PIONEER INSTITUTE OF PROFESSONAL

STUDIES

Report of Minor Research Project

On

“ A STUDY OF FACTORS AFFECTING THE SELECTION OF E-PAYMENT”

SUPERVISOR: GROUP MEMBERS

Prof. SUMIT ZOKARKAR NEHA DUBEY
NEHA PUROHIT
NEHA SHRIVASTA
PARUL SINGH
POOJA DHAKA

GROUP NO.42
 ACKNOWLEDGEMENT

This report bears the imprint of many people and without their support it would not have
existed. First of all we would like to express our sincere indebtedness and profound gratitude
to our parents whose support in all manners had made us capable to complete this project.

We acknowledge our deepest thanks to Dr.V.K Jain and Prof. Sumit Zokarkar for all their
care and encouraging words and giving suggestion at different point of times. At the outset
we would like to put on record our sincere gratitude to all of our friends for giving us
valuable ideas throughout of our project.

Team members
NEHA DUBEY
NEHA PUROHIT
NEHA SHRIVASTA
PARUL SINGH
POOJA DHAKA
GROUP NO.42
 DECLARATION

We hereby declare that the research report on “ A STUDY OF FACTORS AFFECTING

THE SELECTION OF E-PAYMENT” is legal as per my knowledge and work outcome

of our own job. This report in any form has not been submitted to any other institute or

university for any degree or similar award.

DATE Team members:

NEHA DUBEY
NEHA PUROHIT
NEHA SHRIVASTA
PARUL SINGH
POOJA DHAKA
GROUP NO.42
 CERTIFICATE OF SUPERVISIOR

This is to certify that the report entitled ‘A STUDY OF FACTORS AFFECTING

THE SELECTION OF E-PAYMENT’ is being submitted by us in partial fulfillment
of the requirement for the minor research project as a part of curriculum of MBA degree in
Pioneer Institute of Professional Studies, under the guidance and supervision of Prof.
Sumit Zokarkar. The result embodied in this dissertation has not been submitted to any
other university or institution for the award of any degree or diploma.

SIGNATURE :………………………

SUPERVISIOR : Prof. Sumit Zokarkar

PLACE:
 CONTENT
• CHATPER 1:- Introduction

1) Conceptual frame work

2) History of organization

3) Literature review

4) Rationale

5) Objective

• CHAPTER 2:- Research Methodology

1) Study

2) Sample Design

3) Research Design

4) Tools for data collection

5) Tools for data analysis

• CHAPTER 3:- Result & Discussion

1) Result

2) Tables

• CHAPTER 4:- Conclusion

1) Conclusion

2) Suggestions

3) Scope for future work

CHAPTER- I
INTRODUCTION
 INTRODUCTION
E payment is a subset of an e-commerce transaction to include electronic payment for buying
and selling goods or services offered through the Internet. Generally we think of electronic
payments as referring to online transactions on the internet, there are actually many forms of
electronic payments. As technology developing, the range of devices and processes to
transact electronically continues to increase while the percentage of cash and check
transactions continues to decrease. In the US, for example, checks have declined from 85% of
non-cash payments in 1979 to 59% in 2002, and electronic payments have grown to 41%.

The Internet has the potential to become the most active trade intermediary within a decade.
Also, Internet shopping may revolutionize retailing by allowing consumers to sit in their
homes and buy an enormous variety of products and services from all over the worlds. Many
businesses and consumers are still wary of conducting extensive business electronically.
However, almost everyone will use the form of E Commerce in near future.

Electronic Payments Benefits

Electronic payments can benefit your business by extending your customer base; boosting
cash flow; reducing costs; enhancing customer service and improving your competitive
advantage.

