examine the extent to which electronic payment systems are utilized by undergraduate students in Nigeria.
2. 2.  To investigate the impact of electronic payments on the spending patterns of undergraduate students in Nigeria.
3. To identify the factors that influence the adoption and use of electronic payment systems by undergraduate students in Nigeria.

1.4 Research Questions

To guide the study and achieve the objectives of the study, the following research questions were formulated:

1. What is the prevalence of electronic payment usage among undergraduate students in Nigeria, and what are the most commonly used electronic payment methods?
2. How has the adoption of electronic payments influenced the spending patterns of undergraduate students in Nigeria, in terms of spending frequency, spending amounts, and the types of goods and services purchased?
3. What factors contribute to the adoption and use of electronic payment systems by undergraduate students in Nigeria, and what are the perceived benefits and challenges associated with these systems?

1.5 Research Hypothesis

The following research hypothesis was developed and tested for the study:

Ho: There is no significant influence of electronic payment systems on the spending behavior of undergraduates in Nigeria.

1.6 Significance of the Study

The study is important for many reasons. The following are the major stakeholders this paper through its practical and theoretical implications and findings will be of great significance:

Firstly, the paper will benefit major stakeholders and policy makers in the Banking sector. The various analysis, findings and discussions outlined in this paper will serve as a guide in enabling major positive changes in the industry and sub-sectors.

Secondly, the paper is also beneficial to the organizations used for the research. Since first hand data was gotten and analyzed from the organization, they stand a chance to benefit directly from the findings of the study in respect to their various organizations. These findings will fast track growth and enable productivity in the organizations used as a case study.

Finally, the paper will serve as a guide to other researchers willing to research further into the subject matter. Through the conclusions, limitations and gaps identified in the subject matter, other student and independent researchers can have a well laid foundation to conduct further studies.

1.7 Scope of the Study

The study is delimited to University of Uyo.  Findings and recommendations from the study reflects the views and opinions of respondents sampled in the area. It may not reflect the entire picture in the population.

1.8 Limitations of the Study

The major limitations of the research study are time, financial constraints and delays from respondents. The researcher had difficulties combining lectures with field work. Financial constraints in form of getting adequate funds and sponsors to print questionnaires, hold Focus group discussions and logistics was recorded. Finally, respondents were a bit reluctant in filling questionnaires and submitting them on time. This delayed the project work a bit.

1.9 Organization of the Study

The study is made up of five (5) Chapters. Chapter one of the study gives a general introduction to the subject matter, background to the problem as well as a detailed problem statement of the research. This chapter also sets the objectives of the paper in motion detailing out the significance and scope of the paper.

Chapter Two of the paper entails the review of related literature with regards to corporate governance and integrated reporting. This chapter outlines the conceptual reviews, theoretical reviews and empirical reviews of the study.

Chapter Three centers on the methodologies applied in the study. A more detailed explanation of the research design, population of the study, sample size and technique, data collection method and analysis is discussed in this chapter.

Chapter Four highlights data analysis and interpretation giving the readers a thorough room for the discussion of the practical and theoretical implications of data analyzed in the study.

Chapter Five outlines the findings, conclusions and recommendations of the study. Based on objectives set out, the researcher concludes the paper by answering all research questions set out in the study.

1.10 Definition of Terms

1.  Electronic Payments

 Digital transactions that allow individuals to transfer funds or make purchases using electronic devices, such as smartphones, computers, or point-of-sale systems, without the need for physical cash.

2.  Spending Behavior

 The patterns and habits exhibited by individuals in relation to their purchasing decisions, including frequency, amount spent, and the types of goods and services acquired.

3.  Undergraduates

 Students who are pursuing a bachelor's degree at a college or university, typically between the ages of 18 and 25, and who may have specific financial constraints and lifestyle factors influencing their spending.

4.  Cashless Economy

 An economic system where financial transactions are conducted electronically, reducing the reliance on physical cash and promoting the use of digital payment methods.

5. Financial Literacy

The ability to understand and effectively use various financial skills, including budgeting, investing, and managing debts, which influences an individual’s spending decisions and financial behavior.

6.  Impulse Buying

Unplanned purchases made by consumers driven by emotional responses or external stimuli, often heightened by the convenience of electronic payment methods.

7. Transaction Costs

The expenses incurred in the process of making a financial transaction, including fees associated with electronic payment methods, which can impact consumer spending choices and behaviors.