International Journal of Contemporary Hospitality Management

Customer acceptance of cashless payment systems in the hospitality industry

Ahmet Bulent Ozturk
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To cite this document:
Ahmet Bulent Ozturk , (2016),"Customer acceptance of cashless payment systems in the hospitality industry", International
Journal of Contemporary Hospitality Management, Vol. 28 Iss 4 pp. -
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 Customer acceptance of cashless payment systems in the hospitality industry

Submitted: 22 February 2015

1st Revision: 03 July 2015

2nd Revision: 28 October 2015

Accepted: 11 November 2015

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Introduction

Over the past decade, radio frequency identification (RFID) technology has received

great deal of attention due to its potential to improve organizational performance and enable new

business models (Smith et al., 2014). In general, RFID technology can be defined as an

automated data collection technology that transmits different types of data wirelessly between a

RFID tag and a reader device using radio waves (Want, 2004). A basic RFID system is made up

of three components including RFID transponder (or tag), RFID reader and back office data

processing equipment. Each tag contains unique identification number and electronically sorted

information about the product (e.g., product attributes, physical dimensions, price) to which it is

embedded and transmits that data to the reader through radio waves. The RFID reader receives

radio waves to read the identification number of the tag and the information stored in the tag.

Finally, the reader transfers the readings to one or more back office data processing equipment

which in turn process the collected data (Wu et al., 2006; Zhu et al., 2012).

Even though RFID technology falls under the category of automatic identification

technologies such as bar codes and optical character readers, there are important differences

among these technologies. For instance, unlike barcode technology, RFID does not require line

of sight since RFID tags can be read as long as they are within the range of the RFID reader. In
1
 addition, since each tag has a unique identification number, the readers can differentiate among

numerous tags that are within the range of the RFID reader and communicate with multiple tags

simultaneously (Violino, 2005; Hoang and Caudill, 2006).

The commercial use RFID technology has been initially started by retail companies (e.g.,

Wal-Mart) to improve efficiency in the supply chain. However, various types of RFID

technologies have been employed in different contexts in recent years. Some of the applications

of RFID technology include inventory tracking, building access control, toll collection and
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tracking library books (Ozturk et al., 2012). On the other hand, with the decreased cost of

equipment and tags, more customer–facing applications have emerged especially in the

hospitality industry. One such technology, namely RFID based cashless payment system, has

become popular in the hospitality industry in recent years. Thanks to its great cost-saving and

revenue generating benefits for operators and its convenience and ease of use for customers, a

growing number of hospitality firms have already adopted or planning to adopt this technology

to improve their service effectiveness to the customers (Ozturk and Hancer, 2014).

However, RFID technology in general and RFID cashless payment systems in particular

are progressing at a very fast pace, which creates uncertainties about both the benefits and the

risks associated with it (Ferrer et al., 2010). Therefore, consumers may be hesitant to use RFID

cashless payment systems as the risk they perceive may be overwhelming compared other

traditional ways of payments (i.e., cash, credit/debit card, checks) due to uncertainties and

potential undesirable outcomes. On the other hand, RFID cashless payment systems may be

perceived as a complicated technology where users’ judgments about their capabilities (i.e.,

required knowledge, skills and self-efficacy) to use the technology may influence their

acceptance. For these reasons, there is a need for a better understanding of the factors affecting

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 consumers’ acceptance of RFID cashless payment systems. However, although numerous types

of RFID applications have been extensively investigated in retail, healthcare and logistic, there

has been little or no research that examined the acceptance of RFID cashless payment systems in

the hospitality industry.

Based on the preceding discussion, the purpose of this study was to develop and test a

comprehensive conceptual model that examined consumers’ acceptance of RFID cashless

payment systems in the hospitality industry. To this end, an extended version of Technology
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Acceptance Model (TAM) (Davis, 1989) was used to test the proposed model. In addition to

perceived ease of use and perceived usefulness, TAM is extended by adding two constructs to it;

(1) perceived self-efficacy, and (2) percieved risk. Particulary, this reseach analyzed the

influence of self efficacy on perceived usefulness and percevied ease of use and the impact of

percevied risk on perceived usefulness and intention to use. This study further investigated the

realtionships between perceived usefulness and percevied ease of use and behavioral intention to

use.

