The Effectiveness of e Payment Systems in Revenue Performance of SMEs in Tanday City. Edited

Republic of the Philippines
NORTH EASTERN STATE UNIVERSITY

Main Campus
Tandag City, Surigao del Sur
GRADUATE SCHOOL
The Effectiveness of E-payment System on Revenue Performance in Tandag

Small and Medium Enterprises
_____________________________________________
A Thesis/Dissertation/Special Problem
presented to
The Faculty of Graduate School of
North Eastern Mindanao State University
Rosario, Tandag City, Surigao del Sur
____________________________________________________
In Partial Fulfillment of the Requirements

for the Degree of Master in Business Administration
____________________________________________________
Brillantes, Roselle B.
Corminal, Aiah Jane D.
De Rosas, Jerrah Jane C.
Gruyal, Ian Jay
Hinlog, Shawn N.
December 2022
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Chapter I
THE PROBLEM AND ITS SETTING
Introduction
The existence of an e-payment environment is already altering how we conduct
business in the retail, corporate, and wholesale markets. Financial literacy is critical in
today's digital environment for the business sector to achieve a higher level of
competitiveness. The usage of digitization is a method to improve payment and service
delivery. To generate a high degree of revenue performance, local business owners
must offer e-payment innovations to the community.
The adoption of a payment method that is secure, practical, and cost-effective
and that can serve as the basis for the growth of any economy is necessary because
the world's economies are dependent on payment systems (Azam, 2015). Before the
emergence of electronic systems, buying goods and services was possible through
cashless transactions. Payment systems have evolved in a new direction as information
technology and the internet has advanced, with electronic money gradually replacing
coins and paper currency (Nguyen & Gopalaswamy, 2018). Andrieu (2016).
Transactions involving cashless payments are practical methods that serve as superior
alternatives everywhere.
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Individual customers, businesses, and banks have all benefited from the usage of
e-payment in reducing some of the flaws inherent in the settlement and payment
process. The e-payment system allows customers to pay their bills without physically
moving to the bank's locations (Wheelock & Wilson, 2017). Micro, small, and medium-
sized businesses (MSMEs) must adapt to the new trend either globally or locally in
order to reap the many benefits that come with it.
Conceptual Framework
Entrepreneurial Level of
Background of Implementation
Small and of e-payments Intervention
Medium systems towards programs
Entrepreneurs in revenue
Tandag performance
Figure 1. Schematic Diagram
The first box contains the Entrepreneurial Background of Small and Medium
Entrepreneurs in Tandag City. The second box pertains to the level of Implementation
of e-payments systems toward revenue performance. The third box pertains to the
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output of the study to give an Intervention Program for Small and Medium
Entrepreneurs in Tandag.
Statement of the Problem
This study investigates the effectiveness of the E-payment System on Revenue
Performance in Tandag Small and Medium Enterprises.
1. What are the entrepreneurial background respondents in terms of:
1.1 Age;
1.2 Sex;
1.3 Educational Attainment;
1.4 Employment status;
1.5 Number of years in business sector; and
1.6 No. of Trainings attended relating to entrepreneurship.
2. What are their level of implementation of e-payments systems towards revenue
performance?
3. What are the intervention programs that may be proposed for this study?
Hypothesis
According to [Zhu Z and Matsuno K; 2016], financial technology is the provision
of credit by a business through digital payments services. To increase the effectiveness
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of digital payments system improvements like electronic payments transactions,
businesses now give financial technology their entire focus and make significant
investments in it.
The performance of SMEs is impacted by financial technology. Companies must
adapt to ever-changing circumstances. His findings found that digital innovation
improved his network correspondence [Begenau J.2020, Ngurah G, Adinegara J,
Wayan N et al.2017] think that financial technology experience has a positive impact on
the performance of SMEs. Payment systems will achieve the highest performance in
revenue [Brynjolfsson E, Malone TW, Gurbaxani V, Kambil A. 1994]. The performance
of SMEs is improved by experience. The payment systems attain the best financial
performance [Brynjolfsson E, Malone TW, Gurbaxani V, Kambil A. 1994].
There is a positive effect on the Philippine economy and performance due to the
advancement of financial technology developments in Philippines. So that it can
encourage the welfare of the community equally. Technology companies generate
payment revenue from transactions. This will improve performance.
[Dong J, Yin L, Liu X, Hu M, Li X, Liu L. 2020] [ Kuvaas B, Buch R, Weibel A,
Dysvik A, Nerstad CGL. 2017] indicates that online financial developments have a
positive impact on profitability (revenue performance), the hypotheses that can be
proposed are as follows:
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H1: There is a positive effect of e-payment system on SMEs revenue
performance
Scope and Limitation of the Study
The goal of this study is to determine how e-payments affect the revenue
performance of Tandag Small and Medium Enterprises. This study will take place at
Tandag. Its target proponents are businesspeople from various backgrounds, including
top management, the accounts or revenue department, e-commerce, and service
personnel.
Significance of the Study
This study aimed to determine how Tandag City's Small and Medium Enterprises'
