Examination of the Macroeconomic Effects of the e-Payment System on the Pathway to Cashless Economy in Nigeria

Abstract

The exploration of the macroeconomic effects of the e-payment system in the realization of a cashless economy in Nigeria has not enjoyed sufficient scholarly inquiries. Based on this gap, this paper aims to determine whether the CBN's recent demonetization scheme on the path to a cashless economy is informed by evidence-based insight on the macroeconomic effects of the country's epayment  systems. The researchers appraise the policy and regulatory environment in Nigeria, and evaluate the challenges and opportunities for the government towards the development of a more reliable digital payments system. The study deployed an ARDL model to investigate the relationship between e-payments and macroeconomic conditions. Using a monthly frequency, the study shows that the macroeconomic effect of a cashless policy is not only limited and temporary but also sensitive to the measure of the macroeconomic conditions under consideration. The ATM looks to be inflationary; however, alternative e-payment channels such as POS, WEB, and MOBILE APPS are capable of causing price levels to fall. The research reveals that the digital mode of payments is highly advantageous to the macroeconomic survival of Nigeria. Also, there is a need to put in place policy and regulatory frameworks to ensure that the
digital option has the capacity to serve the large population of the country in terms of technologicaland technical expertise. The study concludes that the growing presence of e-payment facilities is the way to go to strengthen macroeconomic conditions when the demonetization strategy is implemented on the route to a cashless economy.