A Cashless Society for All: Determining Consumers’ Readiness to Adopt Mobile Payment Services

TL;DR: In this article, a technology readiness index was applied to determine consumers' readiness to adopt mobile payment services and the moderating effect of gender on their willingness to use mobile payment service.

Abstract: The technology readiness index was applied to determine consumers’ readiness to adopt mobile payment services and the moderating effect of gender. Gender has been identified as a key variable in ad...

Summary

Introduction

• The rapid adoption of mobile phones and their role in the development of personal and professional activities has been one of the most important technological events in recent decades (Liebana-Cabanillas, de Luna & Montoro-Rios, 2015).
• Global statistics indicate that mobile subscriptions worldwide have passed the 7 billion mark, of which about 770 million are estimated to be in Africa alone (ITU, 2016).
• Thus, the research question addressed in this study is: Successful targeting of mobile payments across genders will not only advance financial inclusion, but also unlock significant growth opportunity for the mobile payment industry (GSMA, 2014).
• This study investigates those factors that influence the adoption of mobile payment services in order to suggest recommendations to increase the adoption levels.

Mobile payments

• The first example of mobile payments came in 1997 when Coca Cola introduced a limited number of vending machines, from which the consumer could make a mobile purchase.
• The consumer would send a text message to the vending machine to set up payment and the machine would then release the product (Dahlberg, Guo & Ondrus, 2015).
• Since then, mobile payments have been subject to different conceptualisations.
• For the purpose of this study, mobile payment is defined as the ability of a mobile phone user to initiate, authorise, and complete a financial transaction, in which money or funds are transferred over the mobile network, or via the wireless communication technologies to the receiver through the use of a mobile device (Slade et al., 2014).
• Proximity payments, on the other hand, require the users to conduct payment via their mobile phones without connecting to the remote server, such as paying bus fares, meals at restaurants, as well as other services (Zhou, 2013).

Theoretical background

• Extant literature has drawn on a number of information technology theories to explain the adoption of new technology.
• Since the traits differ among people, so are their beliefs about the various aspects of technology; and the relative strength of each trait indicates a person’s openness to technology (Walczuch, Lemmink & Streukens, 2007).
• Thirdly, the TRI has been updated and streamlined in terms of content, structure and psychometric properties to reflect significant changes in the technology landscape (Parasuraman & Colby, 2014).
• The TRI comprises four subdimensions: optimism, innovativeness, discomfort, and insecurity (Parasuraman & Colby, 2014).

To recognise the differences in individual consumer’s adoption of mobile payment services,

• And the widening scope of the elements of new technology adoption studies (Yang, Lu, Gupta, Cao & Zhang., 2012), this study incorporates other variables from prior studies that have been reported as significant drivers and inhibitors of consumers’ readiness to adopt mobile payment services.
• These factors require further investigation not only because a number of studies have reported them as significant predictors, but also to investigate their predictability in the South African context.

Conceptual framework and hypotheses

• Figure 1 shows the conceptual framework of the drivers and the inhibitors of consumers’ readiness to embrace mobile payment technologies.
• Rogers (1995) considered the adoption process as a learning process that is influenced by a group of dynamics involving four processes: the awareness stage, the evaluation stage, the trial stage, and the adoption stage.
• These definitions given by various authors show that there is no universally accepted definition and usage of the term.
• For the purpose of this study, adoption is defined as the mental process an individual passes from first hearing about an innovation (mobile payment app) to the final adoption thereof (downloading the app) (Rogers, 1995).

Optimism

• Optimism is defined as a positive view of technology and a belief that it offers people increased control, flexibility, and efficiency in their lives (Parasuraman & Colby, 2014).
• Optimists use more active coping strategies than pessimists and these strategies are more effective in achieving positive outcomes (Walczuch et al., 2007).
• These authors further contend that optimists are less likely to focus on the negative events and thus, they confront technology more openly.
• Previous studies have reported that optimism leads to more positive attitudes and it would help bring out more positive attitudes towards technology (Walczuch et al., 2007; Lin et al., 2007).
• Based on the above, it can be hypothesised that: H1: Consumers’ optimism regarding mobile payments positively influences the adoption of mobile payment services.

