ELECTRONIC PAYMENT SYSTEMS: ITS PROSPECTS AND CHALLENGES CASE STUDY ON COMMERCIAL BANK OF ETHIOPIA AND ZEMEN BANK S.C.

Abstract

The loan transaction between lender merchants and borrower farmers and traders gave a birth to the first bank on our planet earth which dated back to around 2000 BC in Assyria and Babylonia. The expansion of trade, security questions, huge and complex transactions, a need for fast Transferring of money to different places (everywhere banking). As a result the current technological advancement produce that made fast service provisions possible through electronic payment systems. Electronic payment system is simply a system that provides payments electronically. The electronic payment system changed and has made banking services comfortable and easy around the globe. It increases payment efficiency, reducing transaction costs; avoid unnecessary involvements and time wastages. Electronic payment systems facilitate payments electronically. However, lack of network infrastructure, security problems, awareness level of users, inadequate law and regulations are the major challenges that banks of these days face to make payments electronically in Ethiopia. This study tries to identify these challenges in detail and propose the possible way outs from these challenges. It also addresses the successes and possibilities this technology will bring to the banking industry in the near future.