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FORMULATING - Customer Loyalty - Mobile Payment (2)

FORMULATING - Customer Loyalty - Mobile Payment (2)

Determinants of Customer Loyalty Using Mobile Payment Services in Iran


According to the available literature, seven constructs affect customer loyalty in mobile payment .This model focuses on the factors influencing customer loyalty which consists of the relationship of security, customization ,usefulness , ease of use ,responsiveness , perceived risk and customer satisfaction. The model is summarized as in chart1 .

M-payment and research hypotheses quality domains
Recent research has identified loyalty as a potential research issue in both e- and mcommerce (Hsu and Lu, 2005; Hsu et al., 2007). Inspiring mobile customers’ loyalty relies on their satisfaction. Recent studies examined a variety of topics including the impact of satisfaction on loyalty in m-commerce (Lin and Wang, 2006), factors affecting satisfaction in m- commerce (Choi et al., 2008).

The quality of services was also shown to be important for inspiring the loyalty of mobile payment services customers. Studies related to service quality in relevant fields have examined web site or interface design (Liu et al., 2005), information quality, responsiveness and mobile technology and banks. Similarly, it was found that the quality of services affected satisfaction as well as loyalty.


Security may be defined as protecting the details of transactions and customers from internal and external fraud/criminal usage. People may fear to transact and make online payment, fearing that their confidential information might be revealed. Security remains one of the most crucial and well researched areas of study in payment systems. Concerns about security in the network reveal that further systems must be developed. Due to an increase in bank mergers and acquisitions, customers are sceptical about the security of online payments. It is agreed that online sales are not as safe as conventional sales; people are suspicious since there is no human factor involved in the sale and it is done in a virtual setting (Whiteley, 2000). The existing literature recognizes the security concerns of users and the effect it has on the satisfaction of mobile payment systems. Mayer and Davis (1999) have further described that security opinions directly influenced trusting intentions (e.g. customer loyalty) and Anderson and Srinivasan (2003) suggested trust appears to be especially important for creating loyalty when the perceived level of risk is high.

H1. Security directly affects satisfaction.

H2. Security directly affects loyalty.


Lee and Benbasat (2003) defined customization as a tailoring ability enhanced by users’ mobile setting. Venkatesh et al. (2003) further suggested that customization's impact can be extended to enhance the mobile interface design and improve mobile usability as well; hence a raise in satisfaction level. Accordingly, mobile payment services quality refers to the satisfaction fulfillment process; hence the fallowing hypothesizes that:

H3. Customization directly and positively affects satisfaction.

 H4. Customization directly and positively affects customer loyalty.


The ‘usefulness’ of the technology refers to the degree to which using the system or technology will improve the user’s performance in the workplace. Davies (1989) defines perceived usefulness as ‘the degree to which a person believes that using a particular system would enhance his or her job performance,’ as the user’s subjective perception that using a specific computer application will increase his or her job performance within the organizational context. The ‘usefulness’ of the technology refers to the degree to which using the system or technology will improve the user’s performance in the workplace. Mobile payments provide consumers with ubiquitous payment possibilities, timely access to financial assets and an alternative to cash payments. The users can, for example, pay for transportation tickets or car parking remotely without the need to visit an ATM, a ticketing machine or a parking metre . The relative advantage of mobile payments compared with traditional payment instruments is thus likely to include time and location independent payment possibilities.

H5. Usefulness directly affects satisfaction.

Ease of use

 Ease of use’ refers to the process leading to the final outcome. It is defined as‘…the degree to which a person believes that using a particular system would be free of effort (Davies, 1989). When conducting activities in a portal, ease of use can be thought of as the process s of using the new media while engaging in online behavior. The easier technology is to use, the more it can encourage feelings of control and usefulness in the consumer. Swanson (1987), in his study to test a model for explaining choice and use of information, found that the ability to control the selection and use of information related favorably to the perceived ease of use factor. Ease-of-use in m-payment can include ease handling, fast processing of the payment transaction, high number of accepting merchants, easy learnability of payment procedure, no installation of software on the mobile device, and no pre-registration necessary.

