E-payment transaction could put pressure on commodity prices

The Improvement in the value and volume of E- payment transaction systems may lead to higher commodity prices in the coming months, according to Financial Derivatives Company (FDC) financial monthly report, a firm that offers quality quantitative and qualitative research to provide insight for investment decisions.
“The improvement in E-payments as seen between June and July will lead to an increased in the velocity of money in circulation or money in supply which would eventually lead to increase in commodity prices.”
The report arrived at this conclusion after analysing the value and volume of transaction made in June and July 2018.
The E-payments can be done through cheques, point of sales (POS), National Electronic Funds Transfer (NEFT) and instant payment (NIP).
An electronic payment (e-payment) can be simply defined as paying for goods or services on the internet.
According to the report there were mixed movements in the E-payment transactions. The volume of transaction of cheques, declined marginally by 2.3 percent to 715,400 in July from 732,100 in June but the value rose by 4 percent to N413.5 billion in July from N397.6 billion in June.
The volume and value of transactions for POS both rose for the months under review. The volume rose by 3.3 percent to 24.1 million in July from 23.3 million in June and the value increased by 1.8 percent to N185.0 billion in July from N181.1 billion in June.
NIP increased by 5.2 percent to 61 million in July from 57. 9 million in June with its value increasing by 0.004 percent to N 6.4trillion in July from N6.4 trillion in the previous month .
Analysts supported the forecast that the ease of payment has led to an improvement in the payment system and can put pressure on the commodity prices.
Ayodeji Ebo, MD, Afrinvest Securities Limited said, “The improvement in payment system can pressure commodity prices due to the ease of payment. The advert of retail outlets that integrate with online payment solutions for the purchase of goods and services can also boost demand due to the ease of purchase.”
“However, in the long run, this could bolster production and normalize prices,” Ebo added.
Also from the report, government spending is expected to pick up in the coming months due to pre-election activities which would further put pressure on prices.

BUNMI BAILEY