Effect of Electronic Payment System On Revenue Collection Performance of County Government of Kajiado, Kenya

Abstract

The study examined the effect of electronic payment systems on revenue collection performance in the County Government of Kajiado, Kenya. Revenue collection is a crucial aspect of county governments, enabling them to finance development projects and meet their financial obligations. Despite the adoption of electronic payment systems, challenges such as inefficiencies, fraud, and delayed payments persist. This study aimed to determine the influence of key components of electronic payment systems; online billing, receipting, payment, and response on revenue collection performance. Guided by the Optimal Tax Theory, Resource-Based View Theory, Innovation Diffusion Theory and the Technology Acceptance Model, the study employed a descriptive research design to investigate the relationship between the independent variables and revenue collection performance. The study targeted 195 respondents, including Executive Committee Members, Finance Personnel, and Revenue Officers, using stratified sampling to ensure representation. Sample size was 131. Data was collected through structured questionnaires, validated through pilot testing, and analyzed using both descriptive and inferential statistical methods, including multiple regression analysis. The findings revealed that all components of the electronic payment system significantly impacted revenue collection performance. Online billing and online response had the most substantial influence, demonstrating their importance in ensuring accurate billing and effective taxpayer engagement. Online receipting and payment also positively contributed by enhancing accuracy, convenience, and trust in the payment process. Correlation analysis further supported these findings, with strong positive relationships between the components of the electronic payment system and revenue collection performance. The results indicate that improving electronic payment systems can significantly enhance revenue collection by reducing inefficiencies, increasing transparency, and fostering taxpayer compliance. The study concludes that adopting and optimizing electronic payment systems is critical for achieving better revenue collection performance in county governments. The study recommends strengthening the online billing and response processes through continuous technological upgrades and robust taxpayer engagement mechanisms. Additionally, enhancing the usability of online receipting and payment platforms is essential to encourage adoption. Policymakers are urged to standardize electronic payment systems across counties and promote digital inclusion to address barriers to adoption. Future research could explore the long-term impacts of electronic payment systems, their scalability, and inter-county comparisons to identify best practices. This study provides actionable insights for county governments aiming to improve revenue collection efficiency through digital transformation.