Innovativeness

• The personal innovativeness of individuals influences their acceptance attitude towards mobile services (Lee et al., 2012).
• Personal innovativeness is explained as the inclination of an individual to try out any new information systems and it has a significant and positive effect on mobile payment services (Kim et al., 2010).
• This assumption is justified based on previous studies that reported that individuals with high levels of personal innovativeness in information technology develop more positive perceptions about the innovation (Yang et al., 2012).
• Therefore, it can be hypothesised that: H2: Consumer innovativeness regarding mobile payments positively influences the adoption of mobile payment services.

Convenience

• Convenience has been reported in the literature, as one of the important factors predicting the success of mobile payments.
• According to Kim et al. (2010), consumers believe in the benefits of technology when the technology makes people’s lives easier and it ameliorates the difficulty of performing common tasks.
• These devices store data and they are always at hand, and they are increasingly becoming easy to use (Obe & Balogun, 2007).
• This assertion is supported by Teo et al. (2015), who reported that the convenience of having a single payment device to substitute multiple payment alternatives contributes to the benefits of mobile payments.
• Thus, many studies (Obe & Balogun, 2007; Liao, Shi & Wong, 2012; de Kerviler, Demoulin & Zidda, 2016) have reported significant positive relationships between convenience and the adoption of mobile payment services, hence, the construct was included in this study as a driving variable.

Compatibility

• In the adoption of new technologies, compatibility has been defined as the consistency between an innovation and its values, experiences and the needs of potential adopters (Rogers, 1995).
• Previous scholars have found compatibility to be an important predictor for the adoption of mobile payment apps (Liebana-Cabanillas et al., 2015; Mallat, 2007), particularly if the technology is new (Ramos-de-Luna, Montoro-Rios & Liebanna-Cabanillas, 2015), such as is the case with mobile payment apps.
• According to Mallat (2007), the consumers’ ability to integrate mobile payment apps into their daily lives in terms of purchase transactions and habits is an important determinant of consumers’ willingness to adopt mobile payment services.
• As suggested by Liebana-Cabanillas (2015), the compatibility variable includes the coherence of an innovation with the values, behaviour patterns and experiences of an individual.
• Based on the above, it can be hypothesised that: H4: Consumers’ perceptions of compatibility regarding mobile payments positively influence the adoption of mobile payment services.

Insecurity

• It is necessary to establish new security systems for mobile payment methods to ensure the security of customer transactions and to generate confidence thereby improving attitudes toward them (Ramos-de-Luna et al., 2015).
• This is so because security threats in mobile devices are more challenging than those in personal computers as mobile devices are easily lost or stolen (Liu, 2015).
• Insecurity is described by Parasuraman and Colby (2014) as the distrust of technology stemming from scepticism about its ability to work properly and concerns about its potentially harmful consequences.
• Users fear that hackers may obtain data through Bluetooth or radio frequency identification (RFID) or alternatively, the mobile device may be infected by malware through the downloading and scanning of QR-codes (Liu, 2015).
• Therefore, insecurity is more likely to negatively affect the adoption of mobilepayment services.

Discomfort

• Users who score highly on the discomfort scale suffer from a perceived lack of control and a sense of being overwhelmed by technology (Walczuch et al., 2007).
• Hence, they will perceive technology as more complex.
• These findings have been corroborated in prior studies that reported that high levels of discomfort with regard to technology can lead to negative attitudes towards the technology (Walczuch et al., 2007; Parasuraman & Colby, 2014).
• Based on the above, the following hypothesis was formulated: H6: Consumers’ perceptions of discomfort regarding mobile payments negatively influence their adoption of mobile payment services.

Perceived cost

• The results of their study indicated that mobile payments that pass on the transaction costs to consumers are not likely to succeed unless they are able to provide superior advantages.
• Chong et al. (2012) also found that cost has a significant and negative relationship on Malaysian consumer decisions to adopt mobile payment services.
• Based on the above, it can be hypothesised that: H7: Consumers’ perceived the cost regarding mobile payments negatively influences their adoption of mobile payment services.

