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Evaluating the Effect of Digital Payment Friction on Micro- Transaction Cost Efficiency: Evidence from a Nigerian Tertiary Institution

Fasanmi Oluwatobi Oluwakayode, Ogodor Blessing Ngozi PhD, Afolabi Mathew Babatunde

Abstract

The global transition toward digital financial systems promises enhanced transaction efficiency, yet frequently introduces complex structural inefficiencies that disproportionately burden end- users. In Nigeria, acute infrastructural deficits and policy-driven cashless mandates have exposed vulnerable demographics, particularly tertiary institution students, to a severe "cost-convenience paradox". Grounded in Transaction Cost Economics , this study empirically evaluated the effect of digital payment friction on micro-transaction cost efficiency within a Nigerian tertiary institution. Adopting a descriptive survey research design, primary data was collected from 390 purposively selected active digital payment users at The Federal Polytechnic Ado-Ekiti, Nigeria using a structured 5-point Likert scale questionnaire. Data was analyzed using Multiple Linear Regression via SPSS. The findings revealed that the primary model was statistically significant (R2 = 0.308, p = 0.000). Specifically, Monetary Friction (β = 0.281, p = 0.000) and Operational Friction (β = 0.292, p = 0.000) exerted a highly significant effect on micro-transaction cost efficiency, forcing students into sustained adoption despite severe financial leakages. On the other hand, Temporal Friction (p = 0.834) demonstrated no significant impact, indicating a high experiential tolerance for network delays. The study concludes that systemic digital inefficiencies act as a regressive tax on students. It is recommended that fiscal authorities implement targeted policy exemptions for student bank accounts and that payment service providers deploy workflow- aware resilience frameworks to mitigate operational downtime.

Keywords

Digital Payment FrictionMicro-Transaction Cost EfficiencyTransaction Cost EconomicsCost-Convenience ParadoxCashless PolicyTertiary Institutions. JEL: M41 JAFM JAFM

References

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