Impact of Customers’ Trust in E-Payment Channels on Their

Purchase Intentions: A Case Study on STC

Dr. Mahmoud Abdel Hamid Saleh, King Saud University (KSU), Riyadh, Kingdom of Saudi Arabia

ABSTRACT

This study is aimed at exploring the impact of customers’ trust in electronic payment channels offered by
the Saudi Telecom Company (STC) on their purchase intentions of the services the company provides. Furthermore,
the study measured the impact of demographics (gender, age and nationality) on both customers’ trust in the
company’s e-payment channels and their purchase intentions of its services. Findings of the study revealed a
positive association of customers’ trust in e-payment channels with their purchase intentions of the services the
company provides. The study also concluded significant differences in customers’ trust in STC’s e-payment
channels, based on gender and age, and non-significant differences based on nationality. Additionally, there were
significant differences in consumers’ purchase intentions of the company services based on gender and age, and
non-significant differences based on nationality. Accordingly, the study recommended that the company develop its
e-payment system in order to meet the needs and desires of its customers, as security and privacy are important
factors that customers consider when using e-payment channels at the time of purchase. The study also
recommended that the company consider the impact of demographics on customers’ trust in e-payment channels and
their purchase intentions when planning for marketing strategies.

Keywords: E-payment, Telecommunication, Trust, purchase intentions, E-commerce, Demographics, STC.

1. INTRODUCTION

Electronic commerce has become an important growing channel in marketing exchange processes. It
facilitates the customer’s ability to get the products at any time and in any place, increases the company's revenues,
and reduces the costs of providing products and getting them, thus increasing the level of customer satisfaction. In
light of the massive developments in communications, information technology and e-commerce transactions,
electronic payment has become an important issue that raises concerns to customers who would like to buy online.
Several studies have addressed this issue, particularly in terms of customers’ trust when using electronic payment
channels offered by the companies for products they provide. Few others addressed the impact of trust on the
intentions of customers’ purchase. The overall trend has been that the customers’ trust in electronic payment
channels is an important factor in the continuity of future customers’ purchase intentions for goods and services in
all e-commerce transactions.

Telecommunication companies are service companies that heavily use electronic payment channels at the
global level, including STC in Saudi Arabia. Therefore, the researcher has conducted this study basically to measure
the trust of customers in STC’s channels of electronic payment, and to explore its impact on their purchase
intentions of the provided services. This is especially important in light of a business environment characterized by a
high degree of competitiveness with two other local companies which provide telecommunication services in the
Saudi market. Those companies are Zain and Mobily. All three companies provide some form of e-payment for
telecommunication services.

Intrusion by hackers and unsafe websites on the Internet increase customers’ worries of using e-payment
for their online purchases at the global level. These worries reduce customers’ propensity of using electronic
commerce in purchasing goods and services that satisfy their needs and desires. Hence, more work is needed in
order to achieve adequate trust in electronic channels of payment; assuring customers’ money and personal data
protection. Accordingly, this research has been conducted for many reasons: first, measuring to which extent the
STC customers trust in electronic payment channels offered by the company for the services it provides; second,
ranking customers’ preferences of the offered STC’s e-payment channels; third, identifying the impact of customers’
trust in STC’s e-payment channels on their purchase intentions of its services; and finally, investigating the
differences in both customers’ trust in the company’s e-payment channels and their purchase intentions of its
services based on demographics of the Saudi market customers in terms of gender, age and nationality.

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 2. CONCEPTUAL FRAMEWORK AND LITERATURE REVIEW
2.1 Electronic payment channels
Electronic payment (e-payment) is defined as "the transfer of an electronic value of payment from a payer
to a payee through an e-payment mechanism" (Kim et al., 2010). It is also described as a means of settling financial
transactions electronically, using information and communications technologies in implementing purchase
transactions (Raja & Velmurgan, 2008). There is no doubt that the success, sustainability and growth of e-commerce
depend on the success achieved by instruments and channels of electronic payment; keeping up with the needs and
circumstances of customers. Electronic payment instruments can be classified into three categories: cards, electronic
checks and electronic money. First, cards (plastic money), such as credit cards, debit cards, pre-paid cards and
stored-value cards are instruments that enable cardholders to buy products they want without the need for cash
(Borestam and Schmiedel, 2011). Second, electronic check (e-check or net check or digital check) is a form of e-
payment designed to make it possible for a payer in a remote site to pay for some products through electronic
communication networks (Chaum et al., 1990; Chaum et al., 1989). Because the check is in an electronic format, it
can be processed in fewer steps and has more security features than a standard paper check. Security features -
provided by electronic checks - include authentication, public key cryptography, digital signatures and encryption,
among others (www.investopedia.com). Third, electronic money (e-money or digital money) is defined as
“monetary value as represented by a claim on the issuer which is: stored on an electronic device, issued on receipt of
funds of an amount not less in value than the monetary value issued, accepted as means of payment by undertakings
other than the issuer” (FSA handbook, 2011).

In addition to the above mentioned e-payment instruments, Integrating computer systems and systems of
modern communications has led to a multiplicity of e-payment channels to meet the purposes of different customers.
The most common of these channels are:

