International Journal of Economic Research ISSN : 0972-9380 available at http: www.serialsjournal.com Serials Publications Pvt. Ltd. Volume 14 Number 3 2017 Preference Towards Digital Payment Among Gen X-ERS J. Sivasubramanian 1, M. Velavan 2, S. Arunkumar 3, P. Abirami 4, C. Therasa 5 and G. Abirami 6 1 Director, Shivani School of Business Management, Tiruchirapalli, Tamil Nadu, India. Email: sivsu_7@yahoo.co.in, 2,3 Assistant Professor, SOM, SASTRA University, Thanjavur, Tamil Nadu, India. Email: 2 velavan@mba.sastra.edu; 3 arunkumar@mba. sastra.edu 4 Assistant Professor, Department of Management Studies, MNM Jain Engineering College, Chennai, Tamil Nadu, India. Email: abirami2509@ yahoo.com 5,6 Research Scholar, SOM, SASTRA University, Thanjavur, Tamil Nadu, India. Email: 6 gabirami23@gmail.com Abstract The purpose of the current study is to analyze the consumers perception towards digital payments in Tiruchirapalli. The factors those induce customer satisfaction on the usage of digital payments is derived. Here the perception of consumers belonging to Generation x is taken for the study. The current study has adopted a descriptive methodology with the structured Questionnaire to extract data. The study factors chosen for the study have shown a reliable relationship with the digital payment adoption and it used tools like Factor Analysis, Correlation and Multiple Regression Analysis to analyze the data. This study had identified the factors which determine the usage of digital payment systems among the Gen-X consumers. The research concludes by providing some valuable implications to develop the quality of digital payment system. Keywords: Digital payments, Perception, Generation X consumers. 1. Introduction Digital payment system has gained importance nowadays, especially after demonetization. The government is taking essential steps to encourage the public to use digital payment platforms. To promote digital payments, it has declared discounts on purchases of certain products digitally. It has also introduced UPI (United Payment Interface) which is app based to transact across multiple banks. Another improved version is set to be unveiled by the government, which makes banking transactions though mobile phones without internet by a platform called USSD (Unstructured Supplementary Service Data). 375 International Journal of Economic Research
J. Sivasubramanian, M. Velavan, S. Arunkumar, P. Abirami, C. Therasa and G. Abirami Even though the people without mobile can access to digital payment through their aadhar cards and many more E-Wallet providers are utilizing the opportunities by offering various discounts and cash back offers to attract the customers. The mostly used digital payment modes are debit/credit cards, RTGS ( Real Time Gross Settlement)/NEFT (National Electronic Funds Transfer), IMPS (Immediate Payment Service), UPI (Unified Payment Interface), USSD and E- Wallet. Even as people started to use various digital payment platforms there exist some limitations also regarding their operational aspects. There arise various issues which include connectivity and server issues while transacting through POS terminals, balance amount in the E-Wallet might not get reflected during E-Wallet transactions, Issues with network congestion and Internet connectivity have led to some delays in transactions going through and reflecting on the users wallet balance, etc. Customers who use Digital Payment Systems concern more on the security issues than any other issues prevailing currently. Hence this study intends to capture the preferences towards digital payment systems among Gen-Xers regarding various factors. 1.1. Problem Statement After demonetization, the government is taking essential steps for efficient use of digital payment platforms in order to weed out corruption and black money from the economy. After this move, currently 80% of the transactions in India are through digital platform. Even though there is a welcoming move among the Gen-X and millennial customers there have been some critics which include the reliability, affordability, security and scalability of the Digital transaction processing systems. Nowadays people are more concerned about these issues while transacting online. The goal of the digital payment system is to allow users to securely send and receive payments digital. A survey also supported the above premise that 66% of the respondents were very much worried about the security of the transactions. There has been a vast change in the cultural aspects and the mindset of the people nowadays and hence the people are using a digital payment system widely. To capture the changing preferences among Gen-X, the current study has made an attempt to analyze the factors determining preferences towards Digital Payment Systems. 