Potentials and Consumers' Adoption of Mobile Payment Systems in Malaysia

How Consumer Adopt Mobile Payment System

Consumers define mobile payments as the use of a mobile device to conduct a payment transaction in which money is transferred from a payer to a receiver through an intermediary such as Mobile Money (MM). Mobile payments also come with definition of mobile payment transactions conducted via mobile banking systems. It’s important to differentiate between mobile payments and mobile banking services. Mobile banking services are based on banks’ own legacy systems and offered for the banks’ own customers while mobile payment are offered as a new payment service to a retail market, which is distinguished by:-

1) Mass competition of providers such as banks and telecom operators.

2) Two different and demanding groups of adopters who are consumers and merchants.

3) Challenges regarding regularity and compatibility of diverse payment systems.

Note: All these factors will increase the complication of mobile payment adoption environment thus affect consumer willingness to use mobile phone as a payment instrument in transactions.

Potential of mobile payment systems

Offers customers additional value in terms of location-free access – provide consumers with possibilities to purchase something in anywhere, timely access to financial assets as well as it’s also an alternative way in making payments to goods and services. Difference between traditional payment instruments and mobile payments are focus on time and location as well as independent purchase possibility.

Mobile payment systems also withhold compatibility between an innovation (mobile payment system) and values, experiences, and needs of potential adopters.

Complexity and problems with usability have contributed to the low adoption of a variety of payment systems, including smart cards and mobile banking. Similarly, ease of use and convenience has been found to affect consumer adoption of internet payments and WAP financial services. Mobile payments are commonly expected to increase consumer convenience by reducing the need for coins and cash in small transactions and increasing the availability of purchase possibilities.

The cost of a payment transaction has a direct effect on consumer adoption if the cost is passed on to customers. As shoppers in electronic channels are attentive to price of the transaction costs of mobile payments should be low enough to make the total cost of the purchase competitive with physical world prices.