Perceived risk

• Due to the higher levels of uncertainty that are associated with services, services are considered to be riskier than products (Pham & Ho, 2015).
• Mallat (2007) identified several dimensions of risk.
• Participants in her study identified the risks associated with the possibility that someone would be able to pay with their mobile phone if the device was lost.
• Other participants identified risk in terms of the possibility of lack of a transaction record and documentation owing to the difficulty of making follow-ups on mobile payments while some participants were sceptical about the possible errors in payment transactions.
• Therefore, it can be hypothesised that: H8: Consumers’ perceived risk regarding mobile payments negatively influences their adoption of mobile payment services.

The moderating effects of gender

• There seems to be a general consensus among researchers that demographic differences should be taken into account, when planning mobile marketing strategies (Mukherjee, 2012; Karjaluoto, Leppaniemi, Standing, Kajalo, Merisavo, Virtanen & Salmenkivi, 2006), including mobile payment services.
• To the best knowledge of the authors, there are no empirical studies to report the moderating effects of gender on the various factors that influence the adoption of mobile payment services in South Africa, where mobile payment services are experiencing rapid growth.
• Understanding the effect of gender differences is important in market segmentation as is also the understanding of buyer behaviour and the development of potential new product opportunities (Kimloglu, Nasir & Nasir, 2010).
• Thus, this study concurs with many scholars that have proposed that there is a need for more rigorous studies that could yield a deeper understanding of consumer behaviour in general as well as any differences in user characteristics (Karjaluoto et al., 2006).

Sampling and data collection

• The target population for this study consisted of adult (18+) South African mobile phone users who have downloaded a mobile payment application.
• The data were collected by using an online self-completion questionnaire administered in all nine provinces in South Africa.
• Participant recruitment for the study was done through a market research firm using convenience sampling from their consumer panel.
• The questionnaire was hosted on the market research firm's online server.
• Upon registration, consumer panel members give their consent to participate in the surveys.

Sample profile

• Table 1 represents the demographic profile of the participants.
• A sample of 416 was realised; and it comprised almost an equal split between males and females.
• The majority of respondents were aged between 22 and 29 years, which is similar to the South African youth population of 36.2% (Statistics SA, 2016).
• Of the 416 participants, 62% have either a college degree, certificate or diploma qualification while approximately 33% earned a monthly income before interest and tax of less than R15 000 (approximately $1100).
• Approximately 34% of the respondents indicated that they use their payment app every month while 25% use the app weekly, followed by 7% of the participants who indicated that they use their payment app daily.

Instrument design and measurements

• The previously validated measures used in this study were sourced from the literature and they were adapted to reflect the context of the study.
• The self-administered online questionnaire comprised six sections.
• A provided the introduction to the study, screening questions, and questions relating to respondents’ knowledge about the various mobile payment apps that are currently available in South Africa.
• A 7-point Likert type response format was used and the scale points ranged from 1 (strongly disagree) to 7 (strongly agree).
• Section C measured the demographic profile of the respondents with respect to age, gender, educational level, occupation and household income.

Data analysis and results

• The original TRI has four factors: optimism and innovativeness as drivers; and discomfort and insecurity, as potential inhibitors.
• The two additional potential drivers: convenience and compatibility, and the two additional potential inhibitors from the literature, namely perceived risk and cost were included in the TRI model, in order to measure the adoption of mobile payment services.
• The purpose of the test was to see whether latent constructs could be derived that represent the four drivers and the four inhibitors.
• Ideally, the target coefficient value should fall between 0.9 and 1 (Hair, Black, Babin, Anderson & Tatham, 2006).

