Mobile Payment Adoption: An Empirical Investigation on Alipay

41 Pages Posted: 12 Nov 2018 Last revised: 20 Apr 2019

See all articles by Yuqian Xu

Yuqian Xu

University of Illinois at Urbana-Champaign - College of Business

Anindya Ghose

New York University (NYU) - Leonard N. Stern School of Business

Binqing Xiao

Nanjing University - Research Center for Banking

Date Written: April 18, 2019

Abstract

The rapid development of mobile technology has introduced a new channel for consumer consumption, in addition to traditional online PC and offline (physical card) payment channels. In this paper, we investigate the determinants and outcomes of mobile channel adoption on consumer consumption behaviors. We utilize a unique data set from one of the largest banks in China, which contains the consumer credit card consumption from PC, offline, and mobile payment channels. The mobile payment channel under study here is from Alipay, which is now the world’s largest mobile payment platform. In our work, we find that both higher service demand and higher local penetration are associated with earlier mobile channel adoption. For the post-adoption behavior analysis, we show that the total transaction amount increases by around 2.4% after the Alipay adoption, and the total transaction frequency increases by around 23.5%. The relationship is even stronger for medium income consumers. Furthermore, we find that Alipay channel acts as a substitute for the offline channel, and as a complement for the PC payment channel. Both substitution and complementarity effects increase over time. Finally, we find that the increased credit card transaction activity and profitability are likely to be driven by hedonic shopping behavior with low value items. Our work aims to bring managerial implications for bank and retail managers on multi-channel management.

Keywords: Alipay, adoption, mobile payment, channel, PC, offline, online, credit card.

Suggested Citation

Xu, Yuqian and Ghose, Anindya and Xiao, Binqing, Mobile Payment Adoption: An Empirical Investigation on Alipay (April 18, 2019). Available at SSRN: https://ssrn.com/abstract=3270523 or http://dx.doi.org/10.2139/ssrn.3270523

Yuqian Xu (Contact Author)

University of Illinois at Urbana-Champaign - College of Business ( email )

Champaign, IL 61820
United States

Anindya Ghose

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

Binqing Xiao

Nanjing University - Research Center for Banking ( email )

Nanjing, 210093
China

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