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Factors affecting consumers’ perception of electronic payment: an empirical analysis

Wendy Ming-Yen Teoh Siong Choy Chong Binshan Lin Jiat Wei Chua
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Wendy Ming-Yen Teoh Siong Choy Chong Binshan Lin Jiat Wei Chua, (2013),"Factors affecting consumers’
perception of electronic payment: an empirical analysis", Internet Research, Vol. 23 Iss 4 pp. 465 - 485
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Consumers’
Factors affecting consumers’ perception of
perception of electronic payment: e-payment
an empirical analysis
Wendy Ming-Yen Teoh 465
Faculty of Business and Law, Multimedia University, Melaka, Malaysia
Received 29 September 2012
Siong Choy Chong Revised 21 November 2012
Chancellery Division, Linton University College, Mantin, Malaysia 2 January 2013
4 March 2013
Binshan Lin
13 March 2013
Business School, Louisiana State University in Shreveport, Shreveport, 13 March 2013
Accepted 14 March 2013
Louisiana, USA, and
Jiat Wei Chua
Faculty of Business and Law, Multimedia University, Melaka, Malaysia
Abstract
Purpose – In view of the promising growth of e-payment in Malaysia, this study aims to discover the
factors influencing perception towards electronic payment (e-payment) from the Malaysian
consumers’ perspective.
Design/methodology/approach – Literature indicates that factors such as benefits, trust, self-
efficacy, ease of use, and security influence consumers’ perception towards e-payment. A self-reporting
questionnaire was developed and disseminated to 200 respondents, out of which 183 valid responses
were considered for further statistical analysis.
Findings – The multiple linear regression results reveal that benefits, self-efficacy, and ease of use
exert significant influences on consumers’ perception towards e-payment. However, the insignificant
results obtained for trust and security warrant further investigation.
Research limitations/implications – This study proposes five factors for measuring consumers’
perception towards e-payment which is replicable across different economies. However, the small
sample size raises the issue of generalizability which future studies should seek to address.
Practical implications – The use of e-payment by the majority of respondents confirms that there is
a great potential for future expansion of such payment devices. The challenge is to ensure that it
continues to meet consumers’ expectations which will subsequently lead to its increased adoption
and use.
Originality/value – This study has advanced knowledge for it has provided information on the
current state of e-payment acceptance and use, particularly among Malaysians. The significant factors
identified are beneficial to the policy maker, banking institutions, online transaction facilities
providers, and software developers as they develop strategies directed at increasing e-payment
acceptance and use.
Keywords Electronic payment, Customers’ perception, Benefits, Trust, Self-efficacy, Ease of use,
Security, Malaysia, Payments, Customers
Paper type Research paper
Introduction
Electronic payment (e-payment) has become a popular means today for paying for Internet Research
Vol. 23 No. 4, 2013
online purchases made. The growth of internet has facilitated the popularity of this pp. 465-485
payment instrument as electronic commerce (e-commerce) has created new financial r Emerald Group Publishing Limited
1066-2243
needs that in many cases cannot be effectively fulfilled by traditional payment systems DOI 10.1108/IntR-09-2012-0199
INTR (Sumanjeet, 2009). Different e-payment systems and vendors have since emerged,
23,4 growing gradually along with the sophistication of e-commerce transactions.
There are two major e-payment systems used in Malaysia, namely large value
payment system (SIPS) which includes real-time electronic transfer of funds and
securities system (RENTAS), and retail payment system which comprises of three
categories. The first category is retail payment systems (e.g. national cheque
466 information clearing system, shared automated teller machine (ATM) network, e-debit,
Interbank GIRO, financial process exchange, and direct debit), followed by retail
payment instruments (e.g. credit card, charge card, debit card, e-money), and
retail payment channels (e.g. ATM, internet banking, mobile banking, and payment).
These payment systems support transactions amounting to RM49.5 trillion (USD15.9
trillion) in 2011, which is equivalent to 58 times of Malaysia’s gross domestic product
(GDP) (Central Bank of Malaysia, 2012c). In terms of e-payment transactions made

