Effect of Electronic Payment Mechanisms On Revenue Performance: A Case of Kisumu County Government, Kenya

Abstract

ABSTRACT Globally,realization of revenue targets in counties is core to meeting their financial responsibilities which will lead to recognition of their directive to offer valuable and well-timed services to the residents.Counties have sufficient revenue streams to fund their current projects and programmes, but revenue collection levels often do not meet projections. According to approved supplementary budget of Kisumu county for the financial year 2017/2018, the total revenue generated by the county from all its revenue streams depicted a deficit 4.59% less than the projected revenue.This is a pointer to the fact that electronic payment(e-payment) system introduced by the county government in revenue collection is not achieving the much desired outcome in revenue collection.Studies however reveal that the use of electronic payment positively influence revenue performance.The effect of e-payment on revenue performance is still not clear.Similarly past studies have failed to examine the extent of mobile and online payments in revenue collection. The general objective of the study was to assess the effect of electronic payment mechanism on revenue performance in Kisumu county.Specifically, the study sought to: establish the extent of usage of mobile phone payment in revenue collection, to determine the extent of application of online payment in revenue collection in Kisumu county.The study was anchored on technology acceptance theory.A correlational survey design was adopted with a study population of 140 taken from 7 sub counties using stratified judgemental sampling technique, primary data was collected using structured questinnares and secondary from audited financial records.Out of the 140 respondent there was 72.1% response rate. The questionnares were administered on drop and pick technique. The 140 sampled group was informed as a result of pilot study in Butere subcounty of Kakamega County and subsequent reconnaisance in the target subcounties in Kisumu county. The validity of the instrument was achieved through pilot testing with analysis of the pilit study data yielding a Cronbach alpha of 0.742 which compares favorably with the acceptance standard value of Cronbach's Alpha coefficient at α=0.7 used to test reliability There was a strong positive association between mobile phone payment and revenue performance in Kisumu County as depicted by r value of 0.781, p-value 0.006< 0.05 hence indicating there was sufficient evidence to confirm existence of a significant relationship between mobile money payment and revenue performance. The value of r of 0.603 signifies moderate positive association between online payment and revenue performance which resonate with the p-value of 0.000<0.05 (at 95% confidence level/alpha value) which evince existence of sufficient evidence to confirm existence of a significant relationship between online payment and revenue performance. In conclusion it was evident that the electronic payment mechanisms have a significant effect on revenue performance. Therefore it was recommended that the county government finds a mechanism of fully implementing electronic payment to boost revenue collection. It also forms a basis of theory building for future research endeavors.