Five reasons why Electronic payments improve customer service – the five ‘Cs’

1. Choice – like your competitors, you can offer a wide range of payment options
2. Convenience – they remove the need for invoices, cheques, cash and BACs
3. Credit – they may allow purchases that would otherwise be delayed
4. Concessions – small discounts to encourage online purchases improve the
perception of value.
5. Competitive Edge - if you don’t offer the full range of payment options but your
competitors do, what does this say about your business?
Five reasons why Electronic payments increase profitability
1. Convenience – removing administrative resources required by invoices, cheques and
cash.
2. Immediacy – credit cards enable instant purchasing (without delay)
3. Improved cash flow – payment at the time of purchase reduces the pressures caused
by 30-day invoicing
4. Growth – open additional payment channels via the phone, mail order and Internet
and increase your customer base. More customers mean more revenue.
5. Competitive advantage – match and beat the services of your competitors and gain
the edge.
 CONCEPTUAL FRAME WORK

The research will give focus on all the factors which affect the customer payment decision. In
the present Scenario everybody is enough familiar with the term internet, internet banking,
ATM facility and different e-payment methods. The basic concept behind the study is to
know what factors customer takes into consideration while selecting payment method.
The study will focus on-

1. Customer preference towards e-payment methods.

2. The factors which affect the selection of payment method.

3. Limitation and advantages of various e-payment methods.

4. Awareness of the customer for various e-payment methods.

 HISTORY OF E-PAYMENT

Payments
In 1918, electric money was born when Federal Reserve Banks first moved currency via
telegraph. However it wasn‘t until the automated clearinghouse
(ACH) was setup by the US Federal Reserve in 1972 that electronic currency became
widespread. This provided the US Treasury and commercial banks with an electronic
alternative to processing cheques.
In 1939, a serial inventor by the name Luther George Simjian created the Bunkmate
automatic teller machine. He filed 20 patents and asked the company now know as Citicorp
to trial it. After six months the bank had reported that there as no demand for such a product.
However in 1968, Don Wetzel, Tom Barnes (mechanical engineer) and George Chastin
(electrical engineer) conceptualized what is now known as the modern ATM. In 1969 and
five million dollars later, the first prototype of the modern ATM was made and patents were
then issued in 1973. The first working ATM was installed into the Chemical Bank based in
New York City The first ATM‘s were off line machines, meaning that the money was not
automatically withdrawn from user’s accounts. Therefore only exclusive customers with good
credit history were able to use ATMs. Today, almost everyone has access to the use of these
devices and at last count there were over 352,000 ATMs in the US alone. These ATMs now
perform over 1.1billion transactions per month or 26,000 transactions a minute. Charge cards
date back to as early as 1914 when Western Union provide Metal cards, allowing deferred
payment privileges to preferred customers. These cards were colloquially known as metal
money“. By 1924, General Petroleum Corporation was allowing customers to use metal
money to buy fuel.

In the late 1930s, American Telephone and Telegraph (AT&T) introduced the Bell System
Card“ and before long, railroads and airlines had introduced similar cards.

In 1950, Diners Club issued the first —plastic money“charge card and in 1951it Issued the
first credit card to 200 customers who could use it at 27 different restaurants in New York.
Bank of America issued the Bank Americard (now Visa) - the first bank credit card - later in
1958. This was first promoted to travelling salesmen (more common in that era) for use on
the road. By the early 1960s, more companies offered credit cards, advertising them as a
time-saving device rather than a form of credit. But it wasn‘t until the establishment of
standards for the magnetic strip in 1970 that the credit card became part of the information
age.This saw companies such as American Express and MasterCard became huge successes
overnight, which prompted moves by Congress to begin regulation of the credit card industry
by banning practices such as the mass mailing of active cards to those who had not requested
them.In 1983, RSA encryption algorithm was invented by Ronald Rivest, AdShamir and Len
Adelman, (hence the name RSA) at MIT‘s Laboratory for Computer Science. The
breakthrough was that it allowed for encryption in a multi-user environment, that is, no active
participation was necessary between the sender and the receiver of data at the other end.

Unfortunately credit card security has not seen substantial growth during this time. Although
some security improvements have been made, the actual process of reading numbers off a
magnetic strip and possibly a signature to verify the user is realistically as far as the industry
has progressed.
 LITERATURE REVIEW

1. Electronic payments through mobile

D. Murali / Kumar Shankar Roy | 2008-06-16
Published in BUSINESS LINE
Awareness will be key in promoting electronic payments, he adds. If a customer is well
educated about the electronic payment service options, he/she definitely converts to the
electronic habit! Read on. The electronic payments industry is vast territory and covers
both retail payments and large-value payments; large-value payments essentially deal with
corporate sector payments while the retail payments cover the person-to-business, person-
to-government and person-to-person payments. Most payments that happen today through
cheques and cash are potential transactions for conversion to the electronic payments
segment; from that perspective, the size of the electronic payments mark et is perhaps
gargantuan!

