Impact of E-Payment on Online Shopping Behaviour
Chapter One
Aim and Objective of the Study
The aim of this study is to examine the impact of e-payment on consumers shopping behaviour online. While the specific objectives are to:
- ascertain customers’ level of awareness of online shopping and its benefits;
- examine the factors prompting the use of online shopping by customers;
- determine if customers are satisfied with online shopping; and
- determine how the usage of online shopping influences customer satisfaction
CHAPTER TWO
LITERATURE REVIEW
Electronic Payment System in developing nations
Electronic payment system (EPS) is growing no doubt however, the concern about security and privacy is still the major reason why consumers are sceptical about adopting it (Clayton 2000). Even when they have strong positive attitude towards internet usage and e-commerce activities generally, accepting online payment technology still remains a challenge (Iriobe 2017). This is predominant in developing countries whose gains from e-payments are minimal and who still operate a cash-based economy. For instance, a report published by Visa Inc1., showed that about $983 billion was added to the GDP of 56 countries between 2008 and 2012. There was also an increase in consumption globally as a result of payments made through electronic cards alone (Zandi et al. 2013). This is an indication that the benefit of electronic payment goes beyond just convenience and safety of cards, it plays a role in economic growth of a nation and the world at large (Yaqub, Bello, Adenuga, & Ogundeji, 2013).
The growth of Electronic payment system (EPS) in developing countries has received considerable attention. For instance, Brooks (2011) studied the institutional arrangement in developing an EPS. Musub et al, (2000) summarized the challenges of information System in Sub-Saharan Africa where inadequate infrastructure is lacking, e.g. poor power supply and telecommunication – they observed that there is much disparity between the rate of infrastructural growth, and technological change. Other studies outlined the advantages and limitations of EPS in Asia (Yu, Hsi, & Kuo 2002), and the benefits of e-commerce to businesses in developing countries (Molla & Heeks, 2007). Teoh, Chong, Lin & Chua (2013), in their review, listed factors that affect consumers’ perception of e-payment as popularity of cash, failure of system design to meet user requirements, security and lack of trust etc.
Nigeria has a peculiar situation when it comes to Electronic Payment System (EPS) considering its socioeconomic environment (Heeks, 2002; Avgerou, 2008). In spite of the growth, and the economic gains associated with electronic payments (Yaqub, Bello, Adenuga, & Ogundeji, 2013).
Nigerian consumers are yet to embrace the electronic payment technology (Nwankwo & Eze 2012). It is believed that lack of infrastructure is considered responsible for this (Brook, 2011) and even where it is adopted; it is often a combination of online payment and traditional payment methods. For example, consumers place orders online and they have the option to pay cash once the items are delivered. At an early stage of e-commerce development,
1Visa Inc. is an American multinational financial services corporation headquartered in Foster City, California, United States consumers are more interested in searching for more information than buying items online (Hamid & Cheng 2013) because they lack knowledge on the likely outcome of their decision (March, 1978). Although EPS has replaced most attributes of the traditional payment systems like cheques (Liao & Handa 2010), achieving a cashless society will continue to be a mirage in the long run (Tee & Ong 2016). This is because risk averse customers are sceptical about using a new technology for their shopping or payments (Bhatnagar, Misra, & Rao 2000).
The various outcomes affecting e-commerce especially e-payment are not peculiar to Nigeria alone, developed countries experience such as well (Datta 2012; Ariff, Sylvester, Zakuan, Ali & Ismail, 2007) , even though the impact varies (Yu, His & Kuo 2002).
Perceived Risk
Perceived risk is one of the constructs researchers have identified as a major influence on online shopping behavior (Hassan, Kunz, Pearson & Mohamed, 2000; Soopramanien 2010; Cemberci, Civelek & Sozer, 2013), and it is believed to be higher in the online environment when compared with the Offline stores (Salam, Rao & Pegels, 2003).
The various definitions given to perceived risk are viewed with respect to uncertainty and consequences (Ross 1975; Cunningham 1967). Events that are uncertain and uncontrollable increases perceived risk, and consumers make effort to mitigate the effect of risk on their decisions online. For instance, new customers will search for relevant information that will help them reduce risk while buying online (Challappa & Pavlon, 2002; Hamid & Chen, 2013), vendors as well as regulators also attempt to put in place risk reducing strategies to aid consumers make decision to pay for goods bought online (Kim 2001,). In spite of the efforts to lower perceived risk, issues of security and privacy is still top concern for consumers who want to pay online (Clayton 2000), and these affects consumers’ buying decision negatively by increasing perceived risk (Li& Huang 2009).
CHAPTER THREE
RESEARCH METHOD
This empirical study utilizes a survey research method to collect data, to explain the influence of risk reduction strategies on consumers’ attitude towards online payment in Nigeria.
Population of the study
The population of the study comprised of customers who make online payment in Nigeria. While the figure for customers who pay online in Nigeria may not be readily available, the Nigerian Communication Commission put the figure of internet subscribers at 136 million as at September 2017.
Sample of the study
An online questionnaire was sent out to active internet users via social media platforms (Facebook and WhatsApp chat groups). Young people make up majority of adults population who are actively engaged online, and a large chunk of this number are students (Lenhart 2009; Ellison et al. 2007). Young people are deemed as an appropriate target for sampling purpose because they are active online shoppers and are frequent online buyers (Mangold & Faulds, 2009). In total, 516 online questionnaires were sent out, and 285 responses returned.
CHAPTER FOUR
RESULTS
Demographic Characteristics of the Respondents
The socio-economic characteristics of the respondents that participated in the Online Payment survey are presented in Table 1 below.
CHAPTER FIVE
CONCLUSION AND RECOMMENDATION
The study revealed that customers of online shopping are well aware of online shopping as a means of purchasing goods and also know the potential benefits using it brings to them. It was revealed as well that time and convenience is the most important factor influencing customers’ decision to engage in online shop- ping while other factors such as risks involved are also equally as important. Other factors such as quality of products, costs and level of awareness are also im- portant and play very significant roles in determining whether customers engage in online shopping. All these factors involved in the usage of online shopping have significant relationships with customer satisfaction, and customer satisfaction, in turn, can impact on continued patronage of online shopping outlets.
On the second objective, the relationship between age and POD was significant while others were insignificant. The younger the customers, the more confident they have in the POD. This may imply that the older/more experienced the customers get and the more financial independent they become; the less likely they will depend on POD.
This implies that the gender of customers has no relationship with the risk reduction strategy employed for online payments by Nigerian youth.
Finally, the study recommends that online vendors should adopt the pay-on-delivery method in a cash-based economy to smoothen the movement from traditional payment methods to online payment methods. Where financial infrastructure is lacking, pay-on-delivery, money back guarantee and encouraging more interpersonal online interaction among users will help in mitigating the risk to pay online faced by , they should also provide more money back guarantees and pay-on-delivery offers to consumers to simulate and hasten their movement from
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