Convergent validity

• Confirmatory factor analysis (CFA) was performed to assess the convergent and discriminant validity of the scales.
• Items C1 for optimism and C16 for insecurity constructs were eliminated from further analysis because the factor loadings were below the rule-of-thumb specifying values equal to or greater than 0.5, as acceptable (Hair et al., 2006).
• All the other items were retained as they exceeded the cut-off point of 0.5, resulting in constructs demonstrating convergent validity.
• The composite reliability index and the Cronbach’s alpha coefficients (internal consistency) exceeded the cut-off point of 0.7 level for each construct, as suggested by Zikmund, Babin, Carr and Griffin (2010), thereby indicating good reliabilities of the scales.
• In the case of the discomfort construct, the average variance extracted (AVE) is 0.48; and the authors acknowledge that this is slightly below the stated cut-off point of 0.5 (Zikmund et al., 2010).

Discriminant validity

• The discriminant validity of the scales was assessed by considering the square roots of the AVE scores and the cross loading criterion as recommended by Fornell and Larcker (1981).
• The square root of the AVE for convenience (0.71) is not higher than the correlation between compatibility and convenience (0.72).
• Normality tests were conducted by visual inspection of the Probability-Plot (P-P) of the Regression Standardised Residual and the scatter plot (Pallant, 2016) while multicollinearity was assessed by considering the variance inflation factors (VIF) and the tolerance values.
• The results of the model in Table 5 indicate that the factors ‘perceived cost’, ‘perceived risk’ and ‘insecurity’ are significant inhibitors while ‘convenience’ and ‘compatibility’ are significant drivers in the adoption of mobile-payment services.

Moderating effects of gender

• To investigate whether gender moderates the relationship between the factors (drivers and inhibitors) and the adoption of mobile payment services, hierarchical regression was used.
• Firstly, the effects of each predictor and the moderator variables were interpreted.
• The results indicated in Table 8 of Model 2 show that gender moderates only the effects of convenience on the adoption of mobile-payment services.
• There are no interaction effects of gender on the other seven factors tested in this study.

Discussion and implications

• This empirical study analysed consumers’ readiness to embrace mobile payment services.
• 2003; Obe & Balogun, 2007), it is important to discuss the implications of these drivers and inhibitors to enhance managerial decision-making.
• Hence, for the adoption of mobile payment services, it is necessary that service providers make consumers aware of the availability of mobile payment applications; and explain how they add value.
• Given the moderating effect of gender, companies should initiate advertising campaigns targeting women opinion leaders in advertisements, which can in turn encourage and educate other women to enjoy the convenience of mobile payments.
• The diversity and fragmentation of mobile payments requires consumers to store their credentials on a variety of mobile payment platforms which makes consumers more susceptible to hackers and other fraudsters.

Limitations and future research

• Firstly, despite the fact that the empirical data were collected from all the nine provinces of South Africa, a limitation exists since the data were collected from one country only.
• Secondly, this study investigated only the moderating effect of gender on the adoption of mobile payment services.
• Other demographic factors such as age, household income, or education may require further investigation.
• These findings are surprising and incongruent with prior research.

Conclusions

• Few studies have addressed the issue from an emerging country perspective and taking gender into consideration.
• This study does not only contribute to the applicability of the TRI to new contexts, but it also suggests various additional drivers and inhibitors that need to be considered in the adoption of mobile payment applications as well as offering various practical insights.
• Furthermore, the significance of critical mass should not be underestimated.
• Suffice it to say that consumers’ intention to adopt mobile payment services is influenced by the number of participating merchants, which in turn determines the opportunities available to consumers to use the mobile payment services.
• Thus, a cashless society for all, resulting in significant socio-economic benefits, is within reach.