1.2. Objectives of Research The objectives of this research are: To identify the factors of Digital Payment Systems among Gen-Xers. To understand the correlation between various factors and satisfaction towards Digital Payment Systems among Gen-Xers. To find the impact of the factors determining preferences towards Digital Payment Systems on the satisfaction level of Gen-Xers. To understand the demographic profile of Gen-Xers. 1.3. Scope of the Research The current study was conducted to determine the issues and challenges faced by the digital payments among Generation X consumers in Tiruchirappalli city. The aspects looked into were the duration time the consumers spend using digital gadgets, service network used, payment gateway preferred, type of International Journal of Economic Research 376
Preference Towards Digital Payment Among Gen X-ERS bank and the consumers view about digital payment. And this study focuses on payments made in the Tiruchirappalli city in 2016, the data are collected from the consumers peruse digital experience and have a under graduate qualification. 377 2. Literature Review India is heavily cash dependent and cash to GDP ratio is 12%.A survey says over 82% of adults consider cash to be the primary tool and 80% of respondents which comprise both urban and rural areas receive and send remittances in cash and in person of the alternatives and less than 5% of all payments in India happen Digital ally, as per data. Bagchi (2016) has dealt with some challenges faced by consumers which include complexity in usage, transaction failure, OTC transaction, and overwhelming preference for physical cash, quality and accessibility. According to Bagchi (2016), measures to be taken in order to overcome these barriers were by proper understanding of the usage of digital payment systems. He has concluded by saying that, the payments via Digital mode can save large amount of cash and it is the safest and convenient way of transacting the money. Digital payment systems market is having both its advantages and disadvantages. Several new payment techniques have been introduced in the market using wireless RFID and the mobile payment service is using these technologies for easy and convenient transactions. A mobile payment is done using some payment instruments namely cash, credit/debit cards and mobile phone wallet. In addition to this, digital and physical payment instruments were also used nowadays. In a study Dahlberg (2014) used some contingency and competitive factors which include the external environment factors such as Socio cultural, technological, environmental, legal, regulatory and standardized environment. The competitive factors include power of the consumer and merchant, conventional payment services, contemporary e-payment services, mobile payment services. A paper which presents various dimensions and key research themes by Dennehy & Sammon (2015) dealt with mobile payments. A new alternative method for transactions is through mobile payments especially in 21 st century. During last decade there exists some good number of literatures which deal with the use of mobile payments. The authors selected the mostly cited articles since 1999 and recent publications since 2014. On analyzing these papers they concluded that mobile payment systems has lot of potential that attracts customers and it may become an universal adoption by various segments of customers. Japhet E. Lawrence, Usman A. Tar (2010) analyzed Digital commerce for increasing productivity in world wide. This paper captured the views of customers in developing countries which described the impact of factors such as socio-economic and cultural factors, policies taken by government, infrastructure accompanied with technology on the acceptance and dispersion of e-commerce. It finally concluded that there exists a statistically significant difference in the usage of e-commerce among individuals in the developing countries. Padashetty, Krishna Kishore SV (2013) analyses factors inducing behavioral intentions on usage of mobile payments among customers. The factors included for the study are perceived use, trust, expressiveness and perceived ease of use. It finally concluded that Ease of use is the highest preferred factor by the respondents and because of the mere convenience the customers are induced to use mobile payments. The mobile usage patterns used in the study were Mobile banking, Online payment, Career building and Mobile Wallet. Out of these mobile patterns the usage of Mobile banking (40%) ranked first followed by Online payment (14%) and Mobile Wallet (11%). Some samples (24%) included in the study have not used the mobile pyment systems. International Journal of Economic Research
