The Use of E-payment Products and their Impact on Currency-in-Circulation in Nigeria

Abstract

This study is set to ascertain the relationship between the use of e-payment products and the value of currency in circulation in Nigeria. An ex-post facto research design was adopted in the investigation. A least square regression analysis was carried out on a time-series data. The objective was to ascertain relationships between the variables, whether positive or negative and to determine its significance. The outcome of the study indicates that only REMITA and WEBPAY have an inverse but significant negative relationship with currency in circulation in Nigeria. At the same time, the use of ATM and POS maintained a positive and significant relationship. This isn’t surprising considering ATM and POS machines are verified sources of cash withdrawals in Nigeria. Presently, due to the relatively low use of e-payment products, their influence on monetary policy has been insignificant. The Central bank of Nigeria has not recorded a decrease in currency in circulation followed by an increase in the use of e-payment products; instead, it is recorded that between 2009 and 2018, the value of currency in circulation grew by about 97.18%. It is important to stress the fact that any innovation takes time to mature and become accepted in the market. It might be too soon to complain. We ought to expect that in the future, e-money products could be made more acceptable as regular payment instruments. Following this, their influence on monetary policy could be increased. This depends on the extent to which it will substitute the currency in circulation. This means that a developing nation like Nigeria needs to monitor the trend of development of e-money on the market and the increasing degree of use by institutions and clients. Lastly, the regulatory authorities need to develop the capacity to manage an e-money driven economy more closely and more carefully.

Nexus Between Point of Sale, Automated Teller Machine, Mobile Banking and Currency in Circulation in Nigeria: Ardl Bond Test Cointegration Approach

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