per capita, there are 49 transactions in 2011 compared to 14.3 in 2003, and there are
more than 80 percent of retail payment transactions conducted electronically in 2011
(Central Bank of Malaysia, 2012a). The increase is mainly due to greater use of
electronic money (27.8 transactions) and credit cards (10.9 transactions) (Central Bank
of Malaysia, 2012b). In fact, the growth of e-payment use among Malaysians is
reported to be faster than the global growth, with 20 percent of online transactions
made through this means compared to the global scale of 15 percent (The Malaysian
Reserve, 2012). Because of this, Malaysia was ranked 29th out of 62 countries in the
overall performance of e-payment adoption under the 2011 Government E-payment
Adoption Ranking (GEAR) study (Economist Intelligence Unit Limited, 2012). The
Central Bank is targeting to increase the number of e-payment transactions per capita
to 200 by 2020.
E-payment is designed to benefit consumers mainly in terms of convenience and
lower the transaction cost. The web-based user interface allows customers to access
and manage their transactions remotely. This is supported by the strong buildup of
broadband services and penetration rate. Out of the 28 million Malaysian population,
more than half (14.9 million) are internet users, with 17.5, 44, and 93.9 percent of
broadband, personal computer (PC), and mobile penetration rates, respectively. These
developments have enabled the provision of internet and mobile banking services by
telecommunications companies and banking institutions, respectively.
A considerable number of studies have looked at e-payment from the technical and
user acceptance perspectives (Abrazhevich, 2001, 2004; Aw et al., 2011; Böhle et al.,
2000; Chavosh et al., 2011; Elly and Kavishe, 2008; Graham, 2003; Haque et al.,
2009; Harris et al., 2011; Humphrey et al., 2000; Kim et al., 2009; Lim et al., 2006;
MacKie-Masain and White, 1996; Mantel, 2000; Mohd Saleh, 2005; Özkan et al., 2010;
Patil and Shyamasundar, 2005; Ramayah et al., 2005; Rigopoulos and Askounis,
2007; Rouibah, 2012; Sumanjeet, 2009). In conjunction with these studies, a number of
key factors influencing perception of e-payment are proposed. Hataiseree (2008) found
that cash and cheques remain as popular payment modes because consumers are not
convinced of the benefits of using e-payment. Abrazhevich (2001) attributes
e-payment’s failure to the system design and deployment that do not meet user
requirements and expectations, while many studies view security and trust as among
the very important concerns (Chellappa and Pavlou, 2002; Fatimah et al., 2000;
Friedman et al., 2000; Hoffman et al., 1999; Kousaridas et al., 2008; Linck et al., 2006;
Md Johar and Ahmad Awalludin, 2011; Multimedia Development Corporation, 2001;
Oh et al., 2006; Poon, 2008; Singh, 1998; Streeter, 1997; Stroborn et al., 2004; Sumanjeet,
2009; Tsiakis and Sthephanides, 2005; Wang et al., 2003). A study by the Central Consumers’
Bank of Malaysia (2009) cites lack of awareness as one of the reasons why consumers perception of
are not using e-payment. Although Ramalingam (2012) concludes that Malaysia is
moving toward greater e-payment adoption, interestingly, the majority of online e-payment
population in Malaysia is still considered “infants” with a shallow level of internet
knowledge, and this builds up fears of using e-payment (Luarn and Lin, 2005; Paynter
and Lim, 2001). 467
These studies suggest that security, trust, benefits, self-efficacy, and ease of use
are important factors influencing perception of e-payment. Very few studies to date
have attempted to study these factors in a single setting (e.g. Haque et al., 2009;
Özkan et al., 2010) and that relevant studies are conducted outside Malaysia. It is
interesting to examine these factors particularly in the Malaysian setting due to the
intriguing developments that are currently taking place, more so on the prediction
that e-payment use will grow at a significant rate within the next few years. The
findings will permit significant factors to be identified so that appropriate strategies
can be formulated to support the Central Bank of Malaysia in promoting e-payment
use among Malaysians. In addition, the results contribute to banking institutions,
online transaction facility providers, and software developer firms in understanding
the Malaysian consumers’ concerns and issues when using e-payment. It provides
insights which will lead to wider e-payment acceptance and use, to the extent that
e-payment ultimately becomes a preferred medium for economic transactions in
Malaysia as indicated in the Financial Sector Blueprint 2011-2020 (Central Bank of
Malaysia, 2012d).
The rest of the paper is organized as follows. The next section presents the literature
related to the topic of study. As a result, a research framework with a series of
hypotheses is developed to be tested. The methodology adopted is described next. The
data collected are analyzed and interpreted before the results and their associated
implications are discussed. The paper is then concluded along with the study’s
limitations and future directions.
Literature review
Definitions of e-payment
Shon and Swatman (1998) define e-payment as any exchange of funds initiated via an
electronic communication channel, while Gans and Scheelings (1999) define e-payment
as payments made through electronic signals linked directly to deposit or credit
accounts. E-payment represents any kind of non-cash payment that does not involve
a paper cheque (Hord, 2005). This study adopts these definitions and refers e-payment
to the transfer of an electronic value of payment from a payer to payee through an
e-payment mechanism which allows customers to remotely access and manage their
bank accounts and transactions, executed through an electronic network (Lim et al.,
2006; Sumanjeet, 2009). The payment mechanisms include those identified under the
two major e-payment systems used in Malaysia.
E-payment requires internet connection to work, similar to the use of other
e-environments such as electronic banking (e-banking), electronic shopping (e-shopping),
or electronic learning (e-learning). Since e-payment refers to financial exchange
(Kalakota and Whinston, 1997; Zhang and Jasimuddin, 2012), it is one of the major
functions of e-banking. It could also possibly serve as a main payment mechanism for
e-shopping, but not necessarily for e-learning or some e-services where payment can
also be made through other payment channels.
INTR Perception toward e-payment
23,4 Davis (1989) finds that a user’s overall attitude toward a specific information
technology (IT) and its applications is a major factor determining whether an
individual uses that system. Accordingly, attitude toward use is also determined by
perceived ease of use of that IT application. Abrazhevich (2001) confirms this theory
in his study where users’ perception of e-payment has a significant effect on its
468 acceptance, which is highly dependent on users’ attitudes. Eastin (2002) further states
that prior adoption of IT had an identifiable impact because customers will usually
adopt a new service only when they have similar experiences before. In addition,
the feasibility of technology in terms of security, trust, and efficiency will also
affect users’ decision to use e-payment. Based upon these premises, attitude toward
e-payment is operationalized in this study in terms of the perception that it is better
than the traditional payment channels, that it can be trusted and is secure, easy to use,
and efficient. The following sub-sections present the literature on the factors
influencing e-payment.
Benefits
Chou et al. (2004) identify benefits as a significant driver for e-payment systems
acceptance and use. Similarly, Eastin (2002) who studied four e-commerce activities
(online shopping, banking, investing, and e-payment systems) found that prior to
adoption, perceived convenience and financial benefits predict adoption decision.
Gerrard and Cunningham (2003) view perceived economic benefits to include
fixed and transaction costs in adopting e-payment. Fixed costs refer to the costs
of installing payment equipment such as card readers and payment software,
while transaction costs are those incurred by customers and merchants every time
they carry out a business transaction (Chou et al., 2004). Accordingly, users can
enjoy the benefits of low cost when they involve in online transactions as they
only need to pay a nominal fee to their respective banks for the services used
(Gerrard and Cunninghamm, 2003; Sonia San-Martı́n et al., 2012; San-Martin and
López-Catalán, 2013).
The statistics of e-payment use in Malaysia show that the perception of Malaysians
is slowly changing from using cash to e-payment due to many reasons. For instance,
the high rate of convenient use of credit relative to revolving use in Malaysia reflects
the attractiveness of credit cards as a transactional e-payment medium. This
attractiveness stems from two basic sources. First, credit card enables individuals
to minimize their cash balances, allowing them to shift their assets into higher return
investments. Second, there has been an explosion in consumer demand for credit card
use, driven largely by the convenience of using credit cards as a mechanism for
conducting transactions. Credit cards offer two transactional advantages over cash and
cheques. First, unlike cash, credit cards make it unnecessary to maintain cash reserves
sufficient at all times to cover current expenditures. Second, credit cards offer several
ancillary benefits unavailable to cash (Zywicki, n.d.).
Besides providing consumers with a convenient means of payment which includes
users’ ability to spend, store, and transport a currency value through the payment
systems (Chakravorti, 2003), other primary advantages of e-payment include time and
cost savings. However, whether or not e-payment leads to time and cost savings remain
a question. Kim et al. (2009) argue that adopting e-payment can be costly in terms of
the time spent on learning to use internet and the new technology. To determine
whether benefits are a crucial determinant of consumers’ perception about e-payment, Consumers’
the following hypothesis is put forth: perception of
H1. There is a significant relationship between benefit and consumers’ perception e-payment
toward e-payment.
Trust 469
Trust is defined as a function of the degree of risk involved in financial transactions,
and the outcome of trust is reduced perceived risk, leading to positive intentions
toward e-payment adoption (Yousafzai et al., 2003). Prior studies found trust to be a
significant determinant influencing customers’ willingness to conduct e-commerce
transactions and engage in online exchanges of money (Friedman et al., 2000; Gefen,
2000, 2003; Hoffman et al., 1999; Jarvenpaa et al., 2000; Wang et al., 2003). As a matter of
fact, trust has long been a catalyst for buyer-seller transactions that provide consumers
with high expectations of satisfying exchange relationships (Peha and Khamitov,
2004). Because of this, many researchers maintain that trust is essential for
understanding interpersonal behavior and economic exchanges which affects
customers’ perception toward e-payment systems (Abrazhevich, 2001; Chou et al.,
2004; Tsiakis and Sthephanides, 2005) and subsequently its adoption success (Chau
and Poon, 2003; Kniberg, 2002; Lim et al., 2006).
Customers’ trust in an internet environment is very important as there is little
guarantee that the online vendor will refrain from undesirable, unethical, and
opportunistic behavior such as unfair pricing, presenting inaccurate information,
distributing personal data, and purchase activity without prior permission (Gefen,
2000). As such, the importance of trust is elevated in e-payment because of the high
degree of uncertainty and risk present in most online transactions (Zhou, 2011). That is
the reason why Kniberg (2002) insists that trust is more important than security. In fact
Kniberg opines that users and merchants are more likely to use an insecure payment
system from a trusted company than a secure payment system from an untrusted
company. It can therefore be concluded that trustworthiness is vital to e-payment
success (Abrazhevich, 2004). Without an adequate system that users can trust, it would
be extremely difficult for e-payment to achieve widespread usage (Lim et al., 2006). The
following hypothesis thus ensues:
H2. There is a significant relationship between consumers’ trust and perception

