the extent of cashless transactions in banking industry only chapter 1-3

CHAPTER ONE

1.0     INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Before the emergence of modern banking system, banking operation was manually which lead to a slowdown in the settlement of transaction.

This manual system involves posting transactions from one ledger to another, which handles figures or counting of money that should be done through computers or electronic machine, we were no 100% accurate thereby resulting to human errors. Most bank then use only one computer in carrying out transactions that ameliorate the sluggish nature of banking transactions.

Nigeria historically operate a cash-driven economy particularly in the consumer sector, however the system has witnessed improvements over the years and particularly in recent times has move from its rudimentary level of the early years of banking business to the current state of sophistication comparable to other economics at the same level of development.

The main reason for introducing cashless economy is to develop a good payment system which promotes an appropriate mechanism for efficiency in mobilizing and allocating resources in the economy.

Cashless can be defined as financial transaction handled on by means of credit cards, bank transfer and cheques etc with handled from person to person or a society where no one uses cash all purchases being made by credit cards, charge cards, cheques or direct transfer from one account to another.

Policy can be explained as definite course of method of action selected from among alternatives and in light of given conditions to guide and determine present and future decision.

Cash can be defined as money in form of bills or coins currency or payment of goods and services in currency or by cheques.

According to Anyaqa Okoro, M. (1999): Electronic banking is defined as the application of technology to banking especially the payment (deposit transfer) aspect of banking. He also defined electronic banking as a system of banking with an electronic communication network which permits online processing of the same day credit and debit transfer of funds between member of a clearing system.

Omotayo . G (2002) defines electronic banking as a system in which funds are moved between different accounts using computerized.

The financial system of any economy is responsible for mobilizing savings for productive investments and ensuring efficient resources allocation. A large volume of literatures such as those of Ajayi (2006), Adegbaju and Olokoyo (2008), and Babalola (2008) have documented the contribution of banks to socio-economic development of nations.

1.2     STATEMENT OF THE PROBLEM

The adoption of cashless policy into the national economy is to ease banking transaction, but one of the major problem is that some banks do not have information back up to fall back on if thereby any computer breakdown. Another major problem is that customers have not being fully enlightened about the cashless policy.

Lastly, the main problem is about the power supply and network services that fluctuate.

In investing in the cashless policy, country will need a large amount of financial resources in computer technology and availability of infrastructural facilities such as electricity and telecommunication network.

1.3     OBJECTIVES OF THE STUDY

          This research works intends to assess the extent of cashless transactions in banking as well as identity the various types of cashless transactions.

The research will also evaluate the possible solutions to the problems, associated with the development of electronic banking system in Nigeria.

There are different types of electronic banking used in Nigeria banks, the researcher will also like to assess the impact of electronic in Nigeria economy.

The government will benefit from the cashless economy in the area of adequate budgeting and taxation, improved regulatory services, improved administrative process (automation), and reduced cost of currency administration and management (Ashike, 2011).

1.4     SIGNIFICANCE OF THE STUDY .

Cashless transaction in our economy today is a welcome development and also its important in the society is overwhelming, so this research is significant in so many ways.

These among other reasons led the researcher to carry out this study not only to examine and appraise the impact and effects of the cashless economy policy on the Nigeria economy, but to determine whether it will serve as a viable alternative cash transaction method in our society.

The extent to which Nigerians will have significantly benefits from the cashless economy initiative, how the policy will ease business for them and its level of acceptance.

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