Review of Literature

RFID Cashless Payment Systems

A RFID cashless payment system can be defined as a system that allows consumers to set

up an account linked to an RFID device (e.g., wristband, card, key chain or hotel room key) that

can be used to make purchases by simply waving it over a RFID enabled POS workstations at

any location that supports RFID cashless payment (Muta, 2006). Currently, different types of

RFID cashless payment systems available in the market which differ in their technical

characteristics and application areas. However, one of the main and common ways to categorize

RFID cashless payment systems is based on the volume of acceptance points offered to an end

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 user. From this perspective, RFID cashless payment systems can be grouped under two broad

categories; (1) open-loop systems and (2) closed-loop systems.

An open-loop RFID system link a payment device (e.g., a card embedded with RFID

chip) directly to consumers’ credit or debit card (alternatively, consumers can set up a prepaid

account which they refill by mail, online or at select merchant locations.) To make purchases,

consumers simply wave their RFID cards over a scanner at any retailer that supports RFID

cashless payment (BTD International Consulting, 2012). Octopus card which was launched back
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in 1997 in Hong Kong is a good example of an open loop RFID system. Especially after the

scope of its transactions widened in 2000, consumers can now use Octopus card not only for

local transportation such as to pay a trip on a ferry, train or bus, but also for purchases at

convenience stores, supermarkets, and fast food restaurants (Lok, 2004).

In contrast to open-loop system, closed-loop RFID systems are designed to accept

cashless payments exclusively at the respective property (e.g., hotels, theme parks) or venue.

(BTD International Consulting, 2012). At registration, consumers (guests) set up an account

which is linked to a payment device (e.g., wristband or room key with RFID chip on it) that can

be used to make purchases by waving it over a RFID enabled POS workstations anywhere within

the property (Ozturk et al., 2012). In hotels for instance, guests are provided with a RFID

enabled room key or a wristband at registration and have the choice of using these devices to

make the charges go directly to their rooms (Rock, 2007). A good example of closed-loop RFID

cashless payment systems is the MyMagic+ program by The Walt Disney Company. Worn on

the wrist, a MagicBand, is a RFID enabled wristband that can be read by short-range readers

located throughout the Walt Disney World Resort. MagicBands are linked to guests’ “My Disney

Experience” account and contains all vacation related information including hotel and restaurant

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 reservations and Fastpass+ experiences and more. Guest can also use their MagicBands as their

Disney resort room key (Swedberg, 2014). However, maybe the biggest convenience of

MagicBands is coming from its ability to be used for purchases throughout the Walt Disney

World theme parks. Since guests are wearing these wristbands they do not need to carry cash or

their credit cards with them all the time reducing the risk of losing them significantly. By simply

waving the MagicBands over a reader near the cash register, and entering their personal

identification number, guests can complete their purchases in a few seconds (Swedberg, 2014).
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Theoretical Framework and Research Model

Technology Acceptance Model (TAM) (Davis, 1989) was adopted to identify factors

affecting customers’ acceptance of RFID cashless payment systems in the hospitality industry.

Davis (1989) stated that there are numerous variables, which impact users to accept or reject a

technology. Among those variables, previous studies suggested that two determinants are

especailly important. First, “people tend to use or not use an application to the extent they

believe it will help them perform their job better” (Davis, 1989, p. 320). Davis (1989) refers to

this first variable as “perceived usefulness”. Second, people percieve that if the technology is too

hard to use, they tend not to adopt and not to use it even though they believe that the technology

is useful. Davis (1989) refers to this second variable as “perceived ease of use”.

There is an extensive research in the information technology literature that validated the

effectiveness of TAM in predicting individuals’ intention to use an innovation (Kim and Qu,

2014; Morosan, 2014). In addtion to the many studies that have adopted TAM as a research

model, there are also several studies which extended the model with other constructs such as

compatibility (Kim and Qu, 2014), self- efficacy (Hernandez et al., 2009), trust and percieved

risk (Kesharwani and Bisht, 2012), and percieved security (Hossain and Prybutok, 2008).

5
 TAM is originally developed for employees’ technology acceptance in organizations.

Even though many TAM studies have investigated IT acceptance in the context of work-related

activities, the theory is applicable to diverse non-organizational settings (Thiesse, 2007).