1. The Internet and other telecommunication networks (WEB): Consumers use this channel to pay the price of
their online purchase via many payment instruments like credit cards, electronic checks and electronic
money. Because of insecurity and lack of privacy of the Web as a channel of payment, some protocols have
been established to secure sending data over the Internet, such as: Secure Socket Layer (SSL), Secure
Electronic Transactions (SET) and Transport Layer Security (TLS) (Horms, 2005; Đurić et al., 2007; Kim et
al., 2010).
2. Automated Teller Machines (ATM): This channel is an integrated banking information system used for bill
payment and many other financial services such as: cash withdrawal and deposits, statement printing, making
inquiry, adding value to payment cards, and money transfer (Wu & Wang, 2007; Tong, 2009; Jacob et al.,
2009).
3. Point of Sale (POS): It is a payment channel that allows the buyer to use some instruments like credit cards
and debit cards to pay for his/her purchase at walk-in service centers (POS offline). When using cards in
payment, the cardholder should be present to enter his/her own PIN number into the POS terminal that reads
the card electronically (Denison et al., 2007). This channel is also used online (POS online) to encourage
customers to purchase. It speeds up and reduces errors in the sales process (http://epos.expertmarket.co.uk/
electronic-point-of-sale-advantages).
4. Interactive Voice Response (IVR): In this channel, customers use touch-tone telephones in payment for
purchasing bills, using cards like credit or debit cards (Denison et al., 2007).
5. Mobile and smart devices: Mobile and smart devices payment is a transfer of money in return for goods or
services using mobiles and smart devices (eg. ipad, iphone and blackberry) in executing and confirming the
payment (Smart Card Alliance, 2011). Mobile and smart devices are used in payment transactions through
some channels, such as:

Short Messages Services (SMS): To use this channel for payment, the customer should have an account with a
mobile payment service provider, a link to a bank account or a credit, debit or pre-paid card. When making a
payment, the customer sends an SMS to the service provider, specifying the amount to be paid and the payee’s
phone number. The provider then sends an SMS back to the customer confirming the transaction and requesting the
customer to provide a Personal Identification Number (PIN) to authenticate the payment. The provider then
transfers the money to the payee’s account (OECD, 2012).
Wireless Application Protocol (WAP): Under this channel, customers access a web merchant’s site using the mobile
device’s browser and make purchase in the same way as a traditional online purchase (OECD, 2012).
Near Field Communication devices (NFC): Smart devices like ipad, iphone and blackbery that use radio-frequency
standard and proximity-based technology enable communication between near electronic devices, Bluetooth or any
other infrared technologies for data transfer (OECD, 2012). Under this channel, the customer uses a smart device to

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 pay for goods or services at a physical Point of Sale (POS) or with a mobile POS device. Proximity mobile
payments can be used at both attended POS locations, such as stores, and unattended locations, such as vending
machines. (Smart Card Alliance, 2011).

Accordingly, we should differentiate between e-payment instruments like cards, electronic money and
electronic checks as tools of e-payment; and the Web, POS and ATM as channels of payment. For example, we use
the credit card instrument to pay through the web channel; considering that we can use one instrument in different
channels. The credit card instrument can be used for payment in the Web, POS and ATM, whereas electronic money
and electronic checks are used on the internet and through touch-tone telephones. However, the current study
focuses on evaluating the customers’ trust in e-payment channels (not instruments) and its impact on their purchase
intentions. However, the payment channels offered by Saudi Telecom Company (STC) are: POS, SMS, WEB,
ATM, IVR and smart devices (An interview with e-payment project manager at STC).

2.2 Customer trust in e-payment

Studies have shown that trust is essential to accept electronic payment (Kannen et al., 2003; Singh, 1997;
Abrazhevich, 2004; Kurnia et al., 2007). Customers feel wary of paying over open networks. They see electronic
payment as being prone to theft, fraud and invasion of privacy (Singh and Slegers, 1997). In essence, trust means
dependability. If you trust in someone, it means he/she is dependable (Morgan and Hunt, 1994). Some scholars see
that trust is a psychological condition (Rousseau et al., 1998). Johnson and Grayson (2005) disclosed that trust has
two dimensions, cognitive and affective. The cognitive dimension expresses the logical causes which lead someone
to trust in something. It exists when customers are confident and willing to rely on a service provider’s competence
and reliability (Moorman et al., 1992; Rempel et al., 1985). The affective dimension expresses the confidence one
places in a partner on the basis of feelings generated by the level of care and concern the partner demonstrates
(Johnson-George and Swap, 1982; Rempel et al., 1985). Combining the cognitive and affective dimensions of trust,
Ennew and Sekhon (2007) have defined trust as “individual’s willingness to accept vulnerability on the grounds of
positive expectations about the intentions or behavior of another in a situation characterized by interdependence and
risk”. Accordingly, customer’s trust in electronic payment channels can be described as an individual psychological
condition caused by his/her own mental and emotional criteria assessments of these channels. The outcome may be
positive or negative, hence, trust or mistrust in e-payment channels. If trust is there, adoption of an e-payment
system is credible (Kniberg, 2002).

Building customer trust in electronic payment channels is one of the foundations upon which the success of
e-commerce depends (MaccIns, 2005; Halaweh and Fidler, 2008; Abrazhevich, 2004; Hoffman et al., 1999; Lee and
Turban, 2001; Corbitta et al., 2003). E-payment integrates payment into the e-purchasing process (Kalakota &
Whinston, 1997). Chou et al., (2004) concluded three factors govern the extent to which customers use electronic
payment channels in their online purchase: technological (including security and reliability), economic (including
cost), and social (including privacy). Along the same line, Dahlberg et al. (2003) concluded that customers’
perceived security and perceived trustworthiness significantly affected customers' perceptions of mobile payment
solutions. Neuman and Medvinsky (1996) assured that the reliability of e-payment operation system should be
available online 24 hours a day without breaking down at any time. The existence of risks in e-payment system leads
a large number of marketing practitioners to see that achieving further progress in e-commerce transactions depends
upon solving problems concerning electronic payment channels; security and trust in particular (Buck, 1997;
Panurach, 1996; Jarvenapaa et al., 2000; Gefen, 2000).

Detailing the risks associated with electronic payment transactions, a number of studies disclosed some
financial, informational and legal risks. Ho and Ng, (1994) studied some risks that customers face when making a
purchase online. Those risks are: physical risk, performance risk, psychological risk, financial risk and time-loss
risk; following, in this regard, an old study by Jacoby and Kaplan (1972) that determined the customers’ perceived
risks accompanying purchase in general. Lim et al. (2007) have summarized some shortcomings which affect the
customers’ acceptance of e-payment channels. Those shortcomings are: lack of cooperation (alliances) with well-
established identities such as banks, Internet stores, and portals; lack of security; lack of trust; complexity; and lack
of clear direction of e-payment system. Because of money and information are exchanged electronically in online
purchases, and there is a possibility of penetrating personal data or credit cards, security is of the most important
factors related to customers’ trust in electronic payment (Leong et al., 2003; Ba et al., 1999; Mann, 2003; Schwartz,
2001). Dewan and Chen (2005) showed that 52.7% of their study sample did not feel secure in mobile-phone
channels of payment, and 48.2% believed that mobile payment may jeopardize their privacy.