2. Understanding the m -commerce payment systems through analytic hierarchy

process

Abstract

Bill issue over online commerce. This paper analyzes currently available e-payment
systems and finds the stored-value card to be the best overall payment scheme for online
commerce.

The paper employs the analytic hierarchy process (AHP), a quantitative method of
decision-making, to evaluate the performance of four e-payment systems: the credit card,
the stored-value card, the smart card, and the telecommunication bill. The results show that
the stored-value card has the highest performance among the four options considered. Our
findings also suggest that a payment alternative, such as the credit card, can be flawed
technologically but can still become the de facto e-payment scheme due to the
advantage of an established customer base. This leads us to suggest that
multiple usages be added to e-payment systems with higher economic/social merits so
that they can gain a critical customer base. Users will benefit as technologically more
capable e-payments are widely adopted for online commerce
3. Journal business Research Volume 57 ,Issue 12 December 2004,

Mobility and Markets: Emerging Outlines of M-Commerce ELECTRONIC FUNDS

WITHDRAWAL CREDIT OR DEBIT CARD debit card, card that allows the cost of goods
or services that are purchased to be deducted directly from the purchaser's checking account.
They can also be used at automated teller machines for withdrawing cash from the user's
checking account payment.
Taxpayers can make tax payments by debit or credit card with or without e-filing the tax
return. The payment can be made at the time of e-filing over the telephone or online. Paying
by credit card allows the taxpayer to pay the taxes now while paying the credit card company
later. Link2Gov Corp. and Official Payments Corp. are the two service providers the IRS uses
to process credit a Article: Advantage Enhances Electronic Payment Options, Boosting
Customer Service.

4. Article: Advanta Enhances Electronic Payment Options, Boosting

Customer Service.

Accept credit card payments online. Secure & Easy. Low Rates!
The Economist Magazine
 RATIONALE

The study is conducted because e-payment methods are widely used. Money transfer become
easy with the help of e-payment method. The main features of electronic payment cards,
which include credit cards, virtual credit cards, debit cards, and charge cards, are described,
and the main characteristics of successful e-payment methods are outlined.

There are various payment methods are available so the business has to recognize the choice
of the customer, so this research shall find out customer satisfaction level for the various
payment methods.

In case of Cash transaction it is difficult for government to monitor them and insure its
legality. Whereas e–transactions are secure and recorded automatically. This also need of the
hour to know the customer behavior regarding net banking. It is also required to know about
the factors which are responsible to make a decision of payment. Customer need security of
transaction or the time factor is important.

Banks and other financial institutions have nowadays a keen interest in their customers’ bank
and mode of bill payment selection criteria, and in factors underlying this decision making.

.
 OBJECTIVES

• To find out the factors which affect the payment decision of customer.

• To find out customer preferences towards e-payment method.

• To compare the preferences of Doctors and Professors towards e-payment.

CHAPTER II
RESEARCH
METHODOLOGY
 SAMPLE DESIGN

A sample design is a definite plan for obtaining a sample from a given population.

• Type of Universe: Finite

• Sampling Areas Doctors and Professors of Indore City

• Size of Sample : 64

• 25 male Doctors and 7 female Doctors.

• 16 male professors and 16 female professors.

 RESEARCH DESIGN

A research design is a arrangement of conditions for collection and analysis of data in a

manner that aims to combine relevance to the research purpose with economy in procedure.

In this research the data is gathered from Doctors and Professors of Indore city. Various

Hospitals, Clinics and Institutes were identified for data collection. These respondents were

asked to fill the questionnaire which was about their preferences towards the selection of

payment method. The data was collected from 32 doctors (25 male and 7 female) and 32

Professors ( 16 male and 16 female).