However, for the RFID cashless payment technology, some of the individual difference and

usage-context factors may be more critical compared to other types of technologies. This may

change the original TAM model for using it in explaining the users’ acceptance of RFID cashless

payment systems. Therefore, TAM requires extension to account for additional constructs that
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are suggested in the RFID literature (Hossain and Prybutok, 2008). Therfore, to identify

customers ‘acceptance of RFID cashless payment systems, an extended version of TAM was

used in this study. In addition to perceived ease of use and perceived usefulness, TAM is

extended by adding two constructs to it; (1) self-efficacy and (2) percieved risk (Figure 1).

---------------
FIGURE 1
---------------

Self-Efficacy, Perceived Ease of Use and Perceived Usefulness

A key concept in Bandura’s (1986) social cognitive theory, self-efficacy, refers to

“people’s judgments about their capabilities to organize and execute courses of action necessary

to perform a given task and it is concerned not with the skills one has but with judgments of what

one can do with whatever skills one possesses” (Bandura, 1986, p. 391). Self-efficacy affects

what behaviors people choose to perform, the amount of effort they are ready to use, and the

amount of time they will persist to overcome obstacles (Bandura, 1986). Based on Luarn and

Lin’s (2005) mobile banking study, this study has focused on whether individuals believed that

they had the necessary knowledge, skill or ability to use RFID cashless payment systems.

6
 Therefore, perceived self-efficacy was defined as the judgment of one’s ability to use RFID

cashless payment systems.

Self-efficacy affects an individual’s system anxiety which in turn affects the perceived

ease of use and perceived usefulness of the system (Igbaria and Iivari, 1995). Prior research in

the context of information systems, suggests a direct relationship between self-efficacy and

perceived usefulness and perceived ease of use (Hasan, 2007; Wang et al., 2003). For instance,

by integrating self-efficacy as an external variable to the TAM, Hasan (2007) assessed the direct
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effect of self-efficacy on perceived eased of use and perceived usefulness. Data collected from

121 respondents demonstrated that self–efficacy significantly influenced perceived usefulness

and perceived ease of use. Another study conducted by Jashapara and Tai (2011) found a

significant positive relationship between self-efficacy and perceived ease of use. In the context of

RFID technology, Chong and Chan (2012) stated that “if a person has high confidence on his or

her ability to use RFID, it can serve as a basis for the person’s perceptions of how easy RFID

will be to use” (p. 111). Given the strong empirical support for the relationship between self-

efficacy and perceived ease of use and perceived usefulness, the following hypotheses were

proposed:

H1: There is a positive relationship between self-efficacy and perceived ease of use.
H2: There is a positive relationship between self-efficacy and perceived usefulness.

Perceived Risk, Perceived Usefulness and Intention to Use

In the context of IS, perceived risk has been defined in different ways. According to the

“theory of perceived risk” consumers perceive risk because they face uncertainty and potentially

undesirable consequences because of purchases (Lim, 2003). According to Bauer (1960),

“consumers behavior involves risk in the sense that any action of a consumer will produce

consequences which he/she cannot anticipate with anything approximating certainty, and some

7
 of which at least are likely to be unpleasant” (p. 24). Prior research suggested that perceived risk

is an important factor for consumers’ acceptance of a technology. Researchers have focused on

the relationship between perceived risk and behavioral intention to use in various contexts

including electronic commerce (Pavlou, 2003; Lim, 2003), self-service technologies (Kim and

Qu, 2014), mobile commerce (Zhang et al., 2012) and mobile banking (Chen, 2013).

As in all other technologies, there are certain risks involve in using RFID cashless

payment systems. As previously discussed RFID technologies mainly rely on wireless

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transmission between the tags and the readers which creates a risk of interference between RFID

and other technologies in the work place (RFID and Interference, 2009). In addition, the

performance of RFID tags deteriorates over time. This problem reduces the read range and

consequently the tag stops working completely causing the whole system fail.