J. Sivasubramanian, M. Velavan, S. Arunkumar, P. Abirami, C. Therasa and G. Abirami The study by Rouibah (2015) evaluates perceived obstacles in using electronic payment systems. The top five obstacles emerged were (1) Security threats caused by potential hackers activities; (2) lack of security relation to ensuring confidentiality, integrity and non-denial purchases made through e-shopping sites; (3) fear of failure to fulfill the services and products posted on websites; (4) fear to be charged more than the price of the goods available on the site; (5) lack of reputation and familiarity of EPS service provider. This study scrutinized various Electronic payment services available in Kuwait and they are categorized into prepaid, Pay now and pay later. It also found that the barriers to e-commerce in Arab countries are Internet security, Digital banking regulations, customer privacy, trust, and service quality. Sumanjeet (2009) analyzed different types of electronic payment system and also its issues revolving around digital currency and EPS (Electronic Payment System). The study also dealt with the usage of various E-payment systems. Credit card (35%) ranked first followed by Debit/Smart card (26.5%) and Cash on Delivery (23.5%). It also shed light on factors which affects the use of E-payment platforms. The first factor was security followed by Difficulties in entering information. Through various literatures the items has been captured for the current study which reflects the perception of Gen- Xers on Digital Payment systems. 3. Methodology A structured questionnaire was designed to measure X-generation consumers preferences about Digital payments in Tiruchirappalli city. The current study is of descriptive in nature and it is an empirical study to scrutinize the data collected from the respondents through a survey method. The survey was administered to the respondents by a questionnaire and Online mode. The questionnaire includes the consent form and a detailed description about the objectives of the study. Thus the data collection was done for about 262 samples in which 102 samples filled the questionnaire directly and remaining 160 samples filled through online. The questionnaire followed some closed ended questions with multiple choices and some statements are assessed using five-point Likert scales. Initially a pilot study was made with 30 undergraduate students and four professors. The pilot study results were validated by using Cronbach s reliability. The reliability of the study items were 0.897 as its Cronbach s alphas and the Cronbach alpha s standard value should be minimum 0.70. The targeted audience for the research is consumers belonging to Generation- X i.e. people in the age of 36 to 52 who pursue digital experience. So the questionnaire is circulated to Gen-X who have completed their under grade in Tiruchirapalli city. 4.1. Demographic Analysis 4. Data analysis& Discussion The Table 1 above describes the demographic details of the respondents. Out of 262 samples, 81.3% of the respondents were male and 18.7% of the respondents were female. The majority of the respondents (67.2%) belong to 45-48 years of age followed by 41-44 years which constitute 19.5%. Regarding occupation of the respondents, 86.3% of the respondents worked in public sector and the next category of the respondents (6.1%) worked in private sector. Considering the usage of Digital Payment Systems most of the respondents (85.9%) have used it for one hour. Digital payment systems were used only during online shopping by the majority of the respondents (85.5%), followed for Bill payments (9.9%). The device used International Journal of Economic Research 378