revenue performance was affected by the e-payment system. The study will be
necessary for stakeholders, including top management, clients, staff, academics, and
huge businesses.
Definition of Terms
Word 1 E-payment System
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Altendorf and Schreiber (2015) define an electronic payment system as
one that accepts payments electronically rather than through checks or cash, such as
direct credit or the electronic transfer of credit card information.
Word 2 Revenue
Revenue is the term used in accounting to describe the money one
receives after selling goods and services to customers. This is part of their typical
company operations (Barnes & Corbitt, 2013).
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Chapter II
REVIEW OF RELATED LITERATURE AND STUDIES
This chapter provides further understanding of the study, the researchers
made use of different reading materials related to the electronic-payment (e-payment)
system. These materials such as web articles, thesis, books, magazines, newspapers,
and other that are essential in broadening the knowledge of the researchers. These will
also guide the researchers to achieve their target objectives by getting ideas another
related studies and make improvements as possible. The information gathered by the
researchers focuses on the empirical and theoretical literature on the impact of e-
payment on revenue performance. The benefits of e-payment on revenue performance,
the obstacles of e-payment on revenue payment, and solutions to improve e-payment
are also obtained. The researchers also sum up the different strategies adopted to
enhance e-payments.
RELATED LITERATURES
This review consists of books, articles, documents that focus on thesame
subject matter or other concepts of the study.
Foreign
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According to (Wonglimpiyarat, 2017), investing in an electronic payment
system is worthwhile. Banks and hospitality institutions, which both belong to the
service sector, are able to expand their global reach so that they are no longer restricted
to local clientele. This results in a significant revenue stream. The prompt handling of
complaints and enquiries ensures improved customer service when emails and other
electronic messages are exchanged with customers. The service sector also avoids
office space booking and shop assistant hiring, which results in reduced capital costs.
Online transaction systems also enable mass customization (Greenwood, 2014).
Regular client communication allows for the development of mass-customized goods
and services with a shorter time to market. It is also simple to choose one target market
and focus your marketing efforts on them. As a result, it is possible to have add-on
services for the essential services or add-on features for the goods they support
(Kaushik & Rahman, 2014) .
A review of E-Payment System in E commerce by (Fatonah etal.,2018) state
that Electronic payment systems can also define as atype of inter-organizational
information related to transactionsystems, linking various associations, and linking to
individualclients. Need for complex interaction require between partners,the technology
and environment. According to the Federal FinancialInstitutions Examination Council
(2010), electronic payment is anew payment practice for retail where a merchant
retrieves paymentinformation for goods and services and places this information inan
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electronic template that creates electronic files forprocessing over the network.
Electronic payments may be defined asan electronic value transfer of a payment from
the payer to therecipient through an electronic payment mechanism.
Local
As claimed by Liebana-Cabanillas, Muñoz-Leiva, & Sanchez-Fernandez (2015),
through this new mode of payment in doing online transactions, it gives significant
advantages to companies and vendors alike by increased in versatility, faster
transactions, greater convenience,and lower costs among others (Liebana-Cabanillas
etal., 2015). Despite the flourishing industry of electronic-payment (e-payment) systems
in recent years, cash transactions continue to dominate the Philippines. One factor
affecting this diminutive growth rate is the Country’s low bank population (Remo, 2018).
However, electronic transactions have great potential given that the Country’s mobile
phone usage rate is high. Nevertheless, there are still many challenges to overcome for
the industry to become successful such as infrastructures, regulations concern, and
buy-in from merchants. Most importantly, firms need to address and build awareness
and trust from consumers to improve e-payment usage in the country.
According to the Bangko Sentral ng Pilipinas (BSP) Financial Inclusion
Survey 2017, most Filipinos still have no bank account due to failure to maintain the
balance needed for these accounts. BSP reports that only 15.8 M or 22.6 percent of the
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total population own a bank account, mainly driven by perceived lack of need, lack of
necessary documents, and high Jurnal ILMU KOMUNIKASI 124 VOLUME 18, NOMOR
1, Juni 2021: 127-134 cost. However, only a few users from this population utilize
banking’s digital features due to the lack of awareness and trust in terms of security
(Lopez, 2018). The BSP aims to change these figures and increase digital banking
usage by 20 percent by 2020.
RELATED STUDIES
This section consists of information gathered from thesis anddissertations
which are also relevant to the research.
Foreign
In the study of Aldiabat (2019), Electronic payment cards are the most
important electronic payment methods that have developed significantly in the past few
years, and the modern alternative to money is widely used in all economically
developed societies .As it took the types that fit the requirements of electronic
commerce as well as the nature of transactions over the Internet, where it identified
