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IMPORTANCE OF TRUST IN ACCEPTANCE OF ELECTRONIC PAYMENT

SYSTEM IN CONTEXT OF NEPAL

POKHARA UNIVERSITY, NEPAL

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INTRODUCTION

• Electronic Commerce (EC) is built upon E-Payment Systems (EPS). As EC becomes a major element of business operations for many companies, e-payment has become one of the most scathing issues for successful business and financial services (Linck et al., 2006;Cotteleer et al., 2007; Kousaridas et al., 2008).

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•Trust on the E-commerce system has a significant impact on the user adoption of Ecommerce, the trust on the online payment gateways also has a significant impact on the success of Ecommerce.

•Electronic Payments as argued by (Cobb, 2005) have a significant number of economic benefits apart from their convenience and safety. These benefits when maximized can go a long way in contributing immensely to economic development of a nation.

•EPS can help displace shadow economies, bring hidden transactions into the banking system and increase transparency, confidence and participation in the financial system. The process creates greater transparency and accountability, leading to greater efficiency and better economic performance” (Al Shaikh, 2005).

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In developing country like Nepal, technology is still far behind reach of banking and financial institutions and still remains backward compared to other developed countries. Apart from this, there is no study that identifies and explains the factors that affect the trust on electronic payment system in context of Nepal.

To understand the implications of EPS in developing countries we can refer to the study performed by Taddesse & Kidan (2005) which identifies barriers for the introduction, adoption and growth of Electronic payments in the African Context. Similarly various challenges Ethiopia faces in adopting e-payments and e-banking are presented in study performed by Worku(2010)

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OBJECTIVES

To know the impact of trust in acceptance of electronic payment system.

To identify the key issues with the electronic payment system

To understand the prospects of electronic payment system in context of Nepal

To suggest and recommend remedies and improvements in the electronic payment system, in light of the observations

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SIGNIFICANCE Of THE STUDY

It is expected that the study will make a theoretical contribution to the body of knowledge related to electronic payment system and usefulness of trust in acceptance of the system.

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LITERATURE REVIEW• “A Framework for Assessing Payment Security

Mechanisms and Security Information on e-Commerce Web Sites”, 2005,Mark Toleman

study sets out to establish how online merchants attempt to engender this trust in the payment instrument options

• preliminary assessment of a selected number (89)of Australian web sites dealing in the sale of books was made through search engines and e - Business “yellow pages” and catalogues.

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Fig: Ally, Mustafa and Toleman, Mark (2005) A framework for assessing payment security mechanisms and security information on e-commerce web sites.

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Perceptions of trust depend on perceptions of technical competence. How potential customers perceive the technical competence of an EPI plays an important part on their likelihood of using it. This study has made the argument that this perception can be influenced by the level of security realized at the website and appropriate assurances given by the merchant. “Comparison of E-payment of the B2C E-commerce in China from the Security and Trust Perspective”, 2014, YingHua Zhang and et al.

• Study attempts to compare the current widely used EPS to invest the issues and priority of e-payment over e-commerce, specifically the B2C e-commerce in a specific market - China.Grey system theory is employed to evaluate the security and the current e-payment systems

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Based on the results, relative top four important criteria to evaluate the e-payment system over e-commerce in China are (1) security; (2) reliability; (3) cost and (4) convenience.

“Electronic Payment Systems: Issues of User Acceptance”, Dennis Abrazhevich, 2002 The research included the nation-wide consumer survey, eliciting user attitudes towards EPSs of a large sample of Netherlands-based respondents•An open challenge remains for developers of novel Internet-based payment systems to meet users’ expectations, requirements, preferences and needs in design and exploitation of payment systems. Failure to meet them results in low usability, insecurity and inefficiency of payment systems and in eventual refusal of customers to use such systems.

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Study of European consumers( Hegarty et al. 2003) showed that these security concerns were raised more frequently ahead of the more generic ones concerning the usability, functionality and added value of a given Electronic Payment Instrument( E P I) or electronic payment application.

Technical defended that are design to reduce this kind of risk need to be taken into consideration before the problem of consumer trust is presented. (Maroofi, Hashemi, & Nargesi, 2012).

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“Electronic-Banking in Ethiopia- Practices, Opportunities and Challenges”, 2010, Gardachew WorkuThe paper examines the practices, opportunities and challenges of E-banking services in Ethiopia. Ethiopian banking system is one of the most underdeveloped compared to the rest of the world.The most important challenges for development of e-banking in Ethiopia werelevel of internet penetration and poorly developed telecommunication infrastructurelack of suitable legal and regulatory frameworkhigh rates of illiteracyhigh cost of Internetlack of reliable power supplyCyber security issues

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HYPOTHESIS

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Research design:• The aim of this study is to examine the

“importance of trust and its impact on acceptance of electronic payment system”. A confirmatory study will be conducted for this research.

• A qualitative method of research will be chosen for investigation.

RESEARCH METHODOLOGY

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Data collection method:• For the research purpose both primary data and secondary data will be used.

Survey method:• survey method will be performed by preparing various set of questionnaires.• The questionnaires used by Dennis Abrazhevich for research on “Electronic

Payment Systems: Issues of User Acceptance” will be adapted in Nepalese context and used for this research

• An online survey would be carried.Sampling technique:Simple random sampling technique will be used to determine the sample that

will be surveyed. Sample size: • The appropriate sample size for the research will be 70 as this size is significant for

producing desired result and analysis of various factors affecting trust on electronic payment system.

Instrument:• The questionnaire will be consisting questions regarding Mobility, Regulatory

Requirement, Privacy & Security, Reliability, and Ease of use and Adaptability. Each item will be of 5 point Likert scale, that ranges from 1(strongly disagree) to 5 (strongly agree).

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• The data collected from questionnaire will be tabulated and analyzed so that the results can be presented as simple as possible. Various statistical tools, graphs, charts, diagrams will be used to describe the data. Apart from this, SPSS and MS Excel will be utilized for data analysis and statistical testing.

DATA ANALYSIS AND INTERPRETATION

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REFRENCES• Al-ma'aitah, M. A. (2014). "Security Concerns in E-payment and the Law in

Jordan." International Journal of Advanced Computer Science and Applications 4.

• Hamid, N. R. A. and A. Y. Cheng (2013). "A Risk Perception Analysis on the use of Electronic Payment Systems by Young Adult." WSEAS TRANSACTIONS on INFORMATION SCIENCE and APPLICATIONS 10(1).

• ABRAZHEVICH, D. (2002). "Electronic Payment Systems: Issues of User Acceptance."

• Kim, C., et al. (2010). "An empirical study of customers’ perceptions of security and trust in e-payment systems." Electronic Commerce Research and Applications 9(1): 84-95.

• TSIAKIS, T. & STHEPHANIDES, G. 2005. The concept of security and trust in electronic payments. Computers & Security, 24, 10-15.

• Worku, G (2010) Electronic Banking in Ethiopia – Practices, Opportunities and Challenges. Journal of Internet Banking & Commerce, August 2010,Vol. 12 No.2

• Taddesse W & Kidan T (2005) e-payment: Challenges & Opportunities in Ethiopia

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