In this context, such risks associated with RFID cashless payment system may influence

users’ perceived usefulness and behavioral intention. Even though there have been a limited

number of studies specifically focusing on RFID cashless payment systems, a few studies

investigated the risks associated with similar RFID systems. For example a recent study

conducted by Zhu et al. (2014) examined the role of perceived risk in the adoption of RFID

credit cards. By integrating perceived risk to the TAM, their study results indicated that

perceived risk was directly and negatively associated with both perceived usefulness and

intention to use. Based on the theoretical and empirical support from the literature, the following

hypotheses were developed.

H3: There is a negative relationship between perceived risk and perceived usefulness.

H4: There is negative relationship between perceived risk and intention to use.

Perceived Ease of Use, Perceived Usefulness and Intention to Use

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 Perceived usefulness was considered as a motivation to engage with use of information

system, whereas perceived ease of use was regarded as an antecedent of perceived usefulness.

More specifically, perceived usefulness is defined as "the degree to which a person believes that

using a particular system would enhance his/her task performance. Perceived ease of use, on the

other hand, refers to "the degree to which a person believes that using a particular system would

be free of effort (Davis, 1989, p. 320). Prior research validated the impact of percevied ease of

use and perceived usefulness on intention to use in various IT contexts including online booking
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(Kucukusata et al., 2015), mobile wireless technology (Kim and Garrioson, 2009), e-commerce

(Hernandez et al., 2009), mobile banking (Gu et al., 2009), and mobile commerce (Chong et al.,

2012)

In the current study, perceived usefulness was defined as the extent to which users

believes that using RFID cashless payment systems saves them time and enhances the

effectiveness of the payment process. On the other hand, perceived ease of use was defined as

the extent to which users believe that RFID cashless payment systems do not make the users

more confused and they are easy to understand and ease to use. Prior research in the context of

RFID technology also confirmed the positive influence of perceived usefulness and perceived

ease of use on behavioral intention. For instance, Hossain and Prybutok, (2008) contextualized

TAM to RFID technology by substituting perceived convenience for perceived usefulness and

perceived ease of use. The findings of their study indicated that higher perceived convenience

(perceived usefulness and perceived ease of use) leaded to greater acceptance of RFID

technology. Another study conducted by Cheng (2013), investigated consumer attitudes and

behavioral intention to use an RFID door security system based on TAM. Data collected from

250 consumers of Taipei Arena Ice Land, Taiwan, demonstrated that perceived ease of use had a

9
 significant positive impact on perceived usefulness, perceived usefulness and perceived ease of

use both positively influenced attitudes toward use and perceived usefulness had a significant

direct positive impact on behavioral intentions to use. Hence:

H5: There is a significant relationship between perceived usefulness and intention to use.

H6: There is positive relationship between perceived ease of use intention to use.

H7: There is significant relationship between perceived ease of use and perceived

usefulness.
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Methodology

A web based questionnaire was developed based on the literature on TAM and RFID

technology acceptance. All research constructs were adapted from prior research and minor

modifications were applied to the constructs in the context of RFID domain. All items were

measured by five-point Likert scale ranging from “strongly disagree” to “strongly agree.”

Perceived ease of use and perceived usefulness was measured by four items each, adapted from

Davis (1989). Self-efficacy was measured via six items developed by Compeau and Higgins

(1995). Perceived risk was measured using four items adapted from Im et al. (2008). Finally,

behavioral intention was measured using a 3-item scale adapted from the work of Davis et al.

(1992). A brief description of RFID cashless payment system was provided at the beginning of

the survey to make sure that all participants had a good understanding of the technology.

The data of the study was collected through a 1.5 million frequent traveler database

purchased by Oklahoma State University the Center for Hospitality and Tourism Research

(CHTR). The frequent travelers who stayed at a commercial hotel at least once during the

previous six months were the target population of the study. A screening question was utilized

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 and participants were excluded from the sample if they had not stayed at a commercial hotel at

least once during the previous six months.

Simple random sampling technique was used and every 25th traveler was selected and

included to the sample. A web survey was used to collect the data. Respondents were invited to

the survey through email. An email reminder was sent out after 2 week to complete the survey.

Sixty thousand emails were sent out and forty five thousand emails were delivered successfully.

Only 462 surveys were returned creating a response rate of 1%. 157 questionnaires were
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eliminated due to incomplete and invalid responses. A total of 305 questionnaires were used for

the data analysis. Two step approach suggested by Fornell and Larcker (1981) was utilized to test

the proposed model. Measurement model was analyzed by a confirmatory factor analysis (CFA)

followed by structural equation model (SEM analysis by using AMOS 22.0.