379 Preference Towards Digital Payment Among Gen X-ERS during transactions was mobile phones (63.7%), followed by tablets (23.3%). The card used during these transactions was debit cards (76.7%). Table 1 Demographic profile of the respondents Variables Total Total Variables Number % Number % Gender Occupation Male 213 81.3% Student 10 3.8% Female 49 18.7% Businessman 10 3.8% Total 262 100 Private sector 16 6.1% Age Public sector 226 86.3% 36-40 years 11 4.2% Total 262 100 41-44 40 19.5% Hours 45-48 176 67.2% 1 hour 225 85.9 49-52 31 11.8% 2 hours 20 7.6 53-56 4 1.5% 3 hours 14 5.3 Total 262 100 Rare 3 1.1 Total 262 100 Transactions Cards Online shopping 224 85.5% Credit card 61 23.3 Bill Payments 26 9.9% Debit card 201 76.7 Loan Payments 12 4.6% Times Total 262 100 1 time 186 71.0 Device 2 time 54 20.6 Mobile 167 63.7 3 time 6 2.3 Computer 34 13.0 4 time 15 5.7 Tablets 61 23.3 5 time 1 0.4 Total 262 100 Total 262 100 The statistical tools used for this study to find out the challenges that are faced by digital payments among X-generation consumers are Factor analysis, Correlation and Multiple Regression Analysis. These tools pave way to list out the issues regarding the digital payments. Initially, the data collected was tested for its reliability using the reliability analysis in SPSS software. It is found that the Cronbach s alpha value is about 0.897 which shows that the reliability of the sample is on the higher side. 4.2. Factor Analysis Table 2 Reliability Statistics Cronbach s Alpha N of Items.897 18 Factor analysis was carried out to group 18 key items representing the perception towards Digital Payment systems and its relationship with the overall satisfaction level among Generation X consumers. Before International Journal of Economic Research
J. Sivasubramanian, M. Velavan, S. Arunkumar, P. Abirami, C. Therasa and G. Abirami conducting factor analysis of the data, it is very much necessary to decide the suitability of the data size. The Kaiser-Meyer-Olkin (KMO) is a measure to check whether sampling is adequate or not and Bartlett s test of Sphericity goes along with KMO and it is used to check whether the sample size is adequate or not. Usually KMO should lie between 0 and 1and for the current study the KMO results are shown in Table 3. Table 3 KMO and Bartlett s Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy..856 Bartlett s Test of Sphericity Approx. Chi-Square 2015.817 Df 91 Sig..000 Table 4 Communalities and Eigen values Communalities Initial Eigen values Initial Extraction Total % of variance Cumulative % Digital payment system saves your money. 1.000.621 6.496 46.399 46.399 Digital payment system operates 24x7 and saves your time 1.000.469 1.405 10.034 56.433 Digital transaction system requires digital experience 1.000.662 1.036 7.397 63.830 Password remembrance is a challenge in electronic payment 1.000.796.943 6.738 70.567 Affordable services charges during the digital transaction 1.000.534.775 5.538 76.106 Digital payments are highly customizable 1.000.701.649 4.637 80.743 Discounts received in digital payment while using online 1.000.623.581 4.151 84.895 shopping is appreciable Restriction made on the number of transactions that can be 1.000.630.548 3.911 88.806 done by the customer is beneficial Larger amount transactions (above 5lakhs) are preferable in 1.000.657.381 2.720 91.525 digital payment system. Customer can easily use digital payment system conveniently 1.000.512.303 2.167 93.692 at anywhere in paying their taxes, licenses, fee, funds etc. Payment gateway plays an important role in E-payment 1.000.649.274 1.958 95.651 system for secured transactions Problem will not arise if your debit card is lost or stolen 1.000.752.223 1.591 97.241 since there is an alternative. Digital payment system is more secure than other payment 1.000.624.203 1.449 98.690 modes like ATM,direct payments etc.. Higher confidence level in your network service provider for 1.000.706.183 1.310 100.000 secured transaction is essential. Extraction Method: Principal Component Analysis. The maximum communality values for the items included for the study represent the variance in explaining the dependent variable (Satisfaction level). The communality value for each item represents the variance accounted by each variable. From the Table: 3, 79.6% of the variance is accounted for Password remembrance is a challenge in electronic payment, 75.2 % of the variance is accounted for, Problem will not arise if your debit card is lost or stolen since there is an alternative. while 70.6 % of the variance in International Journal of Economic Research 380
