The effects of mobile payment on consumer behavior

Abstract

With the advancement of technology and diversification of payment methods, mobile payment methods have gradually replaced traditional cash payments and become the mainstream payment mode. Although mobile payment is more convenient, is it faster than cash payment when their physical differences are controlled? Does it affect consumer behavior? We designed two studies to explore these questions. In Study 1, we required 192 participants to physically pay by cash or mobile phone and measured their willingness to pay (WTP). In Study 2, we compared the speed of the two payment methods when the physical differences between them were eliminated and measured consumers' willingness to buy from 46 students. Our results indicated that the effect of mobile payment, which increases WTP, also applies to specific products, and it does not occur if the money is a gift, as opposed to if it is earned. Moreover, when the process of cash payment is made as easy as mobile payment, people still spend less time on mobile payments than cash payment, and mobile payment effect is impacted by payment time. The above results supplement the evidence that payment methods have an impact on consumer behavior, and provide consumers, merchants, and regional managers with suggestions on payment methods. | INTRODUCTIONThe era of "cashless transactions" is approaching. With the popularity of mobile phones and third-party payment applications, mobile payment has gradually replaced cash payments globally, becoming the mainstream payment method in daily life (Pickford, 2015). Moreover, the Bank for International Settlements (BIS) (2020) pointed out in its latest annual economic report that the payment industry has been greatly affected by the pandemic, accelerating digital payment transformation and the growth of mobile payment scale. Karnouskos (2004) defines mobile payment as the use of a mobile device to initiate, activate, and/or confirm a payment, including online and offline transactions. Mobile payment in offline transactions specifically refers to a settlement method, wherein consumers pay for goods or services in offline facilities (e.g., shopping malls and convenience stores) through payment technologies (e.g., scan code) of mobile payment terminals (e.g., smartphones).Mobile payment services in the market have grown rapidly.Mobile payment market worldwide is projected to grow by US $362.4 billion, driven by a compounded growth of 39.1% (Report Linker, 2019). Given their political agenda, some countries (e.g., India, China) have realized leapfrog development from cash to mobile payments (Beyes & Bhattacharya, 2017). Additionally, the pandemic has highlighted shortcomings in contact payments (e.g., cash and card payments), which may become carriers of virus transmission. Therefore, mobile payment, as a contactless payment method, is favored. Statistics show that in September 2019 (BIS, 2020), share of contactless accounted for 27% in all card-present transactions by a global card network, and it rose to more than 33% in just 6 months. Many coun...

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