Figures

Table 7: The effects of predictor and moderator variables

Table 8: The significance of the moderating effect

Table 4: CFA fit statistics

Table 3. Discriminant validity of the factors

Table 5. Drivers and inhibitors of mobile-payment adoption

Table 1. Sample and population characteristics

Table 6. The results of the hypotheses tested in this study

Figure 1: Technology-readiness framework

Table 2. Results of the measurement model

Full text

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A CASHLESS SOCIETY FOR ALL: DETERMINING CONSUMERS’ READINESS
TO ADOPT MOBILE PAYMENT SERVICES
M. Humbani* and M. Wiese
Department of Marketing Management, University of Pretoria, Hatfield, South Africa
*CONTACT M. Humbani. Department of Marketing Management, University of Pretoria, Private Bag X20,
Hatfield0028, South Africa. Email: M.Humbanimichael.humbani@up.ac.za
Abstract
The technology readiness index was applied to determine consumers’ readiness to adopt
mobile payment services and the moderating effect of gender. Gender has been identified as a
key variable in adoption and its vital role in market segmentation and gender empowerment
obliges its inclusion. The results of the regression analysis indicate that convenience and
compatibility drive consumers’ adoption whereas risk, cost and insecurity are inhibitors.
Furthermore, gender moderates only the relationship between convenience and the adoption
of mobile payment services. Given the moderating effect of gender, companies should initiate
advertising campaigns targeting women opinion leaders in advertisements, which can in turn
encourage and educate other women to enjoy the convenience of mobile payments. Results
provide insights on how to increase adoption and reduce the gender gap in mobile payment
services.
Keywords
Adoption, technology readiness index (TRI), drivers, inhibitors, mobile payment services,
gender.

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Introduction
The rapid adoption of mobile phones and their role in the development of personal and
professional activities has been one of the most important technological events in recent
decades (Liebana-Cabanillas, de Luna & Montoro-Rios, 2015). Global statistics indicate that
mobile subscriptions worldwide have passed the 7 billion mark, of which about 770 million
are estimated to be in Africa alone (ITU, 2016). The above figure of seven billion indicates
the number of SIM cards in a country expressed as a percentage of the country’s population.
In the light of this development, merchants, financial institutions and telecommunication
operators are focusing their efforts on increasing the number of mobile-enabled services
available to mobile phone users. These advances in mobile technology are having a profound
impact on people’s daily lives; and they are beginning to offer interesting advantageous new
services (Kim, Mirusmonov & Lee, 2010). One area that is experiencing exponential growth
is the mobile payment service (Liebana-Cabanillas et al., 2015), which enables users to pay
for goods and services by using their mobile phones wherever they go (Kim et al., 2010).
Mobile payment services are now available in 61% of the world’s developing countries and
about 53% of active global mobile payment services are in Sub-Saharan Africa (GSMA,
2014). Forecasts suggest that global mobile payment services will have 450 million users and
$721 billion in transaction value by 2017 (Slade, Williams & Dwivedi, 2014). Due to this
expected growth, it is suggested that mobile payments will change lives and ways of
conducting business; since consumers and mobile devices have become inseparable (Lee,
Park, Chung & Blakeney, 2012).
South Africa has the highest rate of smartphone and mobile penetration in Africa,
representing 51% of smartphones and 133% mobile penetration, followed by Kenya with
31% of smartphones and 70% mobile penetration, and then, Nigeria with 29% and 72%,

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respectively (Fripp, 2014). Based on these statistics, it can be said that South Africans are
prolific users of mobile phones, thus making South Africa a prime market for mobile
payment services. Considering this state of affairs, it is surprising to note that by the end of
2014 only 2.1 million South Africans were using QR code-based mobile payment
applications to perform transactions of various kinds (World Wide Worx, 2014).
While service providers such as merchants, banks and mobile network operators are actively
promoting mobile payment services, the intention to adopt mobile payment services is still
low (Chong, Chan & Ooi, 2012). The key question faced by the service providers is how to
transfer the potential mobile payment service into financial profits. Thus, the research
question addressed in this study is: What are the salient motivations that drive or inhibit
consumers from adopting mobile payment services? The answer to this question is important
as service providers cannot recover their investments, or tailor-make and adapt their
marketing strategies accordingly unless consumers do adopt and use mobile payment services
(Jia, Hall & Sun, 2014).
Gender has been identified as a key variable in the adoption and use of mobile technology
(Chong et al., 2012; Kabata, 2015). Therefore, gender is included in this study as a
moderating variable to determine its influence on the adoption of mobile payment services.
Successful targeting of mobile payments across genders will not only advance financial
inclusion, but also unlock significant growth opportunity for the mobile payment industry
(GSMA, 2014). Targeting women through mobile payments can unlock an estimated $170
billion market opportunity by 2020 (GSMA, 2014).
Although the local media in South Africa continuously create a buzz to signal the continued
use of mobile-payment services, little is known about the factors that drive the adoption of
such mobile payment services. The high mobile penetration rates in South Africa of 133%