toward e-payment.
Self-efficacy
According to Bandura (1986), self-efficacy in oneself is derived at by the experience of
one’s personal mastery. Such self-efficacy beliefs are developed as a response to four
sources of information. They are previous experience (success and failure), vicarious
experience (observing others’ successes and failures), verbal persuasion (from peers,
colleagues, and relatives), and affective state (emotional arousal such as anxiety).
Self-efficacy represents a person’s understanding and beliefs in his or her own skills
and capability to perform a task given (Dory et al., 2009). As such, Bandura (1986,
1997) suggests that the perception one has on his or her capabilities to perform a task
will increase the likelihood that the task will be completed successfully.
Many studies found that self-efficacy has a significant positive influence on
perception and behavioral intention to use information systems (IS) (Hill et al., 1986,
INTR 1987; Luarn and Lin, 2005). Accordingly, users with higher self-efficacy tend to
23,4 experience more kinds of communication media and function, while users with lower
self-efficacy may be confined to fewer operations (Burton-Jones and Hubona, 2006;
Li et al., 2011). Venkatesh and Davis (1996) suggest that users strongly anchor ease of
use perceptions about any system to their computer self-efficacy (Chan and Lu, 2004).
In the context of e-payment, self-efficacy refers to the judgment of one’s ability to use
470 e-payment systems. It has been an important determinant of users’ perception toward
e-banking, but whether or not it is a factor influencing e-payment adoption in Malaysia
is to be confirmed through the following proposition:
H3. There is a significant relationship between self-efficacy and consumers’