Preference Towards Digital Payment Among Gen X-ERS Higher confidence level in your network service provider for secured transaction is essential is accounted for. The estimated values after extraction represents the variance explained by each and every item under factor constructs identified in the factor solution. The total variance accounted by factors before rotation and after rotation has been shown in Table 4. The factors identified have Eigen values above 1. The factors whose Eigen values above 5 were rotated and the cumulative % is the addition of variance value of the previous factor and the corresponding factor value. The cumulative % for the first three factors accounts for 63.830% which means that the factors identified were contributing for the prediction of satisfaction level. Table 5 Rotated component matrix Component Factors Items 1 2 3 Trust worthiness Convenience and Benefits Digital payments are highly customizable.792 Problem will not arise if your debit card is lost or stolen since there.741 is an alternative. Larger amount transactions (above 5lakhs) are preferable in digital.727 payment system. Affordable services charges during the digital transaction.684 Payment gateway plays an important role in E-payment system for.656 secured transactions Password rememberance is a challenge in electronic payment.876 Discounts received in digital payment while using online shopping.741 is appreciable Restriction made on the number of transactions that can be done by.681 the customer is beneficial Customer can easily use digital payment system conveniently at.589 anywhere in paying their taxes, licenses, fee, funds etc. Digital payment system saves your money..557 Security Digital transaction system requires digital experience.793 Higher confidence level in your network service provider for secured.647 transaction is essential. Digital payment system is more secure than other payment modes.558 like ATM, direct payments etc.. Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a. Rotation converged in 6 iterations. The Table 5 shows 12 variables which are grouped under three different factor structures with different factor loadings which say that each and every variable contributes to the corresponding latent variable (factors). The loading values less than 0.550 had not taken for the factor variables. The factors identified in factor analysis were given names which are (i) Trust worthiness; (ii) Convenience and Benefits; (iii) Security. These are the major factors which help in explaining the preferences towards Digital payment systems among Gen-X. 381 International Journal of Economic Research
4.3. Correlation Analysis J. Sivasubramanian, M. Velavan, S. Arunkumar, P. Abirami, C. Therasa and G. Abirami Table 6 Correlation between factors determining Digital Payment System and Satisfaction level Trustworthiness Convenience and benefits Security Overall, I am satisfied with the digital payment transactions Trustworthiness 1.603 **.623 **.514 ** Convenience and benefits.603 ** 1.634 **.409 ** Security.623 **.634 ** 1.365 ** Overall, I am satisfied with the digital payment transactions.514 **.409 **.365 ** 1 ** Correlation is significant at the 0.01 level (2-tailed). From the Table 6 we can understand the relationship between the factors influencing Digital payment systems and satisfaction level among Gen-X. The factor trust worthiness has high correlation value with the satisfaction level (R = 0.514) followed by the convenience and benefits with (R = 0.409) and security (R = 0.365). 4.4. Multiple Regression Analysis The Table 7 shows simple correlation. The correlation value between factors influencing Digital Payment Systems and satisfaction level (r = 0.5291) is quite high. The R 2 value which is 28% shows that the independent variables which are grouped into factors were responsible for satisfaction level (dependent variable). The variables selected for the analysis was included step by step and the adjusted R square value has got increased which shows that the variables added are useful variables. Table 7 Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate 1.529 a.280.272.48655 a Predictors: (Constant), security, trustworthiness, convenience and benefits Table 8 shows the statistical significance using ANOVA. The two factors of preference on digital payment system Trustworthiness, Convenience and Benefits shows statistically significant relationship with satisfaction level and the model has been generated. Table 8 ANOVA b Model Sum of Squares df Mean Square F Sig. 1 Regression 23.748 3 7.916 33.439.000 a Residual 61.076 258.237 Total 84.824 261 a Predictors: (Constant), security, trustworthiness, convenience and benefits b Dependent Variable: Overall, I am satisfied with the digital payment transactions International Journal of Economic Research 382