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 Along those lines, Abbas and Alshawaf (2003) concluded that the low customer propensity to use the
Internet and e-payment systems can be attributed to the customers’ low trust in the Internet itself as a means of
purchase and in e-payment as an insecure system of payment. Customers are not accepting of the use of electronic
cash due to a number of problems pertaining to security, speed, and complexity of use (Szmigin & Bourne, 1999)
and lack of reliability (Neuman and Medvisky, 1996). Overall, Ozkan (2010) mentioned six critical factors relating
to the implementation of e-payment channels and their customer adoption: security, trust, perceived advantage, web
assurance seals, perceived risk and usability. He concluded that three essential factors are necessary to expedite the
customers’ adoption of e-payment system and those factors are: security, perceived advantage, and web assurance
seals. The other factors should be sufficiently provided. In this vein, Halaweh and Fidler (2008) mentioned some
obstacles which negatively impact customer adoption of electronic payment systems including: cost, insecurity and
difficulty of use. Further studies concluded five obstacles stand in the way of using the mobile phone as a means of
payment: cost of use, complexity of payment procedures, traders’ lack of providing this technology in dealings with
customers, insecurity, and lack of trust (Mallat, 2007; Lim et al., 2007).

2.3 Purchase intentions

Purchase intention toward their brands is a critical objective that marketing practitioners are working
diligently to achieve. On the one hand, marketers use purchase intentions data as an input indicator for sales or
market share forecasts and for making strategic decisions concerning both new and existing products and the
marketing programs that support them (Barber et al., 2012). On the other hand, academic researchers often measure
and use purchase intention as a choice (Hosein, 2012), especially in a market that is characterized by fierce
competition among various brands. Accordingly, academic consumer behavior researchers have studied purchase
intention (choice) as a dependent variable affected by other independent variables. Harris and Goode (2010) studied
the effect of trust in the website on the consumers’ purchase intention. Heijen et al. (2003) studied the effect of trust
in online store, perceived risk, perceived ease of use and perceived usefulness on consumers’ attitudes towards
online purchase, which in turn affect online purchase intention. In order to measure purchase intentions, studies
concentrated on measuring the consumers’ willingness to: repeat the purchase (Heijden et al.; 2003; Harris and
Goode, 2010; Hong and Chu, 2011), buy more quantity of goods and services; reflecting size of purchase (Harris
and Goode, 2010; Ho and Ng, 1994), increase the value of purchase (Wu and Wang, 2011; Harris and Goode, 2010;
Limbu et al., 2011), recommend other people to buy specific brands or from specific places (Vila and Kuster, 2011;
Limbu et al., 2011) and buy a specific product or from a specific buyer in future, expressing consumer’s loyalty
(Gefen, 2000; Kim, et al., 2003; Harris and Goode, 2010; Chang and Chen, 2008; Hong and Chu, 2011; Belanche et
al., 2012; Limbu et al., 2012; Park et al., 2012).

2.4 Customer trust in e-payment and purchase intentions

Much of the previous research has studied the factors that affect online purchase intentions without
exploring the effect of e-payment trust (Jarvenepaa, et al., 2000; Gefen, 2000; Yoon, 2002; Yousafzai et al., 2003;
Heijden et al., 2003; Hong and Chu, 2011). Few other studies have investigated the impact of customers’ trust in
electronic payment systems on purchase intentions (intentions to buy using e-payment systems). Ozkan et al. (2009)
found some variables related to trust are reliable predictors of intention to purchase. they include: perceived risk,
perceived security, perceived trust, using web seals, perceive advantage, and usability. However, the researcher has
noticed an overlap between e-commerce causes and e-payment causes that hinder purchase intentions, simply
because, from the customer’s standpoint, the causes of e-payment obstacles are included in e-commerce problems.
Many of these studies have investigated the effect of trust on the factors that influence the purchase intentions, but
not the purchase intentions directly. For instance, Featherman (2001) and Pavlou (2001) studied the effect of trust on
perceived risk which in turn is reversely associated with the intention to purchase products on the Internet. Focusing
on e-payment, Abrazhevich (2003) concluded that conventional e-payment systems, like credit cards, suffer from
some problems relating to costs, security and trust. Solving these problems is important for gaining customer
acceptance of e-payment systems. Customers will not use e-commerce if these problems are not resolved. The
perception of customers to information security and trust in e-payment channels influenced their intentions to make
purchases via electronic channels (MacInns, 2005). Therefore, the infrastructure of e-payment; security and trust in
particular, affect the attitudes of customers toward e-payment and the likelihood of using those payment systems as
a common method of financial transaction (Tsiakis and Sthephanides, 2005). For this, web-retailers should
acknowledge that consumers’ trust and perceived risk in e-payment systems may result in a barrier to online
transactions (Kesharwani and Besht, 2012).

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 On the one hand, the above mentioned studies have focused on the problems that customers encounter
when making online purchases, such as lack of: privacy, security and accuracy. On the other hand, there are some
factors which may encourage customers to use the Internet in purchase, such as: ease of use, saving time and
usefulness. The complexity of online payment procedures is an obstacle that limits customers’ trust in e-payment
(Mallat, 2007). Davis (1989) assured the importance of customers’ perceived usefulness, perceived ease of use and
trust in e-payment for the transactions of e-commerce. He also concluded that perceived usefulness is an important
determinant of the ease of use. Therefore, ease of use and usefulness are important factors in customers’ online
purchase decisions. These factors assure making purchase transactions in short time and low cost (Leong et al.,
2003). In this context, Ramayah et al., (2005) concluded a significant positive impact for the Internet perceived ease
of use and perceived usefulness on the intentions of using e-payment channels. However, the perceived usefulness
that customers get from their dealings in e-commerce encourages them to accept and be adapted to e-payment
(Davis, 1989). In this regard, reducing time, effort and cost are important factors (Leong et al., 2003).

