Mobile Payment Adoption: An Empirical Investigation on Alipay
50 Pages Posted: 12 Nov 2018 Last revised: 8 Mar 2021
Date Written: March 7, 2021
The rapidly growing mobile payment adoption has already started to reshape the payment practices. An immediate managerial question naturally arises: How does mobile payment adoption change consumer consumption behaviors? This paper seeks to answer this question by investigating the impact of mobile payment adoption on consumer transaction activities and the interrelationships among different payment methods. We rely on a unique data set from one leading bank in Asia, which records transactions of its credit card consumers based on different payment methods. The mobile payment under study in this paper is from Alipay, currently the world's largest mobile payment platform. We employ the difference-in-differences method coupled with matching to quantify the impact of mobile payment adoption. Our findings first show that mobile payment adoption leads to a 2.93% and 7.14% increase in total transaction amount and frequency, respectively. Next, we find mobile payments act as a substitute to physical-card payments, while interestingly, as a complement to personal computer payments. Besides, transaction activities through both offline and online channels enhance after the adoption, and online transactions increase even more. Finally, we explore the underlying mechanisms of the change in transaction activities based on discussions related to the transaction cost and local geographic penetration. In particular, we find that mobile payment adoption leads to increased impulse purchases and product diversity, especially through the online channel. Moreover, local penetration further intensifies the increased transaction activities. Our work offers managerial implications for the bank, technology, and retail managers on multi-payment management by disentangling these countervailing consumer behaviors.
Keywords: mobile payment, adoption, offline, online, channel, credit card.
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