perception toward e-payment.
Ease of use
Numerous studies have confirmed that a technology will be perceived as more
useful when it is easier to use (Legris et al., 2003; Venkatesh and Davis, 2000; Wang
and Li, 2011). Flavian and Guinaliu (2006) point out that ease of use of a computer
system favors trust levels. This is because greater usability reduces the likelihood
of error, which is a key aspect when providing financial services online. In addition,
greater usability favors minor searching costs (Bakos, 1997) and a better
comprehension of the contents and tasks in a web site. Because of this, Guriting and
Ndubisi (2006) found that perceived ease of use had a significant positive effect on the
behavioral intention of Malaysians to use online banking services and hence
e-payment in Malaysia.
According to Ainscough and Luckett (1996), the provision of customer interactivity
is an important criterion that attracts users in e-payment delivery. Gerrard and
Cunningham (2003) state that the ability of an innovation to meet users’ needs using
different features available on a bank’s web site such as the provision of interactive
loan calculators, exchange rate converters, and mortgage calculators will attract both
users and non-users to the bank’s web site. Besides contents, quality designs, graphics
or colors, and the propensity to portray a good image of the bank would enhance
navigation of web sites ( Jayawardhena and Foley, 2000; Pikkarainen et al., 2004).
Hoffman and Novak (1996) propose that download speed is another important
determinant of user satisfaction. Since demonstration on most sites use small
snapshots, users have to download a program in order to view the demonstration.
Most people perceive that downloading contents from the internet may invite
unwanted viruses, and consume hard disk space (Mohd Khalaf Ahmad and Al-Zu’bi,
2011). Very often, slow response time after any e-interaction also leads to a delay
of service delivery and makes consumers unsure about whether or not the transaction
is completed ( Jun and Cai, 2001). It is for these reasons that Abrazhevich
(2001) concludes that a successful design of e-payment systems from the user
standpoint is important to attract users’ acceptance toward e-payment. In short,
content, design, bank image and management, and speed are very important
characteristics leading to perceived ease of use and subsequently influence
consumers’ perception of e-payment systems. The following hypothesis is
proposed:
H4. There is a significant relationship between ease of use and consumers’

perception toward e-payment.
Security Consumers’
Generally, security is a set of procedures and programs to verify the information source perception of
and guarantee the integrity and privacy of the information (Tsiakis and Sthephanides,
2005). With regards to e-payment, security can be categorized into three areas. They e-payment
are systems security, transaction, and legal. This is because e-payment can only
be considered as confidential when all phases of the transaction process are capable of
satisfying users’ needs and their security expectations (Baddeley, 2004). In the 471
internet’s context, security refers to the perception regarding payment means and
mechanisms for storing and transmission of information (Lim et al., 2006). It refers
to the technical aspects that ensure integrity, confidentiality, authentication, and
non-recognition of relationships. On this score, encryption, digital signature, and
checksum/hash algorithm are the three basic security mechanisms used which ensure
confidentiality, authentication, and integrity (Flavian and Guinaliu, 2006).

Sathye (1999) finds security to be a significant obstacle to online banking
usage, which affects the use of e-payment systems. This is true because although
consumers’ confidence on their chosen bank is strong, their confidence in technology
remains weak. Users generally want to control the kind of data collected and for what
purpose their data are processed (Kobsa, 2001, 2002). It is for these reasons that
security could be a determinant of users’ decision to utilize e-payment systems
(Abrazhevich, 2004). To confirm the effects of security on e-payment, the following
hypothesis is proposed:
H5. There is a significant relationship between security and consumers’ perception

toward e-payment.
Figure 1 shows the research framework of this study. The five independent variables
(security, trust, benefits, self-efficacy, and ease of use) are posited to have significant
relationships with the dependent variable (consumers’ perception toward e-payment).
The next section describes the methodology adopted.
Research methodology
Sampling method and respondents’ demographic information
This study targeted 200 respondents based on the convenience sampling technique.
Table I shows the demographic profiles of respondents. Male respondents formed the
H1
Benefits
H2
Trust
H3 Consumers’ Perception
Self-Efficacy towards
Electronic Payment
H4
Ease of Use
H5
Figure 1.
Security Research framework
23,4
472
INTR
Table I.
of respondents
Demographic background
Classification Classification
Variables variables n % Variables variables n %
Gender Male 103 51.5 Position Professional 29 14.5

