Mobile Payment Adoption: An Empirical Investigation on Alipay

50 Pages Posted: 12 Nov 2018 Last revised: 8 Mar 2021

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: March 7, 2021

Abstract

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.

Suggested Citation

Xu, Yuqian and Ghose, Anindya and Xiao, Binqing, Mobile Payment Adoption: An Empirical Investigation on Alipay (March 7, 2021). 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

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
1,231
Abstract Views
5,182
rank
19,722
PlumX Metrics