PAYMENT PROCESSING PRACTICES AND THE FINANCIAL EFFICIENCY OF RETAIL SUPERMARKET STORES IN NAIROBI CITY COUNTY, KENYA

Purpose of the Study: The purpose of this study was to determine the effect of payment processing on the financial efficiency of retail supermarket stores in Nairobi City County, Kenya. Specifically, the study examined how authorization processes, transaction clearing, and settlement practices influence cost management, inventory optimization, asset utilization, cash flow management, and profitability. Methodology: The study adopted a descriptive research design targeting 117 branches of six large-scale supermarket chains in Nairobi City County. The target population comprised 351 finance, operations, and inventory managers. A sample of 187 respondents was selected using proportionate stratified random sampling. Primary data were collected through semi-structured questionnaires, while secondary financial records covered 2020–2024. Data were analyzed using SPSS version 26. Findings: The study achieved an 86% response rate, with 160 completed questionnaires returned. Descriptive findings indicated that respondents perceived outsourced payment processing positively, recording an aggregate mean of 4.05. Financial efficiency also recorded a high aggregate mean of 4.06. Correlation analysis established a strong positive and statistically significant relationship between outsourced payment processing and financial efficiency (r = 0.790, p < 0.001). Regression analysis showed that outsourced payment processing explained 73.2% of the variation in financial efficiency (R² = 0.732). The regression model was statistically significant (F (1,155) = 106.049, p < 0.001), while outsourced payment processing had a significant positive effect (β = 0.856, p < 0.001). The null hypothesis was therefore rejected. Conclusion: The study concludes that payment processing significantly enhances the financial efficiency of retail supermarket stores in Nairobi City County. Effective authorization, transaction clearing, and settlement practices contribute to improved cost management, cash flow optimization, asset utilization, inventory management, and profitability. Supermarkets should strengthen payment processing systems and continuously optimize transaction processes to sustain financial performance.