IMPACT OF POINT OF SALE (POS) TERMINAL ADOPTION ON THE RETURN ON PROFIT AFTER TAX (PAT) OF TIER-ONE BANKS IN NIGERIA

Abstract

This research examines the effect of Point-of-Sale (PoS) terminal transactions on Tier-One banks' profitability in Nigeria, in terms of Profit After Tax (PAT) and Return on Assets (ROA). Using a panel data approach, the research employs the Panel Estimated Generalised Least Squares (EGLS) model with cross-sectional random effects on data collected from five Tier-One banks over 2014-2023. The application of the random-effects model was confirmed using the Hausman test. Empirical findings revealed that PoS terminal transactions (β=0.0992, p-value=0.0063; β=0.1159, p-value=0.0112) positively and significantly affect PAT and ROA. These results imply that increased adoption and installation of PoS terminals can improve bank profitability and asset utilisation. The paper concludes that digital transaction channels, and even more so PoS systems, are central to banks' financial performance improvement and are well aligned with the Technology-Organisation-Environment (TOE) framework, highlighting the interaction of technological innovation, organisational capability, and external environment. From these results, the research advises additional investment in PoS infrastructure and the utilization of analytics for the optimization of transaction strategies for improved profitability and operational effectiveness.