How Perceptions of Information Privacy and Security Impact Consumer Trust in Crypto-Payment: An Empirical Study

Abstract

The ever-increasing acceptance of cryptocurrencies has fueled applications beyond investment purposes. Crypto-payment is one such application that can bring radical changes to financial transactions in many industries, particularly e-commerce and online retail. However, characteristics of the technology such as transaction disintermediation, lack of central authority, and lack of adequate regulations may introduce new privacy and security concerns among the users. This coincides with another trend of rising individuals' concerns pertaining to information privacy and security issues in online transactions. The current paper investigates how consumer trust in crypto-payment, a key determinant of consumer intentions and relational exchanges over the long-term, is formed based on their perceptions towards privacy and security aspects of the technology. Using data from 327 survey participants, the study found that perceived information privacy risk, perceived anonymity, and perceived traceability of transactions are significant determinants of consumer trust in crypto-payment; but their perceptions of information security fraud risk have no significant effect. It also provided support for the hypothesis that perceived trust contributes to consumers' intention to adopt crypto-payment. The findings highlight the need to enhance consumer understanding and awareness of information privacy and potential security issues in crypto-payment as well as what needs to be done to address consumer concerns in this regard. The paper creates novel insights into the requirements of trust in crypto-payment services and the consequences of consumers' perceptions of privacy and security in this domain.

Crypto-hesitancy: is regulation the answer?

“…Gonçalves et al ’s (2022) study covered the profiles of the cryptocurrency investors with the aim of understanding their motivations and expectations for the future. Mashatan et al (2022) explored the issue of consumer trust in crypto-payments is formed. They found that perceived information privacy risk, perceived anonymity and perceived traceability of transactions are significant determinants of consumer trust in crypto-payment.…”

What is driving consumer resistance to crypto‐payment? A multianalytical investigation

“…Research demonstrates that regulatory support reduces perceived cryptocurrency risk (Dabbous et al, 2022). A lack of safeguards and institutional structures raises risk perceptions, including exposure to breaches and financial losses (Mashatan et al, 2022). Therefore, we anticipate that the lack of structural assurances contributes to security and privacy risk barriers to crypto‐payment.…”

“…Despite such advantages, the application of cryptocurrencies in e-commerce and retail transactions as a means of payment for consumer purchases (i.e., crypto-payment) remains much slower than other use-cases (Mashatan et al, 2022). Recent data indicates that 85% of online retailers with annual sales above $1 billion offer their customers with direct or indirect crypto-payment options (PYMNTS, 2022), yet encounter limited consumer interest.…”

“…However, few studies distinguish between cryptocurrency use in general and in specific applications such as crypto‐payment. Mashatan et al (2022) reveal that perceived anonymity and perceived traceability of payment transactions positively impact consumers' trust in crypto‐payment, while perceived information privacy risk has a negative impact. Chen et al (2022) prove that attitude, social influence, price value, and traceability drive customer satisfaction with using cryptocurrencies as a payment method.…”

“…The risk barrier refers to perceived or actual risks associated with adopting an innovation. Rather than relying on a broad conceptualization of risk, our research investigates the security and privacy risks, which are prominent considerations when making cryptocurrency transactions (e.g., Abramova & Böhme, 2016; Mashatan et al, 2022). Previous studies employing the innovation resistance theory specifically emphasize the security and privacy aspects of the risk barrier associated with new payment systems.…”