Female 97 48.5 Executive 37 18.5
Non-executive 33 16.5
Age Below 20 31 15.5 Housewife 7 3.5
21-25 31 15.5 Student 60 30.0
26-30 40 20.0 Self-employed 31 15.5
31-35 39 19.5 Others 3 1.5
36-40 23 11.5
41-45 21 10.5 Use of e-payment system Yes 183 98.4
46-50 7 3.5 No 17 1.6
50 and above 8 4.0
Location of use Home 55 27.5
Marital status Single 106 53.0 Work 55 27.5
Married 94 47.0 School 10 5.0
Bank 63 31.5
Education level SPM/‘O’ levels 46 23.0 Do not use 17 8.5
Diploma 39 19.5
Advanced diploma 14 7.0 Frequency of using e-payment Daily 27 13.5
Bachelor’s degree 73 36.5 At least once a week 74 37.0
Masters 19 9.5 At least once a month 82 41.0
PhD – – Never 17 8.5
Others 9 4.5
Channels of e-payment ATM 64 35.0
Income level RM1,000 and below 63 31.5 Network/internet 108 59.0
RM1,001-RM2,000 16 8.0 Mobile phone 11 6.0
RM2,001-RM3,000 48 24.0
RM3,001-RM4,000 38 19.0
RM4,001 and above 35 17.5
Note: USD1 ¼ RM3.10
majority of respondents surveyed although the gender composition is almost equal. Consumers’
The age groups are somewhat spread, with the majority of them aged 26 and above. perception of
More than half of them are single and that most of them possess tertiary qualifications.
About 31.5 percent of them earn an income of oRM1,000 (USD 322) per month. This is e-payment
not difficult to understand as 30 percent of the respondents surveyed are students.
However, the use of students is justified as more than 90 percent of the respondents
have used e-payment. To ensure accurate findings are reflected in the study, the 17 473
respondents who have not used e-payment are discarded from the sample size, leaving
only 183 valid responses to be used for further analysis.
Of those who have used e-payment, the respondents reported that they use e-
payment services available in banks, at home, or workplace, leaving only a small
percentage that use e-payment services at schools. This is not difficult to understand as
e-payment provides users with convenience in terms of performing financial

transactions anywhere they like. For respondents who are using e-payment at banks,
they need to use the machines to perform certain transactions such as paying
credit card bills through the cash deposit machine and/or depositing cheques. Many
of the respondents use e-payment at least once a week. The majority of respondents
are using network/internet-based e-payment systems, followed by ATMs, and
mobile phone.
Survey instrument
The survey was carried out using a self-administered questionnaire, which is divided
into two major sections. Section A comprises of ten questions intended to collect
demographic information (see Table I). Section B contains 20 statements meant to
measure the independent and dependent variables (see Table III). The items were
adapted from different studies, i.e. benefits (Davis, 1989), security and trust (Kim et al.,
2009), and self-efficacy (Luarn and Lin, 2005). Self-efficacy is used to test the vicarious
experience and verbal persuasion experienced by consumers in their judgment on
system usage (Bandura, 1986, 1997) in this study; while items measuring consumers’
perceptions of e-payment system were developed by the authors. The study adopts a
four-point Likert scale, ranging from 1 ¼ strongly disagree to 4 ¼ strongly agree with
no midpoint. The four-point Likert scale is used to eliminate social desirability bias
(Garland, 1991) and to push more respondents toward the positive end of the scale
(Worcester and Burns, 1975). Further, research has indicated that an increase in points
(five to seven to nine) on the rating scale does not improve the reliability of the ratings
(Elmore and Beggs, 1975). Besides, omitting the midpoint may force respondents to
provide a definite answer (Kroh, 2005).
Validity and reliability analysis

The questionnaire was piloted on 15 respondents prior to its dissemination in order
to satisfy face validity. Minor modifications were made on the instrument as a result.
In addition, the questionnaire’s construct validity was also measured. As shown
in Table II, the Barlett test of sphericity is highly significant and that the Kaiser-Meyer-
Olkin (KMO) measure of sampling adequacy for the independent variables are 40.60.
The data are therefore suitable for factor analysis. With eigenvalues 41.0 and 71.11
percent of total variance explained, five independent factors emerged from the
analysis. All the items score factor loadings of 0.50 and above, and that items within
the same factor are clustered together. The same goes to the dependent variable, with
57.26 percent of the variance explained.
INTR In addition, the average variance extracted (AVE) and composite reliability (CR)
23,4 exceed the threshold of 0.50 and 0.70, respectively, which show adequate evidence
of convergent validity of all the indicator items (Fornell and Larcker, 1981). The
Cronbach’s a scores for all the variables are higher than 0.60, implying that
the constructs demonstrate reasonably high internal consistencies (Downing, 2004;
Hair et al., 1998).
474
Mean and standard deviation scores
Table III shows the mean and standard deviation scores for all the items clustered
under each of the variables. In terms of the independent variables, benefits score
the highest overall mean, followed by security, ease of use, self-efficacy, and trust. All
the items are found to score above 2.50.
Consumers’ perception toward e-payment scores a rather encouraging overall