2.5 Demographics effect

Regarding the effects of demographics on both e-payment trust and purchase intentions, the researcher did
not find many studies exploring the differences in these variables based on demographics. Rouibah, (2010) studied
some factors which affected the customers’ intentions to use the mobile phone in payment. He revealed that
intentions to use mobile payment are perceived useful and enjoyable for male consumers, but only enjoyable (and
not useful) for female consumers, whereas perceived trust affects intentions to use mobile payment only for female
consumers. In contrast, other studies found males more likely to use electronic banking and e-payments than females
(Ozkan et al., 2009; Katz and Aspden, 1997; Karjaluoto, 2002; Flavia´n et al., 2006). Looking for the most
important factors that affect the intentions to adopt mobile banking services, Riquelme and Rios, (2010) found that
ease of use has a stronger influence on females than males, whereas relative advantage has a stronger effect on
perception of usefulness on males than females. Social norms (or the importance of other people in the purchase
decision) also influence adoption more strongly among female customers than male male customers. In mobile
banking, Amin et al. (2006) demonstrated that females are more concerned by security issues than males, whereas
males pay more attention to effectiveness.
Considering age, Ozkan et al. (2009) revealed that the majority of e-payment users were undergraduates
and postgraduates belonging to age groups of 19-23 and 24-28. Some other studies demonstrated that older
consumers are usually late to adopt new e-payment technology (Katz and Aspden, 1997; Karjaluoto, 2002).
According to a report of the Internet and Mobile Association of India (IAMAI), most of the online financial
transactions are done by young users who are heavy users of the internet (Kesharwani and Bisht, 2012). As a whole,
consumers who use new technology or computers are more likely to use electronic forms of payment (Hayashi and
Klee, 2003) and more likely to deal with internet banking as a channel of e-payment (Singh and Morely, 2009;
Barnett, 1998; Karjaluoto, 2002; Gan et al., 2006). Contrary to these studies, Patsiotis et al. (2012) found that the
least likely to use internet banking of the unconcerned majority of his study sample are the youngest with the lowest
income, which is parallel with the results of Gan et al. (2006) who found that the probability that the youngest
customers will use electronic banking is slightly lower than the middle age customers. This result was supported by
Polasik and Wisniewski (2009) who found that customers under the age of 18 were less likely to use virtual banking.
They attributed this result to the difficulties with opening an account for adolescents.
Some other variables such as: Income, occupation, education and marital status are likely to have an effect
on consumers’ e-payment adoption. A study revealed a significant association of high household income and high
levels of education with credit card ownership (Kalckreuth, 2009). Chan (1997) demonstrated income as the most
important variable that influenced consumers to use credit cards. Adoption to electronic banking reflects, in part,
consumers’ trust in e-payment; simply because they will use electronic banking for payment. Consequently, Al-
Ashban and Burney (2001), Stavins (2001) and Karjaluoto (2002) found that income had a positive influence on the
adoption of electronic banking. Other studies found a positive relationship between consumers in white-collar
occupations and the use of electronic banking (Gan et al., 2006; Stavins, 2001). Another studies have shown that as
consumers increased their educational qualification level, their adoption of electronic banking would increase (Al-
Ashban and Burney, 2001; Stavins, 2001). Finally, Stavins (2001) identified that married consumers were more
likely to use electronic banking than who are not married.

3. PROPOSED RESEARCH MODEL AND HYPOTHESES

Considering the above mentioned literature review, the researcher concluded three important results: First,
previous studies have focused on issues related to e-payment in e-commerce transactions. The most significant of

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those issues are security, privacy, accuracy, perceived risk and reliability. This is in addition to customer’s perceived
advantage such as ease of use and usefulness as important factors that encourage customers to use e-payment
channels. However, the researcher identified all these factors to reflect consumers’ trust in e-payment channels.
Second, few studies tested the impact of trust in e-payment channels on purchase intentions and found a positive
relationship between the two variables, which is a main relationship to be tested in the current study. Third, most of
the previous studies did not study the effect of demographics on each of the customers' trust in e-payment channels
or their purchase intentions, which is also an objective of the current study, concentrating on gender and age as
common examined demographics, in addition to nationality, which is a prominent demographic characteristic of the
Saudi market in Riyadh; the area of the field study, considering the role of selected demographics in market
segmentation, targeting and planning for marketing strategies.

Accordingly, the current study variables and relationships can be depicted in a proposed model described in
Figure 1. The relationships of this model will be tested as a basis of the study analysis, findings, discussions and
recommendations.

Customers’ trust in Purchase intentions

- Purchase repetition
e-payment channels - Quantity increment
- Ease of use - Value increment
- usefulness - Recommendation
- Loyalty
- Perceived risks
- Accuracy
- privacy
- reliability
- security Demographics
(Gender, Age, Nationality)

Figure1. Proposed research model

Based on the proposed model, the study hypotheses were constructed as follows:

H1. Customers’ trust in STC’s e-payment channels has a significant positive association with the
customers’ purchase intentions of the services the company provides.
H2. Customers’ trust in STC’s e-payment channels differs based on:
a. gender b. age c. nationality
H3. Customers’ purchase intentions of STC services differ based on:
a. gender b. age c. nationality

4. METHODOLOGY

4.1 Sample and data collection

Study population is the STC customers in Riyadh, Kingdom of Saudi Arabia. A convenience sample of
customers has been studied because of the difficulty to obtain a population frame. Depending on e-survey, a total of
368 filled surveys were received, of which 48 were invalid and excluded from the analysis.
Table I. Characteristics of study sample
Demographics frequencies %
Gender Male 260 81
Female 60 19
Total 320 100
Age Less than 18 10 3
18-30 208 65
31-45 98 31
More than 45 4 1
Total 320 100
Nationality Saudi 71 22
Non-Saudi 249 78
Total 320 100

