A transaction cost explanation of the card-or-cash decision among Vietnamese debit card holders

Abstract

PurposeThis research provides a new perspective in explaining cardholders' willingness to use debit cards instead of cash by applying the transaction costs economic theory. This study also expands the adaptation of transaction cost economics theory in explaining consumer behaviour by investigating the moderating effects of income and education level on the relationship between perceived transaction costs and willingness to use debit cards.Design/methodology/approachThe conceptual framework was developed primarily from the transaction cost economics theory. An in-depth interview method was employed to further support hypothesis development and the development of measurement scales. A structural equation model linking asset specificity, behavioural uncertainty, environmental uncertainty, frequency of payment, perceived monitoring costs, perceived adaptation costs and willingness to use debit cards was tested using data from a sample of 384 Vietnamese debit card holders.FindingsThis study's results support the transaction cost economics theory that asset specificity, uncertainty and frequency of payment all positively contribute to the perceived transaction costs associated with debit card usage. However, only environmental uncertainty and perceived adaptation costs have significant negative impact on willingness to use debit cards, with the relationship between environmental uncertainty and willingness to use debit cards being totally mediated by perceived adaptation costs. Moreover, the relationship between perceived adaptation costs and willingness to use debit cards becomes less negative among richer and better-educated cardholders.Practical implicationsThe research provides insights into the hidden obstacles for developing cashless economies, thereby supporting policy makers in designing more effective and comprehensive strategies to make debit cards more widely used as a true substitute for cash.Originality/valueThis study provides a new lens in explaining customer willingness to use debit cards, while expanding the transaction costs economics theory by incorporating demographic factors as moderators in the relationship between transaction costs and the card-or-cash choice.

Explaining the comparative perception of e-payment: role of e-shopping value, e-payment benefits and Islamic compliance

“…This leads customers to prefer the e-payment option compared to COD, as the benefits of this method are enhanced by the avoidance of extra fees pertaining to each provider. This idea is in accordance with findings of Hoang and Vu (2020) who supported the theory of transaction cost economics as an explanation of the intention to use debit cards. They found that the perception of adaptation costs mediated the relationship between uncertainty and intention to use this type of e-payment.…”

“…Indeed, by paying online, customers will avoid the fees of COD payment. This is similar to the main assumptions of the theory of transaction cost economies which highlight the fact that consumers choose a payment method which reduces transaction costs (Hoang and Vu, 2020). Indeed, most of the e-retailing companies charge a COD fee for each provider who sells online with the e-shopping platform, whereas the e-payment method incurs no transaction fees for the website.…”

“…They found that the perception of adaptation costs mediated the relationship between uncertainty and intention to use this type of e-payment. Indeed, the major assumption underlying this theory in a consumer perspective considers that “consumers, like firms, will act in a way that minimizes transaction costs” (Hoang and Vu, 2020, p. 1638).…”

“…Another theory supports more directly the choice of our exogenous variables: the theory of transaction costs economy. The major assumption, underlying this theory in a consumer perspective, considers that individuals generally "act in a way that minimizes transaction costs" (Hoang andVu, 2020, p. 1638). Second, it verifies uncovered paths linking perceived e-shopping value to e-payment benefits and CPE.…”

Payment Features and Incentives as Drivers for Non-Cash Payments Usage – the Evidence from Poland

“…Despite the growing number of research on retail payments, due to the limited data on individual payment transactions, explaining the real drivers of consumer payment behaviour remains not an easy task. Most research discusses how consumers pay (Kennickell & Kwast, 1997;Humphrey et al, 2001;Hayashi & Klee, 2003;Bounie & Francois, 2006;Klee, 2006Klee, , 2008De Grauwee et al, 2006;Chen, 2008;Pousttchi, 2008;Carlos & Taylor, 2009;Zinman, 2009;Schierz et al, 2010;Kosse, 2013;Shaw, 2014;Hoang & Vu, 2020;Karjaluoto et al, 2020;Raman & Aashish, 2020), and only a few try to find the answer to the question of why. Even less, try to find what should be done to motivate consumers to switch from cash to other non-cash payment methods.…”