Lilian Khasandi Muyumba, Dr. Lucy Njogu


The economy of the world is dependent on payment systems. There is need to adopt a payment system that is secure, convenient and affordable and that is able to be the foundation for the development of any economy. Despite the efforts of developing a better and easier online system, online payment methods in Kenya are faced by various challenges that affect their efficiency and financial performance. The general objective of the study was to determine the influence of use of online payment methods on the financial performance of authorized payment service providers in Kenya. The specific objectives were to examine the influence of internet banking and payment cards on the financial performance of authorized payment service providers in Kenya. The study was guided by the theory of reasoned action, and electronic market theory. Correlational research design was adopted in this study. The study targeted 23 authorized payment service providers in Kenya. The sampling size was 23 finance managers.   This study collected primary data using questionnaires. A pilot was collected with 10% of the sample hence two managers were used for sampling. The study used content and construct validity.   Questionnaire reliability was measured using Cronchba Alpha coefficient. Findings show that; a strong significant influence of use of internet banking on the financial performance of authorized payment service providers in Kenya (r = 0.972, p-value=0.000), and  strong significant influence of use of payment cards on the financial performance of authorized payment service providers in Kenya (r = 0.982, p-value=0.000). The recommendations are that; the authorized payment service providers should come up with various methods for use by wallet customers. This will enable them to attract more customers and hence increase the number of subscribers leading to higher income. Authorized payment service providers should collaborate with mobile money agents to increase their coverage to different areas countrywide. This will enable them to increase their clientele and commissions from the EFT.  The Authorized payment service providers should invest in hiring competent IT professionals who will greatly help in building fire walls that will protect clients’ data, and the companies should strive to ensure that the payment cards offered are compatible for use both locally and globally.

Key Words: online payment methods, financial performance, internet banking, payment cards, service providers

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