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 Therefore, a total of 320 valid questionnaires were eventually entered into the analysis as shown in Table 1,
representing a response rate of 87%. Table I. also shows frequencies and percentages of study sample
characteristics, categorized by demographics: gender, age, and nationality. Male customers represent 81% of the
study sample, whereas female customers represent only 19%. Customers whose ages are from 18 to 30 years old
represent 65% of the study sample, whose ages are from 31 to 45 years old represent 31%, meaning that customers
whose ages from 18 to 45 years old represent 96% of the sample. With regard to nationality, Non-Saudi customers
represent 78%, whereas Saudi customers represent only 22%.

4.2 Measures
The variable of Customers’ trust in e-payment channels was measured by a scale of (7 items) based on the
scales used by Ozkan (2010); Abrazhcvich (2004); Chou et al., (2004); Neuman and Medvinsky (1995); Buck, 1997;
Mallat, 2007; Lim et al., 2007; Panurach, 1996; Jarvenapaa et al., 2000; Gefen, 2000; Ho and Ng, (1994); and
Halaweh and Fidler (2008). Purchase intentions variable (5 items) was measured by the scales used by Wu and
Wang (2011); Hong and Chu (2011); Heijden et al., (2003); Harris and Goode, (2010); Ho and Ng, (1994); Wu and
Wang, (2011); Limbu et al., (2011); Gefen, (2000); Kim, et al., (2003); Vila and Kuster, (2011); Chang and Chen,
(2008); Belanche et al., (2012) and Park et al., (2012), with paraphrasing the items to aid the respondents in
answering the questions. Accordingly, the survey contained 12 Likert-type items, each item was measured by five-
point scale ranging from “1= strongly disagree” to “5= strongly agree”. Another scale was used to measure the
customers’ assessment of each of the six e-payment channels offered by STC, with a five-point Likert-type scale
ranging from “1= strongly unimportant” to “5= strongly important”.

4.3 Data analysis

Data analysis was performed using SPSS 16. First, Factor analysis was used to test validity, identifying the
suitable variables’ related items for each variable scale. Second, Internal consistency method (Cronbach's Alpha
coefficient) was used to test the scales reliability. Third, Multiple Regression has been used to test H1, Independent
Samples t-Test to test H2a, H2c, H3a and H3c, while One-Way ANOVA has been used to test H2b and H3b. That’s
in addition to some descriptive statistical methods such as: percentages, Means, Standard Deviations and
Coefficients of variance.

5. FINDINGS
5.1 Validity and reliability testing
Using principal extraction and Varimax rotation methods, validity testing findings for the twelve items of
the data collection instrument demonstrated high loading coefficients as shown in Table II. The loading coefficient
for each item exceeded a factor loading accepted benchmark of 0.50 (Churchill, 1979). Hence, all the items of the
instrument have been included in statistical reliability, descriptive and analytical statistics of the study hypotheses
testing. Reliability testing of the study measuring variables as shown in table II demonstrated acceptable levels of
reliability. Alpha Cronbach’s Coefficients have exceeded the minimum accepted benchmark value of 0.60
(Malhotra, 2007).

5.2. Descriptive analysis of study variables

Table II shows Means, Standard Deviations and Coefficients of Variance (C.V.) for all the studied items in
the used measuring instrument. The overall Mean of the customers’ trust in STC’s e-payment channels is 3.90,
which is higher than the Mean 3, representing 78% of the maximum value (5) on the scale that measures that
variable. The role of e-payment channels to save time and efforts (usefulness) had the largest Mean and lowest C.V.
among the six other items of e-payment trust, with a Mean of 4.59 and C.V. of 0.17, followed by easy usage of e-
payment channels with a Mean of 4.15 and C.V. of 0.20, then came the accuracy of e-payment channels, with a
Mean of 4.13 and C.V. of 0.21.

Table II also shows that the overall Mean of the customers’ purchase intentions of STC services is 3.46,
which is higher than 3, representing 69% of the maximum value (5) on the scale that measures that variable.
Wishing to repeat purchasing the services from the company (repetition) represents the largest item of purchase
intentions, with a Mean of 3.85 and C.V. of 0.37, followed by requesting more services (quantity increment), with a
Mean of 3.85 and C.V. of 0.56, then recommending relatives and friends to purchase the company services
(recommendation), with a Mean of 3.36 and C.V. of 0.46.

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 Table II. Factor loading and descriptive analysis
Cronbach
Measurement Items Factor loading alpha Mean S.D. C.V.
Trust in e-payment channels 0.71 3.90 0.579 0.15
Electronic payment channels offered by the company are easy to use (ease of use) 0.714 - 4.15 0.842 0.20
Electronic payment channels offered by the company save time and effort (usefulness) 0.578 - 4.59 0.805 0.17
Risks are surrounding the company's electronic payment process (R) (perceived risk) 0.543 - 3.33 0.952 0.28
electronic payment channels offered by the company are accurate (accuracy) 0.821 - 4.13 0.865 0.21
the company deals with my bank data with a great deal of privacy (privacy) 0.773 - 3.81 0.992 0.26
usually, electronic payment services offered by the company break down (R) (reliability) 0.533 - 3.45 1.246 0.36
Security level of electronic financial transactions with the company is high (security) 0.769 - 3.83 0.888 0.33
Purchase intentions 0.87 3.46 0.763 0.22
I wish to repeat purchasing services from the company (repetition) - 0.858 3.85 0.938 0.37
I expect to increase the value of my purchases from the company (value increment) - 0.825 3.35 0.978 0.49
I would like to request more services from the company (quantity increment) - 0.850 3.85 1.071 0.56
I recommend relatives and friends to purchase the company services (recommendation) - 0.735 3.36 1.171 0.46
I expect to switch to other company services (R) (loyalty) - 0.530 2.87 1.042 0.41
( R ): Reversed value for the item.

