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Key Drivers of Gen Z’s Mobile Payment Adoption Revealed

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A recent study has shed light on the growing acceptance of mobile payment (m-payment) technology among Generation Z (Gen Z) in Indonesia, highlighting key determinants influencing this trend. Researchers from the University of Surabaya conducted a study to examine Gen Z’s behavioural intention to adopt m-payment systems and identify key factors driving this adoption. The findings were published in the Journal of Science and Technology Policy Management

The rapid growth of mobile technology and the high penetration rate of mobile internet users have made smartphones essential devices for many daily activities. With the increasing functionality of smartphones, more users are relying on their devices for payment transactions. M-payment, which involves performing financial transactions using mobile devices and wireless communication technologies, offers a convenient and faster alternative to traditional payment methods.

Globally, the adoption of m-payment has surged over the past five years. In 2020, the global value of m-payment transactions reached USD 1,449.56 billion, with projections indicating it will rise to USD 5,399.6 billion by 2026, reflecting a compound annual growth rate (CAGR) of 24.5%. Despite this global trend, the adoption of m-payment in Indonesia has been relatively slow. However, the study suggests that this is changing, especially among Gen Z, who are increasingly embracing m-payment systems.

The study identified several determinants that significantly influence the behavioural intention of Gen Z to use m-payment. These include performance expectancy, effort expectancy, social influence, promotional activities, and perceived security.

  • Performance expectancy refers to the belief that using m-payment will enhance one’s performance in conducting financial transactions. The study found that Gen Z values the efficiency and convenience offered by m-payment systems, making performance expectancy a strong predictor of their intention to adopt this technology.
  • Effort expectancy is the perceived ease of using m-payment systems. Gen Z, having grown up with technology, finds m-payment systems relatively easy to use. The intuitive and user-friendly interfaces of these systems reduce the effort required to learn and use them, further driving adoption.
  • Social influence also plays a crucial role in shaping Gen Z’s intention to use m-payment. The opinions and recommendations of peers, family members, and influencers significantly impact their decision to adopt new technologies. The study showed that social networks have a particularly strong influence on female Gen Z customers’ adoption of m-payment systems.
  • Promotional activities are another significant factor. Gen Z is highly responsive to promotions and incentives offered by m-payment providers. Cashback, discounts, and reward points are attractive features that motivate them to use m-payment systems. Interestingly, the study found that male Gen Z customers are more influenced by promotional activities than their female counterparts.
  • Perceived security remains a major concern for users adopting m-payment. The study confirmed that security is a top priority for Gen Z, who are cautious about the protection of their financial and personal information. M-payment providers need to ensure robust security measures to gain the trust of Gen Z customers.

The study also examined the moderating effects of gender and education on the relationship between the identified determinants and the behavioural intention to use m-payment. It found that gender significantly moderates the impact of social influence and promotional activities on m-payment adoption. Social networks are more likely to have an impact on female Gen Z customers than male customers, who are more receptive to marketing initiatives.

Education also plays a moderating role, particularly concerning perceived security. The study revealed that less educated Gen Z customers perceive higher security in using m-payment compared to their more educated peers. This indicates that m-payment providers need to tailor their security communication strategies to address the concerns of different educational groups.

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