The Impact of Mobile Payment Channel on Consumer Consumption: Evidence from Alipay

35 Pages Posted: 12 Nov 2018

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: October 21, 2018

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 how the mobile payment channel affects other traditional consumption channels. 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 exploit a natural experiment through the Alipay channel adoption to study our results. We show the total transaction amount increases by around 2.4% after the Alipay adoption, and the total transaction frequency increases by around 23.5%. Furthermore, the estimation results indicate the Alipay channel acts as a substitute for the offline channel, and as a complement for the PC payment channel. More specifically, for the PC payment channel, the total transaction amount increases by around 0.3% after the Alipay adoption. On the other hand, for the physical card channel, the total transaction amount decreases by around 3.9% after the Alipay adoption. We explore the mechanisms behind the Alipay adoption and find two important determinants, namely, service demand and channel ubiquity. Furthermore, we find the adoption of the mobile payment channel would be associated with hedonic shopping motivations, and we show the impact of mobile channel adoption on product acquisition.

Keywords: Alipay, difference-in-difference, matching, mobile payment, channel, PC, offline, credit card, natural experiment

Suggested Citation

Xu, Yuqian and Ghose, Anindya and Xiao, Binqing, The Impact of Mobile Payment Channel on Consumer Consumption: Evidence from Alipay (October 21, 2018). 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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