mean. Consistently, the majority of respondents agree that benefits is the main issue,
followed by security and ease of use. Consumers’ trust on e-payment scores the lowest
mean. The standard deviation scores for all the items are well below 1.00, indicating
consistency in the respondents’ answers.
Multicollinearity
In order to detect multicollinearity, correlation coefficients among the variables under
investigation are analyzed. Although Table IV shows that there are significant positive
correlations among the independent variables, the relationships are rather moderate
(between 0.131 and 0.417). With the highest coefficient score of below the cut-off point
of 0.90, the problem with multicollinearity is deemed minimized (Hair et al., 1998).
Table IV also shows that all the five factors are positively correlated with the
perception toward e-payment, and the results are significant.
Results
Table V shows the multiple regression results between all the independent variables
and the dependent variable. Multiple regression analysis is used in view of the study
objective and hypotheses. Consistent with the correlation coefficient results, the
Variation Inflation Factor (VIF) values for all the variables are below ten, indicating
that the problem with multicollinearity is minimized and that the variables can be used
for regression analysis (Chatterjee et al., 2000; Kleinbaum et al., 1988).
Variance
Factor explained
Measure Items loadings KMO Eigenvalue (%) AVE CR Cronbach’s a
Independent variables
Benefits 5 0.683-0.835 0.743 4.932 30.824 0.582 0.874 0.854
Trust 4 0.686-0.824 2.273 14.209 0.620 0.866 0.810
Self-efficacy 3 0.713-0.821 1.481 9.254 0.573 0.800 0.690
Ease of use 2 0.873-0.892 1.430 8.936 0.779 0.877 0.841
Security 2 0.839-0.869 1.262 7.887 0.730 0.844 0.794
Table II. Dependent variable
Validity and reliability Consumers’ perception
rates for the independent towards e-payment
and dependent variables system 4 0.604-0.854 0.639 2.290 57.259 0.573 0.840 0.739
No. Item Mean SD
Consumers’
perception of
Benefits e-payment
1 It saves my time and cost for using an e-payment system 3.43 0.650
2 E-payment system is convenient for me 3.39 0.581
3 The billing and transaction process are accurately handled 3.40 0.662
4 Speed of e-payment system flow is faster than traditional payment 475
system 3.37 0.632
5 I find that it is easier to conduct my financial transaction 3.52 0.601
Average 3.42 0.497
Trust
1 I trust on the ability of an e-payment system to protect my privacy 2.95 0.527
2 I trust on e-payment system that will not lead to transaction fraud 2.74 0.615
3 Confidential information is delivered safely to customers 3.03 0.502
4 I feel the risk associated with e-payment system is low 2.58 0.656
Average 2.83 0.462
Self-efficacy
1 I will only use an e-payment system if I heard it before 2.77 0.639
2 The comments of other people will influence my intention to use an
e-payment system 3.05 0.665
3 I will use an e-payment system when my friends introduce it to me 2.66 0.599
Average 2.84 0.510
Ease of use
1 The structure and contents of the web site are easy to understand 3.03 0.431
2 Learning to use an e-payment is easy 3.03 0.485
Average 3.03 0.426
Security
1 I am concerned about my security when using an e-payment
system 3.44 0.633
2 Matters of security have significant influence on me in using an e-
payment system 3.36 0.703
Average 3.39 0.610
Consumers’ perception towards e-payment system
1 An e-payment system is better than traditional payment channels 3.18 0.659
2 E-payment system is much more efficient than traditional payment
channels 3.19 0.720
3 I will choose the trusted e-payment system to make transaction 3.28 0.452 Table III.
4 I feel that a user-friendly e-payment system will influence me to Mean and standard
adopt the system 3.03 0.654 deviation scores for
Average 3.17 0.471 all the variables
Independent variables Benefits Trust Self-efficacy Ease of use Security
Benefits
Trust 0.259**
Self-efficacy 0.384** 0.219**
Ease of use 0.380** 0.291** 0.234**
Security 0.417** 0.131 0.175* 0.218**
Perception towards e-payment 0.714** 0.288** 0.395** 0.442** 0.345** Table IV.
Correlation between
Note: *,**Correlation significant at 0.05 and 0.01 levels, respectively (two-tailed) the variables
INTR With the R2-value showing 56.1 percent of variances, benefits, ease of use, and
23,4 self-efficacy are significantly associated with consumers’ perception toward e-payment.
As such, H1, H3, and H4 are accepted. However, security and trust are not
significantly associated with consumers’ perception toward e-payment. Therefore, H2
and H5 are not accepted.
476 Discussion
The study has achieved its overall objective through the use of a valid and reliable
instrument which was administered on respondents with different backgrounds. Since
this study purports to investigate the factors influencing Malaysians’ perception
toward e-payment, a wider representation is critical in order to generate an overall
picture of the topic under investigation. While non-probability sampling techniques
have drawbacks (Sekaran and Bougie, 2010), interestingly this study has identified
more than 98 percent of e-payment users. Notwithstanding the convenience sampling
technique employed, the outcomes imply that the findings do not happen merely by
chance, rather it reflects the actual e-payment users among Malaysians. Further, only
the responses of those who have used e-payment were analyzed, hence this permits
accurate results to be generated.
Overall, the results reflect the rate of e-payment growth in Malaysia where it is
accepted and used by general Malaysians irrespective of backgrounds. The
encouraging usage rate is attributed to both pull and push factors. The various
campaigns launched by the Central Bank and banking institutions to promote
e-payment use are parallel with the government’s effort to ensure a high internet
penetration rate and growth of online businesses. On the other hand, the factors
investigated in this study have also contributed to the growing number of Malaysians
using e-payment.
Taking a closer look, the mean and standard deviation scores of the measured items
reflect the Malaysian consumers’ perception of e-payment and the factors influencing
it. The mean scores of items measuring perception of e-payment concur with its
growing adoption, while all the five independent variables are rated more than 2.50 out
of the four-point scale. With the exception of one item, the results imply that all the five
factors are seen as very important from the context of e-payment, where they
contributed to 56.1 percent of the reasons for e-payment use. In terms of ranking based
on the mean scores, the results seem to be consistent with consumers’ perception
toward e-payment. To a large extent, the results are also reflected in the correlation
coefficient and regression analyses.
Unstandardized Standardized
coefficients coefficients Collinearity
Model B SE b t Significance Tolerance VIF
(Constant) 0.162 0.231 0.702 0.483