5.3. Ranking STC’s e-payment channels

Table III shows that the Internet is the STC’s widely used e-payment channel accepted by its customers
(rank No.1). The internet channel has the highest Mean (4.76) and the lowest Coefficient of Variance (0.16). ATM
Channel was ranked No.2, smart devices were No.3, SMS was No.4, IVR was No. 5 and POS was No.6. This
ranking demonstrates the important role of the Internet, ATM, and smart devices as the consumers’ most preferable
e-payment channels offered by STC versus the other e-payment channels: SMS, IVR and POS respectively.
Table III Ranking of STC’s e-payment channels
Strongly Strongly
e-payment channels important
important Neutral unimportant
unimportant Mean S.D. C.V. Rank
The Internet (WEB) 283 17 9 4 7 4.76 0.75 0.16 1
Automated Teller Machines (ATM) 207 64 27 12 10 4.39 1.00 0.23 2
Smart devices (e.g. iphone, ipad, & black berry) 213 47 32 12 16 4.34 1.11 0.26 3
Short Messages Service (SMS) 156 46 65 30 23 3.88 1.30 0.34 4
Interactive Voice Response (IVR) 52 77 112 45 34 3.21 1.19 0.37 5
Point of Sale (POS) 138 45 49 40 48 3.58 1.50 0.42 6

5.4. Testing of hypotheses

5.4.1. Testing of H1
Table IV demonstrates a support of the proposed relationship in H1. It specifies a positive association
between respondents’ trust in e-payment channels offered by STC and their purchase intentions of the services it
provides. R2 = 0.152 emerges that e-payment trust explains about 15% of the variance in purchase intentions, and R=
0.390 proves that customers’ trust in e-payment channels has a positive effect on their purchase intentions,
validating the finding of Ozkan et al. (2009) when concluding a positive association of perceived risk, perceived
security, perceived trust, using web seals, perceived advantage, and usability with purchase intention. As F (7,312) =
7.973 (P=0.000), then, the model has been emerged and H1 is upheld. Stepwise-multiple regression revealed that
only three items of e-payment trust variable explains 14% of the variation in purchase intentions. Accuracy, the most
important factor, accounted for 12% of the variance (R2=.120). The inclusion of security and privacy items into the
model resulted in an additional 2% of the variance being explained (R2 change=.011 for each). These results
evidenced that accuracy of e-payment transactions is the most critical predictor of STC consumers’ purchase
intentions, followed by security and privacy.
Table IV. H1 testing (Multiple Regression)
Regression R R2 df F P-value
e-payment trust 0.390 0.152 7,312 7.973 0.000**
Dependent variable: purchase intentions
** Marginally significant at the p ≤ 0.05 level.

5.4.2. Testing of H2
a. Testing of H2.a
Table V states a statistical difference in consumers’ trust in e-payment channels due to gender, as t-value=
3.5 (p = 0.001). The Mean of females (4.13) is higher than the Mean of males (3.85), indicating that females are
more trusting of STC’s e-payment channels than males. Thus, H2.a is upheld. Detailing the analysis on item level of
e-payment trust variable, significant differences in three of seven items have been found based on gender. In privacy

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item, the Mean is higher for females (4.68) than for males (3.61). In reliability factor, the Mean is higher for males
(3.55) than for females (3.33). In security item, the Mean is higher for females (4.30) than for males (3.30). These
results reflect that females are more concerned than males in privacy and security items, whereas males are more
concerned than females in reliability item. The other items of trust in e-payment channels (ease of use, usefulness,
perceived risk and accuracy) did not show significant differences between males and females.
Table V. H2.a testing (Independent Samples t-Test)
Gender Mean SD df t-value p-value
Male 3.85 0.57
318 3.500 0.001**
Female 4.13 0.55
Dependent variable measure: trust in e-payment channels
** Marginally significant at the p ≤ 0.05 level.

b. Testing of H2.b
Table VI states statistical differences in customers’ trust in STC e-payment channels due to age, as F
(3,316) = 4.585 (p = 0.004). This suggests that age is likely to have an impact on customers’ trust in e-payment
channels that the company provides. All age groups appeared to differ in terms of their trust in STC e-payment
channels. Thus, H2.b is upheld. Detailing the analysis on item level of e-payment trust variable, significant
differences in all items have been found based on age except for only one item, which is usefulness. To identify the
age group that is significantly different, the researcher has conducted the LSD post hoc comparisons as shown in
table VII. The table states that the differences between the Means are for the youngest age level, where the
differences always in favor of this level, meaning that the customers whose age is less than 18 years old are the most
trusted in e-payment channels offered by STC company, followed by age 18-30, then age 31-45. The customers
whose age group is 45+ are the least trusting of e-payment channels offered by the company.
Table VI. H2.b testing (One-way ANOVA)
Age Mean SD df F-value p-value
18- 4.42 0.00
18-30 3.88 0.55
3,316 4.585 0.004**
31-45 3.92 0.61
45+ 3.28 1.14
Dependent variable measure: trust in e-payment channels
** Marginally significant at the p ≤ 0.05 level.
Table VII. Pair’s comparisons of e-payment trust Mean scores of age groups using LSD Post Hoc comparison
Age levels Ages levels Mean differences p-value
18- 18-30 0.55 0.003**
31-45 0.50 0.008**
45+ 1.1 0.001**
18-30 18- - 0.55 0.003**
31-45 0.040 0.500
45+ 0.59 0.041**
31-45 18- - 0.50 0.008**
18-30 0.04 0.500
45+ 0.63 0.029**
45+ 18- - 1.1 0.001**
18-30 -0.59 0.041**
31-45 -0.63 0.029**
** Marginally significant at the p ≤ 0.05 level.