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(Fripp, 2014) do not tally with the real transactions and payments. Such a situation calls for
more research to identify the factors that influence adoption (Zhou, 2013). There is abundant
international research focusing primarily on the factors that influence the adoption of mobile
payment services (Chong et al., 2012; Mallat, 2007; Pham & Ho, 2015), however, evidence is
almost non-existent to suggest that similar studies have been conducted in an emerging
market such as that of South Africa.
Because of the differences in consumer profiles in different parts of the world, it may be
prudent to deal with consumer related issues differently. A study of this nature is important,
particularly in South Africa where consumers use their smartphones for an average of 127
minutes per day, with tablets taking up 63 minutes per day on average (Business Tech, 2014).
Marketers in developing countries are keen to know the factors that influence the rate of
adoption of new technologies because that information determines the marketing effort and
the allocation of resources to support the launch of the new technology (Mpinganjira, Dos
Santos, Botha, Du Toit, Erasmus, Maree, & Mugobo, 2013).
This study investigates those factors that influence the adoption of mobile payment services
in order to suggest recommendations to increase the adoption levels. Understanding the
adoption of mobile phone payment and the moderating effects of gender could greatly benefit
service providers, such as the retail industry, the banking industry and telecommunication
operators in growing their businesses (Kim et al., 2010).
This study makes two contributions to theory and practice. Firstly, the factors that drive and
inhibit the adoption of mobile payment services are investigated using an updated framework
of the Technology Readiness Index (Parasuraman, 2000) in order to complement earlier
international mobile payment adoption studies, and to validate the determinants of mobile
payment adoption in the context of an emerging economy. To realise this theoretical

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contribution, the study builds on the less-applied TRI in mobile payment adoption studies
(Lin, Shih & Sher, 2007) and adding other constructs that have been reported in the literature
to have a significant influence on consumers’ adoption of mobile payment services.
Secondly, from a practical perspective, understanding the factors that influence the adoption
of mobile payment services would assist service providers to achieve a competitive advantage
(Kim et al., 2010). Of particular importance to managers of mobile payment services is how
effectively to boost the number of users. The results of the study should help service
providers more effectively to invest the appropriate time, effort and money in the
development, provisions and marketing of mobile payment services (Kim et al., 2010).
Background
Mobile payments
The first example of mobile payments came in 1997 when Coca Cola introduced a limited
number of vending machines, from which the consumer could make a mobile purchase. The
consumer would send a text message to the vending machine to set up payment and the
machine would then release the product (Dahlberg, Guo & Ondrus, 2015). Mobile payment
research started soon after the first mobile payment transaction in 1997 (Dahlberg et al.,
2015). Since then, mobile payments have been subject to different conceptualisations.
According to Liebana-Cabanillas, Sanchez-Fernandez and Munoz-Leiva (2014), mobile
payment can be defined as any type of individual or business activity involving an electronic
device with a connection to a mobile network, enabling the successful completion of an
economic transaction. Mallat (2007) defines mobile payments as the use of a mobile device
to conduct a payment transaction, in which money or funds are transferred from the payer to
the receiver via an intermediary, or directly, without an intermediary. Despite these

Frequently asked questions

Q1. What are the contributions in "A cashless society for all: determining consumers’ readiness to adopt mobile payment services" ?

In this paper, gender has been identified as a key variable in adoption and its vital role in market segmentation and gender empowerment obliges its inclusion. 

Q2. What future works have the authors mentioned in the paper "A cashless society for all: determining consumers’ readiness to adopt mobile payment services" ?

As in any other study, this study has limitations but these limitations could provide direction for future research. Further studies are therefore required to test and validate the results of this study in other emerging countries. Other demographic factors such as age, household income, or education may require further investigation. Ongoing research is needed to further explore the impact of these three factors on the adoption of mobile payment services.