Results

Respondents’ Profile

Table 1 shows the demographic characteristics of the respondents. About 54% of the respondents

were male and 44% of the respondents were female. The majority of the respondents were

between 51 and 60 (25%), and 41 and 50 (24%) years old. Forty percent of the respondents

stated that they had a bachelor’s degree and 28% of the participants had an associate’s degree.

As for the question related to income, 25% of the respondents reported that they had a household

income of $41,000 and $80,000 per year. Finally, about 70% of the participants stated that they

had previous RFID technology experience in the hospitality industry.

-------------
TABLE 1
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Confirmatory Factor Analysis

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 The measurement model was analyzed by a confirmatory factor analysis (CFA). To

assess the overall model, goodness-of-fit measures were used. The literature suggests that chi

square to degrees of freedom ratio should be less than 3 for an acceptable model fit (Hair et al.,

2009). The ratio of chi-square to degree of freedom was 2.49 (χ² = 446.93, df = 179) which

demonstrated an acceptable model fit with other fit indexes including RMSEA = 0.07, NFI =

0.93, CFI = 0.96, IFI = 0.96, RFI = 0.92. Overall, the results were considered appropriate for

further analyses. To assess the reliability of the measurement scales, the composite reliability
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(CR) estimates and Cronbach’s alpha values were calculated. The results indicated that the alpha

coefficients values for the scales ranged from 0.71 to 0.91, and the CR values for the scales were

above 0.7 indicating a strong reliability (Hair et al., 2009) (Table 2). In addition, the average

variance extracted (AVE) scores were used to assess convergent validity. The AVE values

ranged from 0.72 to 0.88 which exceeded the 0.50 cutoff recommended by Fornell and Larcker

(1981) (Table 2). Finally, discriminant validity was assessed by comparing the square root of

AVE of each latent construct with the inter-construct correlations (Fornell and Larcker, 1981).

All diagonal values exceeded the inter-construct correlations indicating an acceptable level of

discriminate validity (Table 3).

--------------
TABLE 2
--------------
--------------
TABLE 3
--------------

Structural Equation Model

The structural equation modeling was analyzed to test the hypothesized relationships

among the constructs. The goodness-of-fit measures were used to evaluate the structural model

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 fit. Overall the results demonstrated that the fit measures for the study model were reasonable

with χ² = 580.308 - df = 182, RMSEA = 0.08, CFI = 0.94, PNFI = 0.80, IFI = 0.94, and RFI =

0.90. Furthermore, the variance explained for perceived usefulness was 40%, for perceived ease

of use was 29% and for intention to use was 53%. Overall the results demonstrated that except

hypothesis 2, all of the study hypotheses were supported. More specifically, the results indicated

that self-efficacy had a significant positive impact on perceived ease of use and perceived risk

was negatively associated with both perceived usefulness and intention to use. In addition,
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perceived usefulness and perceived ease of use had the strongest positive direct impact on

intention to use. Finally, perceived ease of use has positively influenced perceived usefulness.

Discussion and Conclusions

The purpose of this study was to propose and test a theoretical model that analyzes the

antecedents of consumers’ behavioral intention to use RFID cashless payment systems in the

hospitality industry. By adopting an extended version of TAM, the study empirically assessed

the relationships among two exogenous variables (self-efficacy and perceived risk) and three

endogenous variables (perceived usefulness, perceived ease of use and behavioral intention).

Table 4 and Figure 2 present the results of hypothesis testing for the research model including

the path coefficients and their significance values.

--------------
TABLE 4
--------------
--------------
FIGURE 2
--------------

The results of the study indicated that self-efficacy had a significant impact on perceived

ease of use (H1- path coefficient = 0.13). This finding was consistent with prior studies (Hasan,

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 2007; Jashapara and Tai, 2011) confirming that users with high level of self-efficacy are more

likely to find RFID cashless payment systems easy to use. However, study results related to H2

(path coefficient = 0.02), which states that self-efficacy is positively associated with perceived

usefulness was not significant. With respect to H3 and H4, the study findings indicated that

perceived risk was negatively associated with both perceived usefulness (path coefficient= -0.47)

and intention to use (path coefficient = -0.27). Consistent with the previous studies (Zhu et al.