The collected data was then tabulated for various factors. The data was analyzed by Factor

analysis using SPSS software. Also z-test is applied on the data to test the hypothesis.
 TOOLS FOR DATA COLLECTION

Primary Data Collection:

During the course of exploratory research the primary data was collected through self
designed questionnaire.
A close-ended questionnaire was designed with 21 variables affecting the selection of e-
payment.
Questionnaire was filled by 64 respondents (32 Doctors and 32 Professors).

Secondary Data Collection:

Tools used for collection of Secondary Data were books, research papers, internet etc.
The secondary data is used to understand the history and traditional view of customer towards
various payment methods. What difficulties customer had to face in the old time in the
absence of e-payment methods? What are the current trends in e-payment methods. What are
the various issues related to e-payment selection.
 TOOL FOR DATA ANALYSIS

NUMBER OF RESPONDENT: Total number of applicants are 64 , in which 32 were

doctors and rest were professors of Indore City.

TEST USED: - Z test

Hypothesis:
H0Factor affecting the selection of e-payment amongst Doctor & Professors are same.
H1Factor affecting the selection of e-payment amongst Doctor & Professors are different.

A) We have taken 32 doctors (N1) whose response to the questionnaire is:-

1) Mean X= x1+x2+x3…………….x32
No. of respondent-1

=1326/31

=41.437 = 42

2) (x-X)2={ (x1-X)+(x2-X)+…………(x32-X)}

3) Deviation (α)= ∑(x-X)2

N1-1

= 1452/31

= 6.843

B) We have taken 32 Professors (N2) whose responses are:-

1) Mean Y= y1+y2+y3…………….y32
no. of respondent-1
 =1363/31

=42.593 = 43

2) (y-Y)2={ (y1-Y)+(y2-Y)+…………(y32-Y)}

3) Deviation (α) = ∑(y-Y)2

N2-1

= 1915/31

= 7.859

Now by applying Z-Test :

Z= X-Y

αx2/N1+ αy2/N2

= 42-43

46.82/32+61.76/32

= -1

108.58/32

= -1

3.393

= 0.294

Null hypothesis is accepted

.

CHAPTER III
RESULT AND
DISCUSSION
s
 RESULTS

1. There is no significance difference between Doctors and Professors e-payment

practices.

2. The research has resulted in 8 factors. Each factor has different variable load and
according that has the priority of selection of e- payment methods.
 FACTOR ANALYSIS

a
Rotated Component Matrix

Component
1 2 3 4 5 6 7 8
VAR00006 .768 2.812E-02 .177 .248 -7.87E-02 8.779E-02 -.220 -4.87E-02
VAR00005 .723 .242 -9.23E-04 9.742E-02 -2.75E-02 -.339 -7.15E-02 .344
VAR00001 .704 -.105 -1.26E-02 -.242 -5.49E-02 .171 .324 6.116E-02
VAR00016 -1.21E-02 .791 -1.86E-03 2.133E-02 -3.24E-02 6.210E-02 .109 -8.97E-02
VAR00013 1.643E-02 .780 1.298E-02 1.784E-02 -.203 .173 -2.62E-02 4.890E-02
VAR00015 2.610E-02 .595 .308 -.171 .241 1.439E-02 8.260E-02 9.914E-02
VAR00018 -.161 .139 .756 -2.95E-02 -.153 .134 .169 .132
VAR00007 .372 -5.36E-02 .630 .379 5.580E-02 -3.77E-02 -.115 -4.93E-02
VAR00019 .234 .334 .607 1.371E-02 .167 -8.42E-02 .330 -.201
VAR00004 .372 -4.73E-02 .527 .123 -.234 -1.30E-02 -.234 .305
VAR00017 .133 .368 -.428 .197 .354 -.221 .257 -.299
VAR00008 -.134 -1.85E-02 3.443E-02 .814 .176 -.102 7.523E-02 .170
VAR00009 .409 -3.84E-02 .111 .763 -.216 2.802E-02 6.523E-02 -8.03E-02
VAR00014 -9.77E-02 2.453E-02 -3.60E-03 8.801E-03 .859 9.235E-03 -9.99E-03 -.142
VAR00011 4.624E-03 -.182 -.152 1.755E-02 .675 .290 .225 .213
VAR00003 .169 1.145E-03 .159 -.316 .117 .755 5.139E-02 -.111
VAR00002 -.135 .300 -8.95E-02 .195 .126 .744 -6.61E-02 .128
VAR00020 -2.09E-02 6.409E-02 3.558E-02 .125 .192 -6.60E-02 .806 -3.23E-03
VAR00012 1.319E-02 .256 .160 -6.31E-02 -.217 .481 .606 .152
VAR00010 .201 -2.33E-02 .117 8.613E-02 4.022E-02 2.053E-02 .152 .837
VAR00021 .466 -5.72E-02 2.773E-02 -2.17E-02 .153 -4.24E-02 .278 -.507
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 14 iterations.