Benefits 0.542 0.058 0.572 9.335 0.000 0.661 1.512
Table V. Trust 0.061 0.054 0.060 1.119 0.265 0.878 1.140
Multiple regression results Self-efficacy 0.106 0.051 0.115 2.099 0.037 0.832 1.202
between independent Ease of use 0.190 0.061 0.172 3.095 0.002 0.807 1.239
variables and customers’ Security 0.031 0.043 0.041 0.740 0.460 0.821 1.217
perception towards
e-payment Notes: F ¼ 45.153 ( p ¼ 0.000); R2 ¼ 0.561
Benefits scored the highest overall mean, which corresponds with the highest Consumers’
correlation and b-values. The finding found support from preceding studies perception of
(Chakravorti, 2003; Sumanjeet, 2009; Zywicki, n.d.) that benefit is a significant
driver of e-payment usage. Sumanjeet (2009) found that e-payment provides greater e-payment
freedom to individuals in paying taxes, licenses, fees, fines, and purchases at
unconventional locations and at whichever time of the day, 365 days a year. This is
supported by the study results whereby the respondents indicated that they found it 477
easier and more convenient to conduct financial transactions online. Contrary to
Kim et al. (2009), Malaysians perceive that e-payment adoption helps them to save time
and costs due to the user-friendly interface, structured transaction process, and speed.
While security has been found to be an important factor judging from the
overall mean scores, the multiple regression results show otherwise. The result is
inconsistent with prior studies (Laforet and Li, 2005; Poon, 2008). The implication that
Malaysians do not perceive security to be a significant issue can be explained from
the point that consumers are increasingly acknowledging the steps taken by many
banking institutions and online transaction facility providers to address the challenges
associated with security. Banks and online transaction facility providers would
issue regular warning to users as well as update users of any occurrence of fraud.
These moves would have instilled consumer’s confidence to use the payment channel.
However, the high mean scores and the significant positive correlation between
security and perception toward e-payment imply that adequate attention still has to be
paid on security issues.
Although ease of use scored the fourth highest overall mean scores, this factor has
been found to be associated with consumers’ perception toward e-payment and the
result is highly significant. The findings corroborate prior studies (Abrazhevich, 2001;
Pikkarainen et al., 2004) where the respondents feel that the e-payment channels
are user-friendly with easy to understand structure and content. Because of that, they
found it easy to learn to use e-payment where only minimal efforts are required. The
instructions provided are very clear and the steps involved to accomplish a transaction
have been minimized for the convenience of users. In fact, some providers have also
offered tutorials and/or advices to their customers on how to use the various e-payment
channels. To some extent, ease of use allows the respondents to think that they are
in control of the transaction process. However, an item “All the terms and conditions
for payment, warranty and return policies are easy to read/understand” which
scored a mean of below 2.50 suggests that attention is required from the e-payment
services provider.
Self-efficacy may score the lowest overall mean, but the correlation coefficient
and b-values are significant, suggesting that self-efficacy is another significant
factor influencing Malaysian consumers’ perception toward e-payment. Corroborating
Bandura (1986) and Eastin (2002), since the majority of respondents have experienced
using e-payment, their positive encounters allow them to continue adopting e-payment.
Peers, friends, relatives, and other people who have used the e-payment services
would have passed positive comments which further influence the respondents’
perception. Coupled with the fact that e-payment is easy to use, the respondents
would have perceived that they too have the skills and capability to complete the
financial transactions.
Similar to security, trust has been found not to be significantly associated with
consumers’ perception toward e-payment although the variable scores the third
highest overall mean and that a significant correlation result is reported. The finding is
INTR consistent with prior studies (Kim et al., 2009; Pavlou, 2001) where trust is marginally
23,4 or not related to the intention to transact online. This may be explained by the fact that
users trust the security system provided by banking institutions and other online
transaction facility providers. To a large extent, this is supported by the high mean
scores for each of the items measuring trust. The respondents realize that banks are
taking steps to protect their privacy and to prevent occurrence of frauds. The Banking
478 and Financial Institutions Act regulates how businesses can collect, store, use, and
disclose personal information collected from customers. Further, financial institutions
and online transaction facility providers are also taking initiatives by actively
developing and incorporating privacy policy into their codes of practice. Because of
this, there have been no cases reported so far on frauds due to e-payment transactions.
As such, consumers perceive the risks of using the e-payment system are rather low.
However, the significant correlation coefficient reported implies that trust is another
important factor requiring attention.
Conclusion and implications

