Mobile Payment Adoption: An Empirical Investigation on Alipay

47 Pages Posted: 12 Nov 2018 Last revised: 9 May 2022

See all articles by Yuqian Xu

Yuqian Xu

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

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 rapid growth in the adoption of mobile payment has already begun to reshape bank payment practices. Relying on a unique data set from a leading bank in Asia, which records transactions of its credit card consumers before and after the launch of Alipay mobile payment (i.e., the current largest mobile payment platform in the world), this paper seeks to understand the impact of mobile payment adoption and expansion on consumer bank credit card transaction activities through both offline and online channels. To do so, we employ the difference-in-differences method coupled with matching to estimate the effects. We find that mobile payment adoption not only increases transaction activities through both offline and online channels but also enhances consumer loyalty to the bank by reducing churn. Specifically, the total credit card transaction amount and frequency increase by 9.4% and 10.7%, respectively. Moreover, we show that mobile payment acts as a substitute for the offline physical-card payment, but interestingly, it exhibits certain complementarity effect on the online personal computer (PC) payment. Next, we examine spillover effects of mobile payment expansion by leveraging the event that Alipay began expanding its collaboration with other banks. We observe a positive spillover effect of mobile payment expansion on our focal bank consumer activities through the offline channel, whereas a negative spillover effect through the online channel. Both positive and negative spillover effects are mainly driven by the change in transaction activities through mobile payment rather than other payment methods.
Finally, we conduct exploratory examinations with heterogeneous analyses following the unified theory of acceptance and use of technology and find that the effects of mobile payment adoption have a higher magnitude for consumers of the younger generation with enhanced effort expectancy, consumers from top tier cities with greater social influence, and consumers with better facilitating conditions (such as when more suppliers accept mobile payments).

Keywords: mobile payment, adoption, expansion, 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 North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
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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