We got here the 8 factors from 21 variables.

Factor-1 Analysis Table

Variables Variable Name Variable Load

6 Fixed cost .768
5 Operating cost .732
1 Security .704
Total 2.195

Factor-2 Analysis Table

Variables Variables Name Variable Load

16 Interpretability/Multipurpose .791
13 Amount of Purchase .780
15 Mobility .595
Total 2.166

Factor-3 Analysis Table

Variable Variable Name Variable Load

18 Status Symbol .756
7 Convertibility to .630
multicurrency
19 Anonymity .607
4 Initial cost .524
Total 2.517
Factor-4 Analysis table

Variable Variable Name Variable Load

17 24x7 .197
8 Acceptability(National) .814
9 World wide .763
acceptability
Total 1.774

Factor-5 Analysis Table

Variable Variable Name Variable Load

14 Ease to use .859
11 Trust .675
Total 1.534

Factor-6 Analysis Table

Variable Variable Name Variable Load

3 Flexibility .755
2 Process speed .744
Total 1.499
Factor-7 Analysis Table

Variable Variable Name Variable Load

20 Protection against fraud .806
12 Promotional offer .606
Total 1.412

Factor-8 Analysis Table

Variable Variable Name Variable Load

10 Financial risk .837

Total .837

Total variable load =13.934

CHAPTER IV
CONCLUSION
 CONCLUSION

Electronic payment is very convenient for the consumer. Electronic payments can benefit
your business by extending your customer base; boosting cash flow; reducing costs;
enhancing customer service and improving your competitive advantage.

Privacy concerns aside, some people simply dislike making electronic payments. They find
the setup too time-consuming and don't want more logons and passwords to remember.
Others simply prefer the familiarity of writing checks and dropping envelopes in the mail.
Regardless of these concerns, electronic payment will likely continue to rise in popularity.

Factor analysis resulted that the fixed cost, operating cost, and the security are the variable
which affect the selection of e-payment methods.
Aware people still not practicing the e-payment methods because of some security issues.
 SUGGESTIONS

• Better security equipments should be used to deal with threats related to e-payments.
• There should be more acceptance for various electronic cards in the business.
• Customers should be made aware of various new methods and technologies of e-
payments.
 SCOPE FOR FUTURE WORK

With the development of technology various new development are being done in the area
of electronic payments. Every technology has its own pros and cons, so as with the
electronic payment also has.
With reference to this research work, further work can done on find the preferences of
various communities of the society e.g. business class people and service class people, or
we can find out the acceptance of e-payment between various age-group people.
As the various e-payment methods increase the profitability of the business, so for most of
the business should be interested in e-payments but the fore most concern is the customer
and his preference in selection of e-payments. So there is a vast scope for future waork.
REFERENCES
WEBLIOGRAPHY-

http://www.docstoc.com/docs/17207542/Consumer-Payment-Preferences

http://www.benchmarkinternational.com/Articles/Trends_in_consumer_payment_preferences
.pdf

http://www.firstdata.com/enews/CPPBrief_InStore.pdf
http://www.aba.com/Press+Room/PR_ConsumerBanking_101501DoveStudy.htm

http://www.electronic-payments.co.uk/benefits_index.jsp

http://www.ignou.ac.in/virtualcampus/adit/course/cst304/ecom2.htm
http://communication.howstuffworks.com/electronic-payment1.htm

BIBILOGRAPHY-

1. C. R. KOTHARI