different forms based on the function performed as a means of electronic procurement
such as (credit card, debit card, prepaid card, cash on delivery) and others.The
electronic payment process is the third step of e-commerce after the first one, which is
the search for information, the second step is demand, and the third is payment. E-
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payment is a means of connecting the seller and the buyer, and has many advantages
compared to conventional payment, including speed, low cost and continuous
development, the most effective means of shopping online, but it faces many risks and
obstacles to the consumer or customer. In particular, credit cards, which are a new
method of payment rather than traditional methods of cash payment, remain a positive
and negative means, as these cards are a means of deferred indebtedness that does
not require a certain period of payment . As it is the fastest way to fall into the spiral of
debt because of the temptations of banks, especially those with high incomes by raising
the ceiling of the card as well as increases the burden and the indebtedness on those
who are late in payment on time leading to the burden of benefits. There are a number
of issues that affect the electronic payment including: safety, ease of use, type of card,
awareness, and increases the risk of electronic payment to the consumer because there
is no face-to-face meeting between the seller and the buyer and there is no payment
directly.
According to a study in India by Thirupathi, M & et.al. (2019), The biggest
benefit of cashless transactions is that they guarantee that all economic transactions
are recorded. Digitalization makes it slightly possible to control black market money,
which is often detrimental to national economies and contributes to the government’s
increased tax revenue. It is stated in the same study that India only has 5% of the
population where their fund transactions are driven by he use of e-wallets and e-
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payments. The same study focused more on depth of their digital payments including;
Banking cards, Mobile wallets, Internet banking, and Mobile banking, such as their very
own banking app which is Bharat Interface for Money. The researchers of this paper
also thoroughly discussed the advantages and disadvantages of cashless payments.
Some of the advantages they stated include having a more comfortable experience
when transacting, another is its low cost wherein some cases a lot of online banks
charge for service fee and some do not charge anything, another advantage is the
waivers/discounts and cash backs, lastly is the records of personal transactions that
enables an individual track where their money is being used and is useful as a
budgeting instrument.
Local
A study in Polytechnic University Manila studied the factors that affect the
buying factors of millennials and investigated the relationship between the buying
behavior and purchase decision of millennials. The researchers used descriptive
research by random sampling to see the current situation. The results revealed the
millennials consider the following factors: sales promotion, advertisement, social
environment, feedback, logistics and payment processes. They used Pearson
Correlation Coefficient or Pearson’s R to find out that there is a significant relationship
on the factors in online shopping and Consumer Purchase Decision Process. Thus,
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online businesses must take into consideration these factors in designing and
implementing their online shops to experience sales growth. (Nartea, Santos, &
Goyenechea, 2019) .
According to “The World Bank’s” latest 2020 report, there are efforts to
enhance the digital interface in the Philippines, however, there are certain obstacles
such as low competition and regulatory constraints in the telecommunication markets.
The Philippine economy has its digital payment still growing and the majority is cash-
based and according to the Global Findex Database, almost the majority of Filipinos
prefer to pay their utility bills in cash rather than using bill payment systems. Only 5% of
people pay their utility bills with their bank accounts or mobile digital bank accounts.
Chapter Summary
This above has presented in detail the literature on the works of other scholars on how
e-payment influences revenue performance. In the next chapter, the research
methodology that includes the research design, population of the study, the sampling
technique then the data collection methods and then the data analysis. Chapter three
covers the research methodology.
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Chapter III
RESEARCH METHODOLOGY
This chapter deals with essential elements of the research process of the
components such as the research design, research environment, sampling, procedure,
the respondents, data gathering procedure and the data analysis are hereby presented.
Research Design
The study will be using the mixed method (combination of quantitative and
qualitative methods) research design, utilizing questionnaires and personal interviews to
gather the data on the knowledge, attitude, practices, and challenges of small and
medium enterprises. The designs are deemed appropriate because the study seeks
responses from respondents regarding their knowledge, attitudes, and practices in E-
payment systems. The interviews would help gather the necessary data to measure the
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performance of the business before, during, and after implementing E-payment
systems.
Research Locale
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Figure 1. Political Boundary of Tandag City
The study will be conducted in Surigao del Sur, specifically in the city of
Tandag. The city has a land area of 291.73 square kilometers or 112.64 square miles.