c. Testing of H2.c
Table VIII states no statistical differences in customers’ trust in STC’s e-payment channels due to
respondents’ nationalities, as t-value= 1.194 (p > 0.05). The overall trust Mean of Saudi customers is (3.90) and the
overall trust Mean of non-Saudi customers is (3.80). Thus, H2.c is not upheld. Detailing the analysis on item level of
e-payment trust variable, significant differences in five of the seven items have been found based on nationality. In
usefulness item, the Mean is higher for non-Saudis (4.91) than for Saudis (4.50). In perceived risk item, the Mean is
higher for Saudis (3.42) than for non-Saudis (3.02). In privacy item, the Mean is higher for Saudis (4.03) than for
non-Saudis (3.05). In reliability item, the Mean is higher for non-Saudis (4.70) than for Saudis (3.10). In security
item, the Mean is higher for Saudis (4.02) than for non-Saudis (3.14). These results reflect that Saudis are more
trusting of STC’s e-payment channels than non-Saudis regarding risks, privacy and security items, whereas non-
Saudis are more trusting than Saudis in usefulness and reliability items. The two other items of trust in e-payment
channels (ease of use and accuracy) did not show significant differences between Saudis and non-Saudis.

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 Table VIII. H2.c testing (Independent Samples t-Test)
Nationality Mean SD df t-value p-value
Saudi 3.90 0.32
318 1.194 0.234
Non-Saudi 3.80 0.63
Dependent variable measure: trust in e-payment channels

5.4.3. Testing of H3
a. Testing of H3.a
Table IX states a statistical differences in STC’s customers’ purchase intentions due to gender, as t-value=
3.195 (p = 0.002). The Mean of females (3.74) is higher than the Mean of males (3.39), indicating that females are
more likely to buy STC services than males. Thus, H3.a is upheld. Detailing the analysis on item level of purchase
intentions variable, significant differences in all items have been found based on gender except for loyalty item. In
purchase repetition item, the Mean is higher for females (4.25) than for males (3.76). In purchasing value increment
item, the Mean is higher for males (3.42) than for females (3.05). In purchasing quantity increment item, the Mean is
higher for females (4.47) than for males (3.72). In recommending others to buy the company services, the Mean is
higher for females (4.15) than for males (3.17). These differences reflect that females are more likely to buy the STC
services regarding repeating the purchase, increasing the purchasing quantity of services, and recommending others
to buy them, whereas males are more likely to increase the value of purchase than females.
Table IX. H3.a testing (Independent Samples t-Test)
Gender Mean SD df t-value p-value
Male 3.39 0.81
318 3.195 0.002**
Female 3.74 0.44
Dependent variable measure: purchase intentions
** Marginally significant at the p ≤ 0.05 level.

b. Testing of H3.b
Table X states non-statistical differences in Purchase intentions of STC communication services due to age,
as F-value= 1.917 (p > 0.05). This suggests that age is not likely to have an impact on purchase intentions of STC
services. All age groups appeared to be somehow similar in terms of their intentions to buy the STC services in the
future. Thus, H3.b is not upheld. Detailing the analysis on item level of purchase intentions variable, significant
differences have been found in two of the five items that measure that variable, they are purchase repetition (F
3,316= 5.436, P= 0.001) and recommending others to buy (F 3,316= 7.468, P=0.000). Significant differences in the
other three items have not been found: value increment (F 3,316= 0.657, P= 0.579), quantity increment (F 3,316=
1.370, P= 0.0.252) and loyalty (F 3,316= 0.235, P= 0.872).
Table X. H3.b testing (One-way ANOVA)
Age Mean SD df F-value p-value
18- 4.00 0.00
18-30 3.46 0.55
3,316 1.917 0.127
31-45 3.39 0.61
45+ 3.50 1.14
Dependent variable measure: purchase intentions

c. Testing of H3.c
Table XI states no statistical differences in consumers’ purchase intentions of STC services due to
respondents’ Nationalities, as the t-value = 1.152 (p > 0.05). The Mean of non-Saudi customers is (3.55) and the
Mean of Saudi customers is (3.43). Thus, H3.c is not upheld. Detailing the analysis on item level of consumers’
purchase intentions variable, significant differences have been found in two of five items based on nationality. In
value increment item, the Mean is higher for non-Saudis (3.89) than for Saudis (3.20). In recommending others to
buy, the Mean is higher for Saudis (3.45) than for non-Saudis (3.01). The other three items of purchase intentions
(purchase repetition, purchasing quantity increment and loyalty) did not show significant differences between Saudis
and non-Saudis.
Table XI. H3.c testing (Independent Samples t-Test)
Nationality Mean SD df t-value p-value
Saudi 3.43 0.84
318 1.152 0.250
Non-Saudi 3.55 0.38
Dependent variable measure: purchase intentions

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 6. DISCUSSION AND CONCLUSION

The study has found a high percentage of customers’ trust in the e-payment channels offered by STC
accounted for 78%. Of these channels, the Internet was the most widely accepted channel by customers, followed by
ATMs, and smart devices. The customers give e-payment channels an important role in saving time and effort,
supporting Ozkan et al. (2009) who concluded the role of e-payment in saving time and money. The study also
demonstrated a positive association of customers’ trust in STC’s e-payment channels with purchase intentions of the
services it provides. 15% of the total variance in purchase intentions can be explained by the change in customers'
trust in STC’s e-payment channels. This positive association of e-payment channels with purchase intentions
validates the findings by Ozkan et al. (2009); MacInns (2005); Ramayah et al. (2005); Tsiakis and Sthephanides
(2005) and Rouibah (2010). In this regard the study recommended that the STC give more attention to retaining and
developing its customer’s trust in e-payment channels. This can be done by: using NFC technology that offers safe,
simple and intuitive communications between electronic devices, putting a plan to counteract e-payment risks,
especially risks that are related to accuracy, security and privacy, cooperating with the financial and other related
identities in setting laws that protect the company and its customers’ e-transactions, especially e-payment, and
applying a positioning program that makes customers more trusting of the company’s e-payment system. In a
fiercely competitive environment among telecommunication companies in Saudi Arabia, trust in e-payment systems
is a highly ranked competitive advantage.