This study examines the factors influencing Malaysian consumers’ perception toward
e-payment. The results show that e-payment is widely used which reflect the growth
of such services in Malaysia. The regression results show that three factors, i.e.
benefits, self-efficacy, and ease of use are significantly associated with consumers’
perception toward e-payment. Interestingly, security and trust are not significantly
associated with consumers’ perception toward e-payment although the correlation
coefficient results show otherwise. Further, As such, both security and trust warrant
further investigation.
Theoretical implications
This study has narrowed the gaps of previous research in terms of investigating
the five factors in a single setting. It has advanced the mainstream literature concerning
e-payment acceptance, particularly from a country which has shown promising growth
in e-payment use. The validated instrument offers the possibility for similar studies to be
conducted across economies to confirm whether the findings are similar or different.
Practical implications
Overall, the findings confirm the salience of all of the five factors investigated, allowing
practical implications from the perspective of strategies to boost e-payment use to
be prescribed. Above all, it suggests that Malaysian banks and online transaction
facility providers should continually enhance their e-payment services in view of the
promising growth rate. It is imperative that the services provided must meet
consumers’ expectations. As Böhle et al. (2000) describe it, e-payment methods should
prove themselves to be convenient and effective in a lot of more real world in order to
win greater market share from cash. The champions of e-payment systems have
to maintain a competitive environment where innovation can continue to foster new
products and services, and yet lower the transaction costs for consumers and
businesses. On this score, the findings could serve as a guide to inform the service
providers so that appropriate strategies can be developed to enhance the e-payment
services. As services are enhanced, the features must be communicated to create or
heighten consumers’ awareness.
Benefits, self-efficacy, and ease of use appear to be significant factors and therefore
warrant extra attention from the banking institutions, online transaction facility
providers, and software developers. Any enhancement to the current e-payment Consumers’
system must take into account these characteristics. Specifically, programmers must perception of
work with the strategy team to determine what are the core and additional benefits
to be provided to users besides ensuring that the systems possess useful contents and e-payment
clear instructions. The findings on ease of use and self-efficacy imply that consumers
need to be educated on how to use the various e-payment channels. Bank
representatives can play a role to inform and educate consumers about the e-payment 479
facilities. This must include information such as terms and conditions for payment,
warranty, and return policies. In order to boost confidence and enhance information
quality, demonstrations via video presentations could be carried out at bank branches
or to the public to show the features and user-friendliness of e-payment services.
In addition, the operating procedures have to be continually re-examined based on the
feedback collected from consumers.

The importance of security and trust should not be overlooked. The policy makers,
banking institutions, online transaction facility providers, and software developers
all have important roles to play to guarantee the security and trustworthiness of the
systems. The government should continue to maintain stability and financial integrity
by regulating e-payment services in order to protect consumers. Banking institutions
and online transaction facility providers must ensure that the system is always secure
in order to maintain trust and confidence. The software developers must keep these in
mind as they design the e-payment features.
Limitations and future research
A number of limitations deserve to be highlighted. The small sample size raises the
issue of generalizability. Since data were collected in major geographical areas,
it is difficult to ascertain if the findings are applicable to those living in areas where
computer ownership, internet connectivity, and awareness of e-payment could be
among the challenges encountered. Another concern would be the variance associated
with the variables.
In order to enhance accuracy and generalizability of the findings, a larger sample
size across different geographical locations should be considered in future studies.
Since the Technology Acceptance Model (TAM) states that perceived usefulness
of a technology is influenced by its perceived ease of use, future studies ought to
consider perceived usefulness and possibly other variables such as anonymity,
convertibility, efficiency, reliability, traceability, and applicability (Abrazhevich, 2001)
which may contribute to the increase in variance. It is also possible to include the
exogenous factors which may attenuate the relationship between the independent
and dependent variables, and this include correlating the demographic profiles of the
respondents with the factors influencing consumers’ perception toward e-payment
so that appropriate target markets can be identified. Another possible area would be
to determine the differences between the consumers’ expectations and the actual
e-payment experience so that a gap analysis can be conducted.
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About the authors

Wendy Ming-Yen Teoh is currently a Lecturer at the Faculty of Business and Law, Multimedia
University, Malaysia. Her research interests include entrepreneurship, women studies, and
human resource management. Wendy has published her research works in several international
refereed journals and conference proceedings.
Siong Choy Chong is currently a Professor and Deputy Vice-Chancellor for Academic Affairs
and Research at Linton University College, Malaysia. He received his PhD from Multimedia
University, Malaysia. Dr Chong has published over 100 articles in international refereed journals,
conference proceedings and book chapters. His vast research interests include knowledge
management, human resource management, information technology management, management
in higher education, and entrepreneurship.
Binshan Lin is Bellsouth Professor at the Business School, Louisiana State University in
Shreveport. Dr Lin has published over 270 articles in refereed journals. Binshan Lin is the
corresponding author and can be contacted at: Binshan.Lin@lsus.edu
Jiat Wei Chua is a graduate student at the Faculty of Business and Law, Multimedia
University, Malaysia. Banking and finance is her primary research area.
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(GDP) (Central Bank of Malaysia, 2012c). In terms of e-payment transactions made

H2. There is a significant relationship between consumers’ trust and perception

H3. There is a significant relationship between self-efficacy and consumers’

H4. There is a significant relationship between ease of use and consumers’

confidentiality, authentication, and integrity (Flavian and Guinaliu, 2006).

H5. There is a significant relationship between security and consumers’ perception

Gender Male 103 51.5 Position Professional 29 14.5

e-payment provides users with convenience in terms of performing financial

Validity and reliability analysis

Consumers’ perception toward e-payment scores a rather encouraging overall

Independent variables Benefits Trust Self-efficacy Ease of use Security

(Constant) 0.162 0.231 0.702 0.483

Conclusion and implications

feedback collected from consumers.

Prentice-Hall, Englewood Cliffs, NJ.

Paper%2011%20Benjamin%20Lim.pdf (accessed December 14, 2009).

e-payments.html (accessed November 17, 2012).

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