This constitutes 5.91% of the land area of Surigao del Sur. The population density of the
city is at 193 inhabitants per square kilometer or 500 inhabitants per square mile.
Tandag has a total of 21 barangays that offers a huge variation of services and
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businesses ranging from small to enterprises. The researchers will identify the small
and medium businesses of the city that will serve as the respondents of the study.
Research Respondents
The respondents of the study are the business owners of the identified small
and medium business in every barangay of the city. Participants will be identified
through simple-random sampling from each barangays of the city. The research
respondents will be interviewed regardless of sex, marital status, and educational
background.
Research Instruments
In order to find truth in the findings of the collected information, the
researchers will use a combination of quantitative and qualitative methods of data
gathering in order to collect high quality responses from the identified respondents. An
interview guide will be prepared in order to collect information about the challenges that
these business owners encountered before and during pandemic.
The questionnaires will undergo validity tests and will be validated by
professionals in the fields of business, trading, and information technology. A reliability
test will also be conducted in the neighboring municipality of Tago to ensure the quality
of the questionnaires. These questionnaires will help identify the knowledge, attitudes,
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practices of business owners with regards to E-payment. The questionnaires will also
measure the effectiveness and profitability of using such method in this modern era of
shopping/trading.
The questionnaire shall contain three sections. Section I is for the socio-
demographic profile of the respondents and section II is for knowledge, attitude, and
practices. The third section will contain the interview guide which will also be used to
determine the challenges met before, during, and after implementing E-payment
systems. The results of the interview will help triangulate the responses of the
respondents in comparison to the previous sections. The researchers shall schedule a
focus group discussion (FGD) in every barangay to ensure the quality of the interviews.
Data Collection Procedure
The data gathering was performed by following several steps in order to
come up with clear and unbiased results. The following steps ensure that the study was
conducted ethically and morally correctly.
First, the researchers will present letters of introduction to the City Mayor’s
Office and the Barangay Captains of the identified respondents to conduct the study.
After the approval of the Municipal Mayor and Barangay Captains, the research
instrument shall be given to the enumerators for data gathering. Together with the
researchers, the enumerators shall visit the identified areas and schedule a focus group
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discussion for the respondents. Information regarding the socio-demographic profile of
the business and the business owners are written on the questionnaires. After the
collection of the information, the researchers selected the interviewees based on their
demographic profile in terms of experience in using of E-payment systems. The data
was made available through the use of questionnaires, personal interviews, and focus
group discussions. All the answers shall be recorded and transcribed in all necessary
language.
Lastly, the researchers shall compile all the data gathered and segregate
those that would seem unreliable and unnecessary for the study. The results will be
tabulated, analyzed, and interpreted. The researchers will direct their findings,
conclusions, and recommendations based on the results of the study.
Data Analysis
In this study, the researchers shall use audio recordings and field notes to
gather information on knowledge, attitudes, and practices of business owners of Tandag
City with regards to E-payment systems and the challenges the business have gone
through before, during, and after implementing E-payment systems. To ensure the
clarity of the recordings, transcription shall be done after each audio recording. The
responses of the participants will be written down to acquire clearer information.
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After gathering the data, the results will be analyzed and translated into
English if deemed necessary. The researchers shall then identify the knowledge,
attitude, and practices of business owners and the challenges they faced before, during,
and after implementing the system. Using the indicators applied in the questionnaires,
the researchers shall identify the data needed for the study.
Statistical Treatment
The collected data were statistically treated with the assistance of the
researcher's statistician. The treatments were used for:
1. What are the entrepreneurial background respondents in terms of:
1.1 Age;
1.2 Sex;
1.3 Educational Attainment;
1.4 Employment status;
1.5 Number of years in business sector; and
1.6 No. of Trainings attended relating to entrepreneurship.
2. What are their level of implementation of e-payments systems towards revenue
performance?
3. What are the intervention programs that may be proposed for this study?
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Below is the statistical treatment used by the researcher to accurately analyze the
results. The tool used to measure the data is weighted mean. Furthermore, frequency
counts and percentage distributions of respondents' associated variables are used in
this analysis.
Cochran's formula:
Where:
 e is the desired level of precision (i.e. the margin of error),
 p is the (estimated) proportion of the population which has the attribute in
question,
 q is 1 – p.
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Republic of the Philippines

