Opportunities and Challenges of the Adopting of National Electronic Payment Switch System in Private Commercial Banks: The Case of Wolaita Sodo City, Southern Ethiopia

Abstract

The introduction of an efficient national switch payment system ensures speed, and convenience, reduces cost, lowers payment risk and directly affects the efficiency of the circulation of goods and services and the overall development of the economy. The main objective of this study is to assess the major opportunities and challenges of adopting the national switch system in the case of selected Ethiopian private commercial banks. The research is designed as an assessment of the payment system through seven selected private commercial banks so that the findings give insights into other commercial banks operating in the country. Both primary and secondary data are issued as sources of information. A questionnaire was issued as the main instrument to collect primary data, and secondary data was reviewed from various publications. Regarding methodology descriptive with survey method applied. The target population for the study is 120 and also used for the study. Data is analyzed using SPSS tools and results are present based on statistical mean and standard deviation values. The finding from the analysis shows that: the National Switch System updates or improves payment instruments, significantly lowers or impairs commercial banks’ cost to introduce new services to their customers, and saves customers resources in terms of time and money furthermore having recently discovered services and functionalities, assist to the NBE’s financial addition strategy and can be taken as a tool to create a cashless society, and it is also one of the path for income generation for commercial banks. On the opposite, the National Switch System is subjected to challenges like: Network and power fluctuation, poor settlement and chargeback process when there is a disputed transaction, poor collaboration between commercial banks to answer customers requests, and lack of proper call centre to handle customer complaints in quickly, lack of confidence and fear from customers, poor awareness by customers, recognized complexity and cost.