383 Preference Towards Digital Payment Among Gen X-ERS Table 9 shows the Beta coefficients used in the regression equation. Trustworthiness (B =.417, sig. =.000) & Convenience and benefits (B = 0.153, sig. =.037) is statistically significant since (sig. < 0.05). This revealed that Trustworthiness & Convenience and benefits are contributing very much to the satisfaction among customers. Security (B =.009, sig. =.905) is not statistically significant in impacting the satisfaction level among customers. It is concluded that the regression model is statistically significant and accepted that the factors determining the usage of digital payment systems are impacting the satisfaction level among Gen-X which also concludes a good fit for the data too. Table 9 Coefficients a Model Unstandardized Coefficients Standardized Coefficients B Std. Error Beta t Sig. 1 (Constant) 1.801.309 5.831.000 Trustworthiness.088.015.417 5.794.000 Convenience and benefits.036.017.153 2.098.037 Security.003.026.009.119.905 a Dependent Variable: Overall, I am satisfied with the digital payment transactions The regression model fit is, Satisfaction (Y) = 1.801 + Trustworthiness (0.417) + Convenience and benefits (0.153) Security (0.009) 5. Conclusion and Future Implications The study shed light on the preferences among Xers on adoption of Digital Payment Systems. 86.3% of the respondents who are working in the public sector were using digital payment platforms with the age ranges between 45 and 48. Most of the Gen Xers were using digital payment systems during Online shopping (85.5%) and they were using their debit cards (76.7%) for the transactions. They were convenient mostly with the mobile phones (63.7%) for the transactions. The communality value for the item which is 79.6% of the variance is accounted for Password remembrance is a challenge in electronic payment, 75.2 % of the variance is accounted for Problem will not arise if your debit card is lost or stolen since there is an alternative. Through factor analysis, three factors have been indentified and the factor trust worthiness has high correlation value with the satisfaction level (R = 0.514) followed by the convenience and benefits with (R = 0.409) and security (R = 0.365). The standardized beta weights explain the relative importance of factors identified in factor analysis. Trustworthiness (B =.417, sig. =.000) & Convenience and benefits (B = 0.153, sig. =.037) is statistically significant since (sig. < 0.05). This revealed that Trustworthiness & Convenience and benefits are contributing very much to the satisfaction among customers. Security (B =.009, sig. =.905) is not statistically significant in impacting the satisfaction level among customers. The successful implementation of digital payment systems among Generation-X consumers depends on the factors such as trustworthiness, convenience & benefits, security and privacy constraints. Future studies can be conducted to throw lights on covering the entire consumers attitude towards digital payments and study can be conducted in different areas of the nation to get fruitful solution in International Journal of Economic Research
J. Sivasubramanian, M. Velavan, S. Arunkumar, P. Abirami, C. Therasa and G. Abirami improving the digital payment system. More studies to validate the use of the factors those are influencing the digital payments can be done. References Bagchi, S. (2016, Feburary 26). CXOtoday. Retrieved from www.cxotoday.com: http://www.cxotoday.com/story/isindia-ready-for-digital-payment/ Dahlberg, T., Mallat, N., Ondrus, J., & Zmijewska, A. (2014, Feburary 4). Past, present and future of mobile payments research:a Literature review. Dennehy, D., & Sammon, D. (2015). Trends in mobile payments research: A literature review. Journal of Innovation Management, 49-61. Lawrence, J. E., & Tar, U. A. (2010). Barriers to ecommerce in developing countries. Information, Society and Justice, 3, 23-35. Sumanjeet Padashetty and Krishna Kishore, S.V (2013). An Empirical Study on Consumer Adoption of Mobile Payments in Bangalore City-A Case Study. International Refereed Research journal, 6, 83-94. NiinaMallat. (2007). Exploring Consumer Adoption of Mobile Payments- A Qualitative study. The Journal of Strategic Information Systems, 16 (4), 413 432. Rouibah, K. (2015). Digital Payment Systems Use And Satisfaction In An Arabic. Issues in Information Systems, 16 (II), 149-160. Sumanjeet, S. (2009). Emergence Of Payment Systems In The Age Of Digital Commerce: The State Of Art. Asia Pacific Journal of Finance and Banking Research, 3, 18-40. International Journal of Economic Research 384