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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