(2014) the results suggested that high risks associated with RFID cashless payment system
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influence users’ perceived usefulness negatively which in turn prevent them using it.

The findings of the study further indicated that perceived usefulness (H5 - path

coefficient = 0.43) and perceived ease of use (H6 – path coefficient = 0.35) had the strongest

positive direct impact on intention to use. In accordance with previous TAM studies (Kucukusata

et al., 2015; Kim and Garrioson, 2009), the results confirmed that perceived ease of use and

perceived usefulness were the predominant factors in assessing behavioral intentions towards

technology adoption. Finally, the study results supported H7 (path coefficient = 0.41) which

states that perceived ease of use positively related to perceived usefulness. Consistent with the

prior studies (Smith et al., 2014) this result suggested that users find RFID cashless payment

systems useful if they perceive that using them is easy and not complicated.

Theoretical Implications

The results of the study contribute to the general body of knowledge in the context of

technology acceptance in general and RFID technology acceptance in the hospitality industry in

particular in several ways. RFID technology has been extensively investigated in different

industries by focusing on the supplier management process to increase the efficiency of

inventory management. On the other hand, as previously mentioned, with the decreased cost of

14
 RFID tags, more customer-oriented RFID applications have emerged in recent years. Even

though there has been a few studies examined RFID technology applications in the hospitality

industry, to the author’s best knowledge, this is the first study that investigated the acceptance of

closed-loop RFID cashless payment systems specifically in the hospitality industry. Therefore,

the first important theoretical implication of the study is that the study contributes to extant

research on technology acceptance by offering a theoretical foundation that identifies factors

affecting consumers’ acceptance of RFID cashless payment systems in the hospitality industry.
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The second theoretical contribution of this study is coming from its validation of TAM in

the context of RFID technology acceptance. Consistent with original and prior TAM studies, the

results confirmed that perceived ease of use and perceived usefulness had the strongest impact on

intention to use. Also, perceived ease of use was found to significantly influence perceived

usefulness. Furthermore, as mentioned earlier, the original TAM examines technology

acceptance in the context of work related activities of employees. This study analyzed the

acceptance of a customer-facing technology in a voluntary adoption setting where perceptions

toward the technology formed in an unrestricted routine instead of in an obligatory environment

(organizational) where management may influence the adoption process (Morosan, 2014).

Third and the final theoretical contribution of the study is the extension of TAM. Based

on the literature regarding the TAM and RFID technology, this study successfully extended

TAM’s applicability within the RFID domain by adding two constructs to it. As previously

mentioned, some of the consumer-specific and usage-context factors may be crucial for the

acceptance of RFID technologies in the hospitality industry. In this study, as an individual

difference variable, self-efficacy was found to positively influence perceived ease of use. Also,

as a usage-context variable, perceived risk was negatively associated with perceived usefulness

15
 and intention to use. This theoretical effort benefits researchers by helping them to understand

how to incorporate different constructs to TAM that are necessary in the development of user

intentions to use different technologies.

Practical Implications

The results of the study provide significant practical implications for hospitality operators
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that had not yet adopted and have an intention to adopt or had already adopted and are looking

for more benefits from RFID cashless payment systems. The study results also provide valuable

information for technology companies and hospitality consultants for identifying factors

important in RFID cashless payment system acceptance.

The findings suggested that perceived usefulness and perceived ease of use are

predominant determinants in assessing customers’ intention to use RFID cashless payment

systems in the hospitality industry. In addition, the results indicated that RFID cashless payment

systems should be ease to use in order to increase their usefulness. Users, especially those who

do not have any previous experience with contactless payment systems may find RFID cashless

payment systems difficult or confusing to complete their transactions. Therefore, to increase the

usability of RFID cashless payment systems, hospitality operators should design them in a way

that does not confuse users. In addition, the systems should be free of effort and easy to operate.

