Assessment of the factors affecting the forms of payment used by business enterprises: a case study of Kampala Central Division.

Abstract

The objective of the study was to assess the factors that affect forms of payment used by business enterprises in Kampala Central. Primary data was obtained from respondents in Kampala Central division. This quantitative cross sectional study involved distribution of 200 questionnaires to business owners in Kampala Central division. This was done by emails and others through interviews. Univariate analysis, cross tabulations and multi nomial logistic regression were performed on the variables in the study using STATA. In univariate analysis slightly less than two thirds of the respondents interviewed we're male (64.7%). Majority of them owned small businesses followed by medium and the least had big scale businesses of these businesses slightly less than three quarters of the businesses (72.8%) were of sole proprietorship. About six out of every ten of the businesses (63.6%) were established businesses-these were in the range of 11years and above with the highest followed by growth businesses with (19.0%) these were in the range of 6-10yaers and the least were startup with (17.4%) these were in the range of 1-5years. Of these businesses, majority preferred using cash with (47.8%), followed by mobile money with (22.8%) , cheque with (16.9%) and the least used other forms with (12.5%). About four of every businesses (41.1%) incur high costs, (31.8%) incur medium cost and the least with (27.1%) incur low costs. In bivariate the study showed that there was a relationship between forms of payment used and type of business ownership, size of business. Perceived risks, cost of payment, ease and fraud. In multivariate, there was a negative effect of size of businesses (small) , percieved risks (very risky), business performance (fair) and ease to the form of payment. A researcher recomended that learning sites should be put in place to educate business owners on the convenient form of payments to be used putting business size, age, ownership into consideration and the government should support global standardization to reduce friction and increase ease in forms of payments used.