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«A thesis submitted to the Faculty of Graduate and Postdoctoral Studies in partial fulfilment of the degree requirements of Master of Science in ...»

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Developing Consumer Adoption Model on

Mobile Wallet in Canada

A thesis presented


Sanaz Zarrin kafsh

A thesis submitted to the

Faculty of Graduate and Postdoctoral Studies

in partial fulfilment of the degree requirements of

Master of Science in Electronic Business Technologies

Winter 2015

© Sanaz Zarrin kafsh, Ottawa, Canada, 2015


The widespread use of smartphones and technological advances in near-field communication

technologies are quickly transforming mobile payment systems. These technologies have made it possible for consumers to use their smartphones to pay for their purchases through various payments systems such as Apple’s iPay, MasterPass and V.me. These mobile payment systems, commonly referred to as mobile wallets, are designed to eliminate the need for consumers to carry multiple credit cards in their wallets, thereby making it more convenient for consumers to shop. Mobile wallets represent a major advance in mobile marketing because they are another major channel through which marketers can better reach and serve customers in a very personalized way. Realizing the potential benefits of mobile wallets for both marketers and consumers depends on the speed of adoption of this new technology. This study examines the factors that influence consumers’ decision to adopt mobile wallets. Drawing on the theoretical technology adoption and diffusion literatures, a model of the factors that influence mobile wallet adoption is proposed and tested with data collected from 530 respondents.

The purpose of this study was to develop a new technology acceptance model by combining TAM with IDT and exploring the factors that affect people’s behavioral intentions to use Mobile Wallet. Based on our proposed model, we explored the relationships among three innovative characteristics with PU and PEU with subjective norm which affect individuals’ intention for using Mobile Wallet. The results of this study show that some factors significantly influenced people behavioral intention to use Mobile Wallet. The effect of the trialability on the perceived usefulness is supported in this study. Subjective norm and awareness are correlated with the users’ perceived ease of use in Mobile Wallet. The findings suggest extended model of TAM for the acceptance of the Mobile Wallet can help industry players who are looking to build public demand and increase usage of Mobile Wallet.

ii Acknowledgement The writing of my thesis has been an amazing journey that I could not have ended without the passionate and continued support of my supervisor, advisor, friends and family.

I would like to take this opportunity to express my special gratitude towards my thesis supervisor’s professor Ajax Persaud as it was his thoughtful guidance and encouragement that helped me to the completion of this thesis. It was his enthusiasm, motivation, and great efforts that helped me understanding the root of my research. I am proud to be his student.

I am deeply grateful to Mr. Conrad McCallum throughout of preparation of documents for ethic committee, his encouragement and help made me feel confident to overcome every difficulty I encountered. I want to express my sincere thanks to professor Tamir Israel as his very relevant advices were great values for me.

I thank to my parents that their support and help are always with me. I also thank to my fiancé Armin Majedi as he has given me his loving and unequivocal support at every occasion of my life.