Purchasing process with a RFID wristband or a room key in hotels for example, should

be easy and fast enough to allow gusts to complete their transactions in a few steps. In addition,

user friendliness of the system will make it perceive more beneficial to the potential users thus

making them more attracted toward the system. In this regard, in order to understand users’

16
 comfort level, developers should encourage actual users to actively involve in the design phase

of the system (Kapoor, 2014). On the other hand, dedicated technical support in various format

(e.g., built-in help features, 24/7 telephone support, designated toll-free number, online live chat

feature) will help service providers to meet a wide range of user needs and to increase their

confidence level in using RFID based cashless payment systems. Furthermore, to increase users’

level of perceived usefulness, hospitality operators and marketers should highlight the potential

advantages of RFID cashless payment system in comparison to other alternative systems.

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Particularly, the major benefits such as significant time savings through faster transactions and

needless to carry cash or credit cards within the property should be emphasized through ads,

brochures and live demonstrations.

Regarding self-efficacy, the study results demonstrated that users with high level of self-

efficacy are likely to have more ease of use beliefs toward RFID cashless payment systems.

Therefore, hospitality operators and technology vendors can jointly organize training sessions on

contactless payment systems in general and RFID cashless payment systems in particular. These

sessions will increase the familiarity of users with RFID cashless payment systems, especially

the ones with no or limited previous cashless payment experience. In addition, explaining and

demonstrating the steps necessary to utilize RFID based cashless payment system will eliminate

or minimize users’ anxiety and the feelings of discomfort toward the system which will also help

them to form positive self-efficacy and ease of use beliefs about the system in general.

The study results further indicated that perceived risk was negatively associated with

perceived usefulness and intention to use RFID cashless payment systems. These findings

suggested that users’ perception of risk about the RFID cashless payment systems will be high

when they face uncertainties and undesirable consequences because of the usage of these

17
 technologies. Therefore making RFID cashless payment systems easy to use will not be enough

to increase the usage of these systems in the hospitality industry as the usage decision is

voluntary basis. Therefore, in order to eliminate uncertainties as much as possible and facilitate

favorable outcomes, it is essential for hospitality operators and technology vendors to pay special

attention to users’ perception of risks associated with the use of RFID cashless payment systems.

In this regard, it is suggested that hospitality organizations and technology vendors should reduce

users’ perception of risk by offering system performance guarantees while information their
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users about the benefits and usefulness of the system on a regular basis (Chiu et al., 2014).

As previously mentioned, hospitality technologies in general and cashless payment

systems in particular developing rapidly creating concerns and uncertainties about their future.

Therefore, it is extremely important that hospitality technology decision makers understand how

potential users’ perceptions and intentions forms toward RFID cashless payment systems. In this

sense, the findings of this study provide useful information about how customers perceive RFID

cashless payment systems and what are the factors affecting their behavioral intentions.

Compared to original TAM model, the model developed in this study suggested that in addition

to perceived ease of use and perceived usefulness, other factors such as perceived risk and self-

efficacy contribute to the users’ intention to adopt RFID cashless payment systems. Equipped

with this information, hospitality operators will be able to best utilize RFID cashless payment

systems in their organizations and will be able to come up with effective marketing strategies to

attract more customers, thereby creating continuous competitive advantage.

Limitations and Future Research

Like in most technology acceptance studies, this study is also subject to a number of

limitations. First of all, in this study, users’ intentions were measured instead of their actual

18
 behavior. In other words, this study was a perception-based study and actual RFID cashless

payment systems usage was not considered. Brief explanation about RFID technology in general

and RFID cashless payment systems in particular were provided in the beginning of the survey

and presumed to be enough for participants to form some basic perceptions toward RFID

cashless payment systems. Therefore, future research which will use actual behavior measures

may deliver more precise and valid findings for hospitality operators and hospitality technology

consultants.
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Secondly, even though TAM model used in this study was extended by adding two

different constructs (self-efficacy and perceived risk) to it, there may some other attitudinal and

behavioral factors responsible of explaining users’ behavioral intentions to use RFID cashless

payment systems. Therefore, future research which examines additional constructs (e.g.,

perceived privacy and security, trust, compatibility and satisfaction) will provide valuable

information for predicting users’ RFID classless payment system usage behavior. In addition,

even though RFID technologies have been utilized by hospitality operators in different concepts

for a while, RFID cashless payment systems can be still considered as a relatively new

phenomenon. Therefore, future research should perform a longitudinal study by considering the

impact of time on users’ perceptions and behavioral intentions. Finally, this research was limited

to US consumers making the data collected in this study not generalizable to all groups of users

with diverse cultural backgrounds. Therefore, future research which would be conducted in

different countries should offer valuable findings in comparison of cultural differences in RFID

cashless payment systems.

