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Consumer Trust and Behaviour: Contactless Payment



Over the last three decades, banking and payment methods have experienced a dynamic shift to the digitalized systems, thanks to technological development. Over the last few years, radio-frequency identification (RFID) payment technology has widely been applied in credit and debits cards (Hossain & Prybutok 2008). The technology is applied as a direct interface to the chip (Thiesse 2007). In addition, the technology has been used in Smartphone retail technologies to enhance payment. For instance, Google Wallet is an example of a Smartphone retail payment system while Geld Karte, Oyster and Octopus are prepaid payment cards in Germany, Britain and Hong Kong, respectively. The technology is the latest in the banking system. However, it has spread rapidly and is penetrating in various industries (Shin, 2009). According to statistics, the UK alone has more than 20 million contactless cards. However, the level of awareness of contactless cards is about 80% due to the presence of multinational institutions advocated for the technology. For instance, retailers such as Marks & Spencer, Waitrose, the Co-operative and Boots are actively promoting the technology (Angeles 2013). In addition, retailers such as McDonald’s and Eat food chains are offering services based on contactless cards. Thus, the acceptance of the technology seems to be progressing every year.

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Nevertheless, it is worth noting that the acceptance of the technology in the UK is considered moderate. Despite the presence of this technology and companies offering its service, it is surprising that the payment method is not the norm in the country. In fact, information about the new method, including its ability to perform twice as fast as the conventional cards, is plenty (Pramatari & Theotokis 2009). There are more than 20 million contactless cards issued to consumers in the UK and an awareness level of more than 80%, yet the system has not changed the method of making payment. In fact, most consumers still prefer conventional cards and cash.

Research problem

The major question in this phenomenon regards the inability of the RFID payment cards to penetrate the market as expected. For instance, it is not clear why the cards have not become a popular method of payment, despite the efforts by multiple companies to advocate for the use of the system (Lee, Park, Yoon & Yeon 2012). Secondly, various questions have been raised about privacy as well as security of the RFID card method of payment. Is RFID payment method worth the risks involved?

Evidently, there is inadequate research information available to address these questions. In particular, information regarding consumer behaviour and embracing the new technology in the payment system is lacking. In fact, most studies have attempted to determine various aspects of consumer behaviour in embracing other payment methods enhanced by technology. For instance, consumer behaviour and its impact on the acceptance of such payment technologies as online, mobile and Smartphone payment technologies have been studied. Nevertheless, information about the impact of consumer behaviour and trust towards RFID-enhanced contactless cards is greatly lacking (Sarma, Weis & Engels 2013). It is quite possible that the low level of acceptance and embracement of the technology among the consumers in the UK results from the inability to consider and address the issues related to consumer trust and behaviour towards new technology.

Aims and objectives

The primary aim of the proposed research study is to extend the current information regarding consumer behaviour and trust in using technology-enhanced payment methods. The study investigates the phenomenon, and its impact on contactless payment, a novel payment method that has resulted from RFID technology. In addition, the study will attempt to describe the impact of consumer trust and behaviour on the level of embracement and acceptance of the contact payment system among the users in the UK.

The study seeks to achieve the following objectives:

  • To review the relevant literature with the aim of revealing gaps in knowledge as well as deriving information for qualitative exploration.
  • To identify a deductive methodology for collecting and analysis data based on the relevant techniques.
  • To develop a method for designing and collecting data.
  • To interpret the findings of the study and develop a critical analysis of the existing literature.
  • To develop academic recommendations in regards to the issue of consumer behaviour and trust in the use of the RFID contactless payment method.

Significance of the study

The study aims at developing knowledge on the inability of the RFID contactless payment method to achieve wide and massive usage in the UK, despite having more than 80% of awareness regarding its efficiency, quality and security. To address the problem, the research will limit its scope on the nature and impact of consumer trust and behaviour towards technology, focusing on the RFID contactless cards. Therefore, this information will be important in addressing the problem. In addition, it will be useful in both academics and business fields. The RFID card makers, marketers, banks, as well as corporations offering the services to their customers will find the information useful in developing effective business strategies. Moreover, the information is expected to act as a part of the guidelines needed in policymaking at both the corporate level and the exchequer.

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Study hypothesis

This research proposal believes that the problem of the low level of acceptance and embracement of the contactless payment cards in the UK is partly caused by various aspects of consumer behaviour and trust towards new technology, despite the availability of information regarding the system.

Review of Literature

Various studies have attempted to develop an in-depth understanding of consumer behaviour and trust towards various payment methods in various parts of the world. In the UK, adequate information is available to explain the relationship between consumer acceptance of various methods of payment and consumer behaviour and trust. For instance, online payment s, mobile and conventional cards and bank-to-bank methods are intensive studies (Lee 2009). Moreover, technology-enhanced methods such as online payment systems have recently received a lot of attention from researchers. In fact, the issue of consumer behaviour and its relationship with consumer acceptance of online payment methods has been studied (Luarn & Lin 2005). Most of these studies indicate that consumer trust and behaviour play an important role in determining the progress, acceptance and applicability of any method of payment available in the market.