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Chapter 1 Introduction

1.1 Research Rational

1.1.1 Definition of Research Problem

1.1.2 Research Objective

1.1.3 Conceptual Framework

1.1.4 Research Questions

1.1.5 The Structure of Thesis

Chapter 2 Literature Review

2.1 Technological Aspects of Mobile Wallet

2.1.1 Mobile Wallet Overview

2.1.2 Mobile Wallet Applications

2.1.3 Near Field Communication (NFC)

2.1.4 Virtual Money

2.2 Environmental Factors in Mobile Wallet

2.2.1 Legal, Regulators

2.2.2 Standardization Environment

2.2.3 Retailers (Merchant)

2.3 Information Policy

2.3.1 Perceived Security and Privacy

Chapter 3 Research Design

3.1 Conceptual Framework and Hypothesis

3.1.1 Theoretical Foundation of Adoption Models

3.1.2 Research Proposed Theoretical Model

3.2 Construct definition and sources

3.3 Survey Instrument Design and Data Collection

3.3.1 Survey Pre-Test Procedure

3.3.2 Sampling Frame

Chapter 4 Analysis and Results

4.1 Data Analysis for Demographic Questions


4.2 Confirmatory factor analysis (Measurement Validity and Construct Dimensionality)

4.2.2 Assessment Criteria for Item Validity and Construct Dimensionality

4.3 Structural Equation Modeling Analysis of Theoretical Model

4.3.1 Evaluation of Measurement Model Reliability and Validity

4.3.2 Evaluation of the Structural Model

4.4 The Theoretical Models

4.5 Structural Equation Modeling Evaluation

4.6 Structural Equation Modeling Analysis

4.6.1 Evaluation of the Measurement Model

Chapter 5 Discussion and Conclusion

5.1 Research Findings

5.2 Theoretical and Practical Interpretation

5.2.1 Contributions to Theory

5.2.2 Contributions to Practice

5.3 Study Limitations

5.3.1 Limitations in the survey methodology

5.3.2 Generalizability of the results

5.3.3 Survey participants


Appendix A: Research Questionnaire

v Tables and Figures Figure 1: The Structure of Thesis

Figure 2 Research Domain

Figure 3 Mobile Wallet Features

Figure 4: Mobile Wallet Target Audience

Figure 5 Smartphone owners like loyalty apps

Figure 7: Innovations Diffusion Theory

Figure 8: Research Theoretical Model

Figure 9 Familiarity with mobile wallet

Figure 10 Number of credit, debit and loyalty cards

Figure 11 Mobile wallet services

Figure 12: Path Coefficients and Significance Levels

Figure 13: Path Validity Coefficient

Table 1: Research Conceptual Framework

Table 2: Mobile Payment Players

Table 3: Mobile Wallet Applications

Table 4: Constructs in Model

Table 5: Measurement Items for the constructs of model

Table 6: Demographic Analysis

Table 7: Mobile wallet services

Table 8: Checking Reliability and Validity

Table 9: Evaluation of Measurement Model Reliability and Validity

Table 10: Matrix of Loading and Cross Loadings

Table 11: Average Variance Extracted and Inter-Construct Correlations

Table 12: Convergent Validity

Table 13: Predictability and Coefficients

Table 14: Data Path Validity Analysis

Table 15 Communality, GoF & Variance of the endogenous constructs of the model

viChapter 1 Introduction

The volume of E-commerce transactions has considerably increased in the last several years (Simplot-Ryl, Traoré, & Everaere, 2012). The Mobile Payment Readiness Index (MPRI) gauges the readiness for mobile payments in 34 countries, which collectively represent 85% of global household consumption will indicate that a market has reached the inflection point where mobile devices account for an appreciable share of the payments mix ( Mastercard, 2012; Hernandez, 2014). New market participants such as e-card schemes, mobile operators, device suppliers and service integrators are fast developing and the three value chains of the payments, mobile, retail and technology industries are the object of significant investment by the smartphone industry (Kemp, 2013).

Increasing smartphone users push merchants to communicate with customers through their mobile handsets by sending them new products lists, provide coupons and facilitate purchasing processes (Yang et al., 2012). Moreover, mobile wallet mechanism provides functions that consumers can manage receiving information from merchants and also compare products prices between different retailers.

Near Field Communication (NFC) technology enables devices within a few centimeters of each other to exchange information and data. Mobile phones are also increasingly being equipped with NFC capabilities, opening up an opportunity to transform the consumer experience of payments in retail stores, ticketing, access control and other aspects of daily life (Gsma, 2012).

Mobile wallets allow consumers to use their smartphones to make payments for purchases of goods and services. In order for consumers to use their smartphones as mobile wallets, they need to download the service provider’s mobile wallet app and enter their credit and debit cards information. Once this is done, consumers can make payments by simply having their smartphone scanned by service providers NFC readers. A mobile wallet is a much-advanced fluent application that includes elements of mobile transactions, membership cards, loyalty cards and travel cards. It also stores personal and sensitive information like passports, credit card information, PIN codes, online shopping accounts, booking details and insurance policies that can be encrypted or password-protected (Caldwell, 2012).

