National Payment System Innovations and Performance of Deposit Taking SACCOs in Kenya

Purpose: Kenya’s SACCOs have not been left behind in embracing payment systems innovations. Despite adoption of such payment system innovations, the performance of SACCOs has been in the limelight. The purpose of this study was to assess the effect of national payment system innovations on performance of Deposit Taking SACCOs in Kenya. Methodology: Anchored on Transaction Cost Innovation Theory, the study adopted a cross-sectional survey design. A sample of 122 deposit taking SACCOs were selected from a population of 176 using cluster sampling. The study employed a questionnaire for data collection. Data analysis was done using descriptive statistics (frequencies and percentages) and inferential statistics (bivariate regression). The study adhered to ethical considerations comprising of informed consent, confidentiality and anonymity, secure data storage and integrity throughout the research process. Findings: National payment system innovations had a statistically significant positive effect on the performance of Deposit Taking SACCOs in Kenya (B = 0.493, β = 0.670, p < 0.001). Unique Contribution to Theory, Practice and Policy: The study extends the application of Transaction Cost Innovation Theory to Deposit Taking SACCOs. In practice, it shows that the use of RTGS, ACH and integrated cash transfer systems improves the performance of deposit taking SACCOs. The study recommends policies that deepen the integration of SACCOs into the national payment system infrastructure.