A Cashless Society for All: Determining Consumers’ Readiness to Adopt Mobile Payment Services
Summary (7 min read)
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.
Did you find this useful? Give us your feedback
Citations
147 citations
Cites background from "A Cashless Society for All: Determi..."
...These recent studies look at consumers’ preparedness to use mobile payment systems (Humbani & Wiese, 2017), use of mobile phone by entrepreneurs (Afutu-Kotey, Gough, & Owusu, 2017), the role of networks in the financial inclusion – financial literacy nexus (Okello Candiya Bongomin, Ntayi, Munene, &…...
[...]
144 citations
124 citations
Cites background from "A Cashless Society for All: Determi..."
...…enhancing financial inclusion (Asongu, 2013; Gosavi, 2017; Kirui, Okello, Nyikal, & Njiraini, 2013; Singh, 2012), supporting electronic payments (Humbani & Wiese, 2017), promoting business development and entrepreneurship (Afutu-Kotey, Gough, & Owusu, 2017; Mishra & Bisht, 2013; Ondiege, 2010),…...
[...]
...Moya, 2016; Fu & Akter, 2016; Jain et al., 2016; Lee & Bellemare, 2013; Mohamed & Abdel-Ghany, 2014; Mokotjo & Kalusopa, 2010; Zhang et al., 2016). Second, there is literature linking mobile technologies to agricultural marketing (see, e.g., Li, Fu, & Li, 2007; Molony, 2008; Tadesse & Bahiigwa, 2015). Third, some studies link mobile technologies to agricultural land management (see, e.g., Jordan, Eudoxie, Maharaj, Belfon, & Bernard, 2016). Despite the extant literature, one area that is under-exploited is the impact of mobile phone ownership and use on agricultural productivity. Meanwhile, agricultural productivity is a key development issue as far as fighting poverty and boosting food security of smallholder farmers are concerned. The argument this study makes is that farmers who own and use mobile phones would have better access to information on services such as inputs and extension that would improve their productivity. Some fine contributions to the study of the effect of mobile technologies on agricultural productivity are the studies of Ogutu, Okello, and Otienoc (2014), Chavula (2014), Houghton (2009) and Lio and Liu (2006)....
[...]
120 citations
119 citations
References
607 citations
"A Cashless Society for All: Determi..." refers background in this paper
...The adoption of mobile payment services has been widely studied (LiébanaCabanillas et al., 2014; Lin et al., 2007; Mallat, 2007)....
[...]
...Previous studies have reported that optimism leads to more positive attitudes and it would help bring out more positive attitudes toward technology (Lin et al., 2007; Walczuch et al., 2007)....
[...]
...Optimism and innovativeness are drivers of TR; while discomfort and insecurity are inhibitors thereof (Lin et al., 2007)....
[...]
576 citations
"A Cashless Society for All: Determi..." refers background in this paper
...In a similar study by Lu et al. (2011), 60% of their respondents were concerned with the costs of using mobile payment services....
[...]
568 citations
"A Cashless Society for All: Determi..." refers background or methods or result in this paper
...Contrary to the existing literature (Parasuraman & Colby, 2014; Yang et al., 2012) consumers’ levels of...
[...]
...Contrary to the existing literature (Parasuraman & Colby, 2014; Yang et al., 2012) consumers’ levels of optimism and innovativeness were found to be insignificant drivers while discomfort emerged as an insignificant inhibitor of consumers’ readiness to adopt mobile payment services....
[...]
...…compatibility (Liébana-Cabanillas et al., 2015; Mallat, 2007) while additional inhibitors included in the framework are the perceived cost (Chong et al., 2012; Lu, Yang, Chau, & Cao, 2011; Mallat, 2007) and the perceived risk (Mallat, 2007; Pham & Ho, 2015; Yang et al., 2012), as discussed below....
[...]
...Prior studies have considered the perception of risk as a deterrent to the adoption of mobile payments (Mallat, 2007; Pham & Ho, 2015; Yang et al., 2012)....
[...]
...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)....
[...]
515 citations
"A Cashless Society for All: Determi..." refers background or result in this paper
...Previous studies have reported that optimism leads to more positive attitudes and it would help bring out more positive attitudes toward technology (Lin et al., 2007; Walczuch et al., 2007)....
[...]
...These findings have been corroborated in prior studies that reported that high levels of discomfort with regard to technology can lead to negative attitudes toward the technology (Parasuraman & Colby, 2014; Walczuch et al., 2007)....
[...]
...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)....
[...]
...Optimists use more active coping strategies than pessimists and these strategies are more effective in achieving positive outcomes (Walczuch et al., 2007)....
[...]
...Personal innovativeness is considered to be a trait and a relatively stable descriptor of an individual and invariant across situations (uninfluenced by environmental or internal variables (Walczuch et al., 2007)....
[...]
480 citations
"A Cashless Society for All: Determi..." refers background in this paper
...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…...
[...]
...Chong et al. (2012) also found that cost has a significant and negative relationship on Malaysian consumer decisions to adopt mobile payment services....
[...]
..., 2015; Mallat, 2007) while additional inhibitors included in the framework are the perceived cost (Chong et al., 2012; Lu, Yang, Chau, & Cao, 2011; Mallat, 2007) and the perceived risk (Mallat, 2007; Pham & Ho, 2015; Yang...
[...]
...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....
[...]
...Gender has been identified as a key variable in the adoption and use of mobile technology (Chong et al., 2012; Kabata, 2015)....
[...]
Related Papers (5)
Frequently Asked Questions (2)
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.