A mobile wallet can support various transactions, including consumer-to-consumer, consumerto-business, consumer-to-machine (i.e., paying for parking meter), and consumer-to-online. In addition, consumers have greater flexibility for settling transactions at the point of sale with mobile phone payments. These functionalities not only offer consumers convenience and other benefits but also provide marketers with a wealth of consumer shopping behavior information, which could be used by marketers to enhance consumers’ shopping experiences. Basically, mobile wallets enable marketers to develop close relationships with its customers.

1.1 Research Rational 1.1.1 Definition of Research Problem While the global adoption of mobile payment is a new concept, many industries are making progress toward attaining the right mix of market forces and consumer acceptance (Ernst & Young, 2012). Despite having a second place on Mobile Payments Readiness Index and very advanced infrastructure at Point of Sale (POS) system and a proactive government, less than 5% of smartphone holders replace the plastic cards by mobile devices and still not enough acceptance behavior by Canadian consumers to use this technology (Mastercard Worldwide, 2012; Evans, 2014). However, consumer adoption is crucial for the success of mobile wallets.

Currently, consumer adoption of mobile wallets is in the early stages but marketers are eager to see widespread adoption of this new technology (Mastercard Worldwide, 2012). Thus, there is a real practical need for a better understanding of the factors that could influence mobile wallet adoption. Although much research has been conducted on various aspects of mobile commerce and payment systems, research on the adoption of mobile wallets is limited. The goal of this study is to add to the emerging research on mobile wallet by investigating consumer adoption of this technology.

1.1.2 Research Objective

The main focus of this study is to identify the main factors that are likely to influence consumer adoption of mobile wallets. The analytical framework utilized in this study is based on two established technology adoption literatures, namely, technology acceptance models (TAM) and innovation diffusion theory (IDT). Relevant factors from these models are tested in the context of mobile wallet adoption. Furthermore, the result of this study will provide proof points that can guide industry players who are looking to build public demand and usage of mobile wallet. To achieve the main objective of the research study, two theoretical models with various constructs and their interrelationships has been formulated to develop an understanding of the interaction between sociological and technological factors that contribute to effective consumer adoption processes and other practices in Canada.

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1.1.4 Research Questions This study is analyzing user acceptance behavior in mobile wallet through identifying and answering the following question.

What are the factors that affect the usage and acceptance of Mobile Wallet systems in Canada?

1.1.5 The Structure of Thesis This research is composed of six chapters. The first chapter includes introduction, objectives and rationale for this study. The discussion is followed in the second chapter; a literature review on the adoption of Mobile Wallet. The third chapter presents the procedures and systematic approach of research design and the fourth chapter is describing the utilized methodology in this study. Moreover, chapter four discusses the appropriateness of the selected methods to the study.

The analysis of the survey instrument and evaluation of the empirical models are presented in chapter five. Finally, chapter six documents main findings of the research and provides research highlights and conclusions.

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Figure 1: The Structure of Thesis Chapter 2 Literature Review The adoption of mobile wallet has several dimensions including Technical, Environmental, Information Policy and Mobile payment players. In technology dimension, this study has more focus on the NFC technology which is enables mobile devices to do transactions and also covers some explanation regarding common practices in mobile wallet like virtual money.

Environmental point of view in mobile wallet explain some legal issues, different standards which is common in other countries and Canada, lastly explain retailers movement to support mobile wallet. One of the important aspects of mobile wallet is security and privacy which is covered in information policy part of literature review. Last part of this chapter has more focus on mobile wallet supply chain. The following figure shows literature review based on these four dimensions and also provides the strategic approach to cover each of them. Action plan represent the main research sources for supporting each dimension in this study.

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