In the UK, “contactless banking or payment” is a relatively new term in the financial sector. It is used in reference to a number of payment methods enhanced by RFID technology, inducing credit cards, debit cards, smart cards and key fobs. The payment is instant because the computer system automatically deducts the amounts payable from the consumer’s total amounts lodged in the card system. According to Dubisky (2010), the card system is believed to have two times the rate of efficiency compared to conventional cards or cash. In fact, this is true because there is no signature or PIN requirement in the payment for good or services worth less than £20. In addition, research has suggested that the method motivates to spend more money when using these cards than when using conventional payment methods because RFID makes transactions easy and interesting (Dubinsky 2010).

According to Parry (2013), ICM research has carried out intensive studies to determine the future of contactless payment methods in the UK. From these studies, it has been shown that the acceptance and embracement patterns of these payment methods are minimal, despite the fact that various companies have distributed a huge number of contactless cards (Mallat 2007). An important finding from these studies is that a number of factors associated with consumer behaviour and trust influence the level of acceptance by customers in the UK. For instance, the studies have shown that variables associated with consumer behaviour such as age and level of education play an important role in determining an individual’s behaviour and trust towards the new technology. The studies indicate that younger consumers have a higher level of embracing technology than the older generations. In fact, the study shows that the most frequent users of the systems are RFID cardholders aged between 18 and 34 years.

At least one-third of this group of consumers make at least one transaction a week using the contactless card. Moreover, Parry (2013) reports that the lack of information on how the cards are used is responsible for the low level of card usage. This report further asserts that the lack of information on how to use the cards is a problem that mainly affects card users in the older generations, especially those beyond the age of 45 years. This means that despite an individual holding a contactless card, the preference for the conventional cards as well as cash is still high due to lack of information on how to operate and use the card (Mukherjee & Nath 2003). In addition, this is an indication that the 80% level of awareness of the cards has been directed towards increasing the number of card users rather than increasing the rate of knowledge on how to use the cards. In fact, this phenomenon has created a problem because the advertisement and awareness campaigns did not consider the aspects of consumer behaviour and trust in new technology, especially in payment and banking methods.

According to Chen (2008), lack of knowledge on the benefits of new technology in the financial industry affects consumer behaviour and trust. In previous studies that investigate consumer behaviour and trust towards other methods such as online and mobile payment and banking, it has emerged that lack of knowledge about the operation of a specific system determines the levels of usability as well as acceptance. Studies have shown that companies tend to create awareness of new technology and success in convening a huge number of consumers to subscribe to the methods (Slettemeås 2009).

On the other hand, these companies fail to consider certain aspects of consumer behaviour that affect their trust in the specific method (Zmijewska 2005). For instance, consumers have always known the existence of online and mobile payment methods (Roussos, 2006). A large number of consumers decide to go for the technology, but their ability to use or preference on the methods are limiting (Jonker 2007). The primary explanation given by various studies is that consumers have information about the presence, effectiveness or benefits of the methods, yet they lack information on how to use the technique (Pikkarainen, Pikkarainen, Karjaluoto & Pahnila 2004). Thus, they tend to shy away from applying the method.

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Most likely, the same phenomenon is affecting the level and rate of acceptance as well as the preference of using the contactless cards in the UK. Consumers want to be shown how to operate the cards in making payments, yet few companies have attempted to provide instructional services at the points of payment or through the mass media (Lim 2003).

Study Methods

Study design

The main purpose of the study is to understand consumer behaviour and trust towards technology, with a special focus on contactless banking cards. Therefore, it is important to describe the phenomenon from a consumer’s point of view. This means that the researcher will need to interact with the consumers, especially those who have the cards and are using or not using them in settling their bills.

These aspects imply that the study will be a mixed-method, with both quantitative and qualitative techniques (Harding 2013). The study will attempt to answer the research questions based on reports from participants (Campbell & Stanley 2009). The quantitative study aims at developing a systematically and empirical examination of the phenomenon through numbers, that is, statistical, computational and numerical approach (Given, 2008). The researcher expects that the data obtained from the field will produce unbiased results, which will be generalized to the entire population of interest (Rushkoff 2005). In this case, the researcher will apply a questionnaire and focus groups on deriving data from the participants.

Target population

In the UK, there are more than 20 million contactless cards. The researcher assumes that about 15 million people won these cards, considering that some individuals own more than one card. Thus, the wider population of interest is the 15 million cardholders in the country. Specifically, this study will work with 400 participants in London as a representative of the total population.

Participants will be selected from individuals in London. Selection will involve asking individuals to join as participants by signing consent forms. At the point of payment such new selected supermarkets or chain stores, fast food outlets and other organizations, the researcher will assign some assistants to ask individuals to join as participants. In addition, a website will be developed to ask participants to register as participants and sign online consent forms.

Inclusion criteria

Cardholders aged above the age of 16 will be included in the study. The study will also include British citizens or foreigners living and shopping in London.

Exclusion criteria

Non-card holders, individuals less than 16 years and foreigners who do not live in London will be excluded from the study.

Data collection methods

Questionnaires will be developed and sent to the participants using physical address, emails or messaging system on the website developed for this purpose. It is expected that consumers will take two weeks to fill and return the questionnaires.

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Focus groups will be developed by participants willing to join as members. They will be asked to join an interactive group setting, where questions will be prompted to them (Tracy, Lutgen-Sandvik & Alberts 2006). The questions will be asking participants to give their perceptions, attitudes, beliefs and opinions towards the contactless cards method and its aspects such as effectiveness, security and privacy (Nachmais & Nachmais 2008).


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