H6. Ease-of-use directly affects satisfaction.


 Responsiveness can specifically represent an e-retailer’s commitment to providing rapid feedback or generally refer to being responsive to the service subscribers. Its recent applications can be found in different areas of e-commerce such as web-based services (Kuo, 2003), internet retailing and electronic banking . Thus responsiveness may influence customer satisfaction based on a business transaction. Moreover, a high level of responsiveness, representing a trust cue, can convey the trustworthiness of the vendor in mcommerce to customers (Corritore et al.,2003). People are likely to place more loyalty in a bank if assistance is readily available, therefore responsiveness may affect loyalty. Based on the reasoning above, It is hypothesized that:

H7. Responsiveness directly affects satisfaction.

H8. Responsiveness directly affects customer loyalty.

Perceived risk

 Perceived risk is that level of risk a customer believes that exists regarding the purchase of a specific product from a specific retailer, whether or not that belief is correct (Miyazaki & Fernandez, 2001). The perceptions of risk and the way they affect customer behavior have been the subject of several studies, which consistently show that providers must overcome the customer’s perceived risk. Miyazaki and Fernandez (2001) argued that the rate of purchasing products online is negatively related to the perceived risk of making online purchases. They further argued that a higher level of Internet experience may lead to lower risk perceptions regarding online shopping and fewer specific concerns regarding system security and online retailer fraud, yet more concerns regarding online privacy. Modifying the definition from Miyazaki and Fernandez, the perceived risk in the m-payment can be defined as a concern over the security of transactions in m-payment. Perceived risk was measured through Likert scales and uncertainty inherent in the m-payment service. Based on the previous studies, this study hypothesizes that perceived risk regarding the security of transactions is one of the factors influencing m-payment behavior

H9. Perceived risk has a direct effect on the satisfaction.

H10. Perceived risk has a direct effect on customer loyalty.


Based on Casalo´ et al. (2008) satisfaction refers to an affective consumer condition that results from a global evaluation of all the aspects that make up the consumer relationship . Complex task to pay online and it could be done in a user-friendly manner. This requirement can be shown by ease of use. If the payment process takes a lot of time and is complicated it would de-motivate the customer and he/she will refrain from using other web activities as well . If customers perceive more convenience through searching online for information they will most probably switch to search for information online (Gao, 2005; Truong and Jitpaiboon, 2008). Moreover, these satisfied customers will also be willing to establish a long-term loyalty relationship with banks that offer m-services. A positive effect on loyalty in m-commerce can also be expected. Hence we relate satisfaction to loyalty in the model and proposed that:

H11. Customer satisfaction has an influence on customer loyalty.


The questions of this research were examined by these experienced mobile banking customers. All subjects involved in this research were required to answer the questionnaire based on their perception of m-Payment Systems . The questionnaire explores the correlation among constructs based on the literature regarding to determine key factors affect on customer loyalty in mobile payment systems . This questionnaire consist of 42 items in eight constructs. The participants indicated their agreement with a set of statements, using a 7- point Likert-type scale (ranging from strongly disagree to strongly agree) drawn from previously validated data collecting instruments. The measures of perceived benefit, perceived convenience, behavioral intention, and attitude were adapted from previous studies relating to the TAM model, mainly from Davis (1989). The subjects are experienced mobile bank system users who have used the MPS(mobile payment system .The questionnaire were distributed among people who use mobile bank system. Out of 320 questionnaires, 265 (83%) were return with completed answers and were used in statistical analyses due to the completeness of all questions.

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Ref :

Prof. Dr.Ali Sanayei, Prof.Dr Bahram Ranjbarian, Dr.Ali Shaemi, Azarnoosh Ansari: INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS, VOL 3, NO 6 (2011)