NORTH EASTERN STATE UNIVERSITY

The Effectiveness of E-payment System on Revenue Performance in Tandag

In Partial Fulfillment of the Requirements

THE PROBLEM AND ITS SETTING

The existence of an e-payment environment is already altering how we conduct

competitiveness. The usage of digitization is a method to improve payment and service

delivery. To generate a high degree of revenue performance, local business owners

must offer e-payment innovations to the community.

The adoption of a payment method that is secure, practical, and cost-effective

cashless transactions. Payment systems have evolved in a new direction as information

order to reap the many benefits that come with it.

Figure 1. Schematic Diagram

Statement of the Problem

This study investigates the effectiveness of the E-payment System on Revenue

Performance in Tandag Small and Medium Enterprises.

1. What are the entrepreneurial background respondents in terms of:

1.3 Educational Attainment;

1.4 Employment status;

1.5 Number of years in business sector; and

1.6 No. of Trainings attended relating to entrepreneurship.

2. What are their level of implementation of e-payments systems towards revenue

According to [Zhu Z and Matsuno K; 2016], financial technology is the provision

of credit by a business through digital payments services. To increase the effectiveness

of digital payments system improvements like electronic payments transactions,

The performance of SMEs is impacted by financial technology. Companies must

adapt to ever-changing circumstances. His findings found that digital innovation

improved his network correspondence [Begenau J.2020, Ngurah G, Adinegara J,

revenue [Brynjolfsson E, Malone TW, Gurbaxani V, Kambil A. 1994]. The performance

performance [Brynjolfsson E, Malone TW, Gurbaxani V, Kambil A. 1994].

advancement of financial technology developments in Philippines. So that it can

encourage the welfare of the community equally. Technology companies generate

payment revenue from transactions. This will improve performance.

[Dong J, Yin L, Liu X, Hu M, Li X, Liu L. 2020] [ Kuvaas B, Buch R, Weibel A,

positive impact on profitability (revenue performance), the hypotheses that can be

proposed are as follows:

H1: There is a positive effect of e-payment system on SMEs revenue

Scope and Limitation of the Study

top management, the accounts or revenue department, e-commerce, and service

Significance of the Study

Word 1 E-payment System

Altendorf and Schreiber (2015) define an electronic payment system as

direct credit or the electronic transfer of credit card information.

Revenue is the term used in accounting to describe the money one

company operations (Barnes & Corbitt, 2013).

REVIEW OF RELATED LITERATURE AND STUDIES

This chapter provides further understanding of the study, the researchers

made use of different reading materials related to the electronic-payment (e-payment)

researchers focuses on the empirical and theoretical literature on the impact of e-

payment on revenue performance. The benefits of e-payment on revenue performance,

the obstacles of e-payment on revenue payment, and solutions to improve e-payment

This review consists of books, articles, documents that focus on thesame

subject matter or other concepts of the study.

According to (Wonglimpiyarat, 2017), investing in an electronic payment

Online transaction systems also enable mass customization (Greenwood, 2014).

Regular client communication allows for the development of mass-customized goods

(Kaushik & Rahman, 2014) .