Analyzing the effect of gender on customers’ trust in STC’s e-payment channels and purchase intentions of
the services it provides, the study demonstrated that female customers have more trust in e-payment channels and
are more likely to buy the services than male customers, validating the findings of Rouibah (2010) who concluded
that perceived trust affects intentions to use mobile payment only for female consumers. Males may be more
conservative and cautious than females in spending and making purchase decisions as a whole. Special male-
oriented marketing programs may be useful in changing the cautious attitude towards risks pertaining to e-payment
systems. These programs should concentrate on new technologies or services that provide safer e-payment systems
from the customers’ standpoint. Web assurance seals can be used in this regard. They are services on the web in
which a third party, like a bank, certifies whether the vendor is trustworthy or not. A study proved that customers
feel less risk when using these seals (Ozkan et al., 2009). On item level of e-payment trust variable, significant
differences have been found between females and males. Females are more concerned than males about privacy and
security, whereas males are more concerned about reliability than females. This can be attributed to males’
conservation and their responsibilities on the family life and expenditure in Saudi society, which make them more
sensitive than females to security and privacy. Special promotional programs may be used to make males less
cautious when using e-payment systems. Regarding ease of use, usefulness, perceived risk and accuracy, significant
differences based on gender were not found. On item level of purchase intentions variable, significant differences
have been found in all items based on gender except for loyalty. Females are more likely to repeat the purchase,
increase the frequency or size of the services use, and recommend others to buy, whereas males are more likely to
increase the value of purchase than females. Emotional and communicative nature of females may be behind the
repetition of purchase and increasing the size of purchase. Furthermore, social lifestyle is a characteristic of the
Saudi society, especially among females. The social integration among females makes it normal and acceptable they
recommend the preferred products to each other. In this regard, social media networks like Facebook and Twitter
can play a vital role in promoting the company’s e-payment systems and products via fan pages as an important
online service for social communication.

Age is likely to have an impact on customers’ trust in e-payment channels. Young customers are more
trusting of e-payment channels, validating the findings of Ozkan et al. (2009), as well as Kesharwani and Bisht
(2012). Young customers are considered more interactive and open to the Internet and modern technologies used in
pursuit of information and communication. Thus, they are more adopted to these technologies. This notion coincides
with Hayashi and Klee (2003) who demonstrated that customers who use new technologies or computers are more
likely to use electronic forms of payment. Detailing the analysis on items level of the e-payment trust variable,
significant differences in all items have been found based on age except for usefulness. All age groups are aware of
the usefulness of e-payment systems, but a variation in usage was found. Young customers are more capable and
dare to use e-payment than older customers. Regarding purchase intentions, all age groups appeared to be somewhat
similar in terms of their intentions to purchase the STC services in future. This can be attributed to the real
importance of communication technology to all age groups regardless of payment systems. Detailing the analysis on
item level of purchase intentions variable, significant differences have been found in in two of the five items that

The Journal of American Academy of Business, Cambridge * Vol. 19 * Num. 1 * September 2013 269
measure this variable, they are purchase repetition and recommending others to buy the services. The other three
items: value increment, quantity increment and loyalty have not been found as significant differences between age
groups. Taking these differences into consideration, the company should give more emphasis to age as a critical
factor for market segmentation, targeting, and building marketing strategies. The age-based segmentation will help
in efficient targeting of old age consumers with promotion campaigns and suitable customer relationship
management programs.

Nationality does not affect both customers’ trust in STC e-payment channels and purchase intentions of the
services it provides. This can be traced to the spread of technology among residents living in Saudi Arabia,
especially in Riyadh, the capital of Saudi Arabia and the center of education and business. Besides, Riyadh had a
large number of expatriates who very frequently use modern communication services to contact their families
overseas. Detailing the analysis on item level of e-payment trust, the study demonstrated that Saudis are more
trusting of STC’s e-payment channels than non-Saudis regarding perceived risks, privacy and security. The higher
incomes of Saudis may make them more tolerant to financial risks than non-Saudis whose incomes are lower in
general. Non-Saudis are more trusting in usefulness and reliability of e-payment channels than Saudis. This can be
traced to the high communication technology that is used in STC and Saudi Arabian telecommunication companies
as a whole, compared to that is used in countries most expatriates came from. The other items (ease of use and
accuracy) did not show significant differences between Saudis and non-Saudis. On the item level of purchase
intentions variable, the study found significant differences in value increment and recommending others to buy the
company services. Non-Saudis are more likely to increase the value of purchase than Saudis because of their need to
communicate with their relative in their home countries, whereas, Saudis are more likely to recommend others to
buy the company services than non-Saudis due to their social lifestyle and close relationships between Saudi
citizens, especially for females. Quantity increment of purchasing services, purchase repetition and loyalty items did
not show significant differences between Saudis and non-Saudis. This can be attributed to the need of
communication services of all who live in Saudi Arabia either citizens or expatriates, which prospects good
opportunity for STC to develop its marketing mix in order to retain its current customers and lure new customer to
be a member of STC community.

7. LIMITATIONS AND FUTURE RESEARCH

The study is only limited to customers in Riyadh, which limits the possibility of generalizing the results to
customers in other regions in Saudi Arabia, who are in different economic, social and cultural conditions. The study
also relies on a convenience sample of customers, because of the difficulty of obtaining a probability sample.
Finally, the study measured the association of customers’ trust in STC e-payment channels with the customers’
purchase intentions of the services it provides. Hence, it does not include any other variables that could have an
impact on the company’s purchase intentions. So, future studies may investigate other variables that might be
associated with the purchase intentions of STC services and other demographic or psychographic variables that may
enables the company to be more insightful of its customers and their purchasing and consuming behaviors.
Acknowledgements
The author extends his appreciation to the Deanship of Scientific Research at King Saud University, for
funding the study through the Research Center.

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