The card industry has been around for decades, evolving in tandem with the banking industry. Initially used exclusively for ATM transactions, cards have gone past that and are now used to perform payments in a society moving towards becoming a cashless society. The benefit of cashless transaction includes less opportunity for fraudulent and criminal activity (Wishart 2011). Despite this, the card industry has still been affected heavily by fraudulent activity; in Kenya for example, losses of in excess of 1.49 billion were reported between April 2012 and April 2013. This necessitated a move from magnetic stripe cards to EMV cards in a bid to cub the vice.
Despite this measure being enforced, the SME sector in Kenya was largely unaffected as the utilization of card payments is very low. Research has shown that this can be attributed to the challenges merchants face in using card payment. It is no surprise therefore that most merchants in Kenya still prefer and take only cash payments as opposed to card payments. The major card service providers, VISA and MASTERCARD are directing additional focus in the form of investment to the East Africa in the hopes of increasing card payments in the market. The secret to this been a success could lie in the success of mobile payments in Kenya. MPESA has been adopted widely by merchants across SMEs in Kenya indicating that the merchants are not facing the same challenges they face in using mobile payments as when using card payments. If the principles applied to mobile payment‟s success can be applied in the card sector, it is likely adoption of card payment will also enjoy success in the SME sector. One of the ways this can be implemented it through Near Field Communication technology (NFC).
The research will sort to understand the challenges that the merchants in SMEs face in utilizing card payments resulting in low adoption of the card payment systems. In addition, secondary data on implementation of mobile payments will be analyzed to understand the concepts that led to their success. Existing NFC based systems around the world will also be analyzed so that this combined knowledge can guide the researcher in designing and developing a prototype of NFC-based card payment system for business transactions for SMEs in Kenya.
Research design to be adopted will be qualitative research design. The study targets SMEs spread in sectors of trade (wholesale and retail) in Nairobi County. The study will use primary data which will be collected through self-administered questionnaires and interviews.