EFFECT OF CASHLESS PAYMENT SYSTEMS ON CASH MANAGEMENT OF COUNTY REFERRAL HOSPITALS IN KENYA

Abstract

Most of the payment systems in the global landscape have been evolving over a number of years. Changes that have arisen from those evolution have been observed to be generating from a number of forces among them; the ongoing digital and technology revolution that has caused an ever-increasing penetration of smart phones and internet on mobile phone payment, free entry of several non-banking institutions that offers alternative payment solutions, constant customer demands for instantaneous and one touch payment solutions. Classification of any cashless payment system can be done according to the transaction type or the process by which a transaction is executed. This study focused on establishing the effect of cashless payment systems on cash management of county referral hospitals in Kenya. The researcher sought to establish the effect of electronic fund transfer payment, mobile money payment, credit card payment and Cheque payment systems on cash management of county referral hospitals in Kenya. The findings of this research if adopted may be beneficial to academician, the government, administrators of health facilities and the management of the county referral hospitals in Kenya. The study was anchored on the following theories liquidity preference theory, technology acceptance theory, Baumol’s optimal cash conversion theory, stochastic cash conversion theory and Diffusion of innovation theory. The researcher applied a descriptive study design in conducting this research and analyzed only secondary data that was obtained from the facilities’ financial statements of between 2014 and 2018. A census method was applied in determining the sources of data where all the 47 county referral hospitals were targeted. Analysis was conducted using SPSS and descriptive, correlation and regression methods were applied.

The results of the study established that the facilities recorded greater amounts being transacted through the cheques payment systems as compared to all other cashless platforms. Besides, most of the facilities are not able to comfortably settle their creditors from their cash and cash equivalent sources since they recorded a cash ratio of less than 1.00. It was also evident that EFT, MMP, CCP and CPS had a strongly positive and significant effect on cash management of the facilities. In order to improve their cash management, the study recommends that the county health referral hospitals should invest in improving and increasing the utilization of electronic fund transfer, mobile money payment, credit card and cheque as modes of payment in their transactions.

Key Words: Electronic Fund Transfer Payment, Mobile Money Payment, Credit Card Payment, Cheque Payment Systems, Cash Management, County Referral Hospitals