Cashless economy has ushered in the cashless banking framework across different countries of the world and this is made possible by the advances in information technology. Electronic cash is a term becoming more acceptable as the world makes a shift towards a cashless society. This research work presents the development of a mobile payment system which implements cashless economy. The main aim of this development is to reduce some cash-related crimes in our society such as: robberies, the risk of losing cash in the case of fire and flooding incidents, inefficiency and corruption associated with cash usage like leakages, money laundering, amongst other cash-related fraudulent activities. The mobile payment system developed produces services operated under financial regulation and performed from or via a mobile device. Instead of paying with cash or check, a consumer can use a mobile phone to pay for a wide range of services, digital or hard goods.  This payment system is a service system where the consumer sends a payment request via an SMS text message to a short code, the merchant involved is informed of the payment success and can then release the goods paid for. AT commands for VB.Net programming language is the tool used in the development of this mobile payment system with Mysql as the database.



1.0       Introduction

Throughout the developing world, there is a strong focus on improving information technology. In this view, many believe that the use of information and communication technology (ICT) is a key that can help to address certain problems that required constant attention, like monitoring, controls, security and other commercial businesses. In the early 1940s, computers were used only for calculating and solving of trigonometric problems, as time went on, the use of computers extended to data processing applications, results oriented programs etc (Wikipedia). Today, Information Technology has advanced to the extent that it has made life more comfortable and efficient. The comfort of being able to pay for goods and services from any point of transaction, using mobile payment system has become a vital issue as it saves a lot of time and the risks involved in carrying cash.

Mobile phones can substitute for travel, allow quicker and easier access to information on prices, enable traders to reach wider markets, boost entrepreneurship and generally makes it easier to do business. Mobile phones have become devices for paying merchants, receiving time sensitive information such as stock quotes, and aid in critical business processes in many countries. Mobile Payment System (MPS) is an innovative application on the mobile phone platform that allows a person to initiate a transaction and make a payment using a mobile phone. MPS as an emerging payment system allows commercial transactions to be carried out anytime, anywhere and by anyone with a mobile phone which is a form of payment system that supports the emergence of Cashless economy. Cashless economy is gaining more and more significance nowadays due to the widespread of Point Of Sale (POS) terminals in stores. This payment system is where paper money is replaced with electronic money which is facilitated with the advances in technology. As witnessed in the invention of the internet, the development of electronic account systems and the increasing sophistication in major industries all around the world, paper money (cash payment system) is becoming functionally less important as its functions are been reduced potentially and drastically.

Cash payment system is the popular form of payment with customers as transactions are completed immediately and it can also be used for another transaction, making them a cash-based economy. Payment with cash is simply using physical cash to make payments. This is the most common form of payment prevailing in most developing countries. The majority of African countries still have cash and cheque economies.

1.1       Statement of the Problem

According to Ovia (2002), Nigeria is largely a cash-based economy with large percentage of funds residing outside the banking sector as against the developed world, where the money in circulation is for example 4 percent in US and 9 percent in U.K. Whereas the cash-based economy is characterized by the psychology to physically hold and touch cash, a culture informed by ignorance, illiteracy, and lack of security consciousness and appreciation of the merit of digital payment.

There are so many problems observed that are associated with Nigerian’s cash-based economy, which include:

  • Delays in financial transactions which can be caused by queue in the bank or ATM to collect cash.
  • Spread of bacteria through handling physical cash
  • High rate of crime, illegal drug trade, terrorism, illegal immigration, human trafficking, corruption, due to its cash-based economy. People are always faced with the challenges of violent crimes (insecurity) such as, bank and ATM robberies, store holdups, armed robberies, employee cash theft, armor car heists, kidnap for ransom, and purse snatching as the system of physical cash been used is non-traceable, unaccountable, easy to hide or lose, steal, counterfeit and spend without a trace, as such paper cash has allowed all sorts of criminal activities to thrive.
  • Too much cash in circulation which causes inflation to rise, and as inflation rises, it diminishes the purchasing power of consumers, making it undesirable to hold cash.

The use of Mobile Payment System can address these disadvantages associated with cash payment system.

  1. Objectives of the Study

The Objective of this research work is to develop a prototype application to simulate the real world Mobile Payments applications that will help to:

  • Make faster transactions – reducing queues at the banks, ATM points and points of sales by eliminate time spent on collecting, counting and sorting cash.
  • Improve hygiene on site – eliminating the bacterial spread through handling of notes and coins.
  • Help eliminate the crimes associated with the cash economy and improve the security consciousness of individuals and remove the common fear associated with using physical cash.
  • Help check inflation by reducing the amount of cash in circulation.
  • Enhance the Central Bank of Nigeria (CBN) new policy on cashless economy.

1.3       Significance of the Study

            The study will foster the reduction of some disadvantages associated with cash-based economy to the government, banks, merchants and customers. It will seek to:

  • Offer huge cost savings to the government because the use of Mobile payment system will reduce cost of printing paper currency.
  • Obviate the need to transport, handle, store and dispense physical cash as mobile payment system will offer enormous savings to the banks and merchants
  • Enable customers to conveniently pay for their goods and services without the inconveniences associates with withdrawing cash, especially those that are staying far from banks or ATMs stands.
  • Provide more security to the business owners who will be saved from the stress of ensuring that they deposit the cash realized on daily basis in the bank due to the fear of financial loss in the case of fire, flooding incidents, armed robbery or domestic crisis.
  • Also drive development and modernization of our payment system in line with Nigeria’s vision 202020 goal of being amongst the top 20 economies by the year 2020. An efficient and modern payment system is positively correlated with economic development, and is a key enabler for economic growth.

1.4       Scope and Limitations of the Study

This research work is to develop a mobile payment system that can handle the payment for goods and services obtainable only in Nigeria. The project was  left without certain limitations which include:

  1. ]The transaction must be made in a location where network signal (like GLO, MTN, etc) is available.
  2. Because the cashless policy is a new system in Nigeria, the researcher encountered challenges in data collection.
  3. Financial constraints posed a great challenge to the success of this project.