Influence of electronic payment systems on revenue collection Performance in Meru county government, Kenya

Abstract

The efficient collection of government revenue is critical to the financial sustainability and service delivery of county governments in Kenya. However, traditional revenue collection methods continue to face challenges such as inefficiencies, leakages, and corruption, limiting optimal revenue generation. In response, Meru County implemented electronic payment systems to enhance transparency, accountability, and efficiency in revenue collection. Despite these initiatives, the impact of electronic payment systems on revenue collection performance remained unclear, necessitating this study. This study has assessed the influence of electronic payment systems on revenue collection performance in Meru County Government. Specifically, it has examined the effect of automation, digital transactions, system integration, and security measures on revenue collection efficiency. The research was anchored on the Technology Acceptance Model and the Diffusion of Innovation theory, which has explained the adoption and impact of technology on organizational performance. The study adopted a descriptive research design, targeting employees involved in revenue collection within Meru County. A stratified random sampling technique which was used to select respondents, ensuring representation across relevant departments. Data was collected using structured questionnaires, ensuring reliability and validity. The data collection process followed ethical guidelines, including informed consent and confidentiality measures. Data analysis employed descriptive and inferential statistics. Descriptive analysis summarized key trends, while correlation analysis was used to assess relationships between variables. Regression analysis has been used to determine the extent to which electronic payment systems influence revenue collection performance. This study has investigated the influence of electronic payment systems on revenue collection performance in Meru County, Kenya. Utilizing a rigorously tested questionnaire (Cronbach's Alpha α range: 0.841−0.879) and achieving an 88% response rate from an experienced and educated sample, the research robustly confirmed a significant positive impact. Regression analysis revealed that approximately 65.9% of the variation in revenue collection performance is explained by the electronic payment systems' attributes: security (β=0.315), accessibility (β=0.291), ease of use (β=0.228), and integration (β=0.196). Security emerged as the strongest predictor, highlighting its crucial role in fostering trust and deterring fraud. Descriptive findings reinforced these quantitative results, showing high positive perceptions regarding the systems' security (Mean = 3.98), accessibility (Mean = 4.05), ease of use (Mean = 4.12), and integration (Mean = 4.08). These attributes collectively led to perceived improvements in revenue collection, including increased revenue (Mean = 4.15), reduced processing time (Mean = 4.09), and decreased costs (Mean = 3.92).The study concludes that well-implemented electronic payment systems, underpinned by robust security, broad accessibility, user-friendliness, and seamless integration, are vital for enhancing public financial management. Recommendations include prioritizing cybersecurity, expanding multi-channel access, improving user experience and training, and promoting cross-departmental system integration to optimize revenue collection and build public trust in devolved governance contexts.