19
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23
 Tables

Table 1: Respondents’ Demographic Characteristics and

Past Experience with RFID Technology

Demographic Characteristics N %
Gender 166 54.4
Male 135 44.3
Female 4 1.3
Missing 305 100
Total
Age
18-30 48 15.7
31-40 48 15.7
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41-50 73 23.9
51-60 76 24.9
61 and older 58 19.0
Missing 2 0.7
Total 305 100
Income
$20,000 or less 33 10.8
$21,000-$40,000 48 15.7
$41,000-$60,000 76 24.9
$61,000-$80,000 77 25.2
$81,000 or more 69 22.6
Missing 2 0.7
Total 305 100
Education
Below High School 2 0.7
High School 38 12.5
Associate’s Degree 85 27.9
Bachelor’s Degree 123 40.3
Master’s Degree 43 14.1
Doctorate Degree 13 4.3
Missing 1 0.3
Total 305 100
Past Experience
Yes 214 70.2
No 91 29.8
Total 305 100
 Table 2: Measurement Model Results

Factors Std. Loadings CR AVE

Self-Efficacy (SE) 0.94 0.72

I could use RFID payment systems if someone else had helped me. 0.92
I could use RFID payment systems if I could call someone for help
when I got stuck. 0.89
I could use RFID payment systems if someone showed me how to do it
first. 0.88
I could use RFID payment systems if I had seen someone else using it
before trying it myself. 0.86
I could use RFID payment systems if I had just built-in help facility for
assistance. 0.79
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I could use RFID payment systems if I had only software manuals for
reference. 0.77
Perceived Usefulness (PU) 0.96 0.88
I believe payment transactions would be difficult to perform without
RFID payment systems. 0.95
I believe using RFID payment systems saves me time. 0.92
Overall, I find RFID payment systems useful. 0.92
I believe using RFID payment systems enhances the effectiveness of the
payment process. 0.90
Perceived Ease of Use (PEOU) 0.91 0.73
I believe using RFID payment systems will not make me more
confused. 0.72
I believe my interaction with RFID payment systems will be easy to
understand. 0.82
Overall, I believe RFID payment systems are easy to use. 0.94
I find it cumbersome to use RFID payment systems. 0.94
Perceived Risk (PR) 0.93 0.79
RFID payment systems would not frustrate because of its poor
performance. 0.83
RFID payment systems would be effective as I think. 0.89
RFID payment systems would be worth its cost. 0.90
Comparing with other technologies, RFID payment systems do not have
more uncertainties. 0.93
Intention to Use 0.93 0.83
Given the chance I intend to use RFID payment systems. 0.87
Given the chance I predict that I should use RFID payment systems 0.89
Given the chance I plan to use RFID payment systems 0.93
 Table 3: Discriminant Validity Matrix

1 2 3 4 5
1. PEOU 0.85
2. SE 0.13 0.85
3. PU 0.62 0.10 0.93
4. PR -0.62 0.16 -0.64 0.89
5. IU 0.64 0.12 0.62 0.66 0.91
Off-diagonal elements: Squared inter-construct correlations.
Diagonal elements (bold): AVEs
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Table 4: The Structural Model Estimate

Structural Paths Standardized Path t-values Hypothesis

Coefficients Supported
yes/no
H1: SE ( + ) PEOU 0.13 2.28** yes
H2: SE ( + ) PU 0.02 0.44n.s no
H3: PR ( - ) PU -0.47 9.32*** yes
H4: PR ( - ) IU -0.27 5.07*** yes
H5: PU ( + ) IU 0.43 7.28*** yes
H6: PEOU ( + ) IU 0.35 4.9*** yes
H7: PEOU ( + ) PU 0.41 8.33*** yes
**p<0.05; ***p<0.01; n.s., non-significant
 Figure 1: Conceptual Framework and Hypotheses

Perceived
H2
Usefulness
H5

Self-
Efficacy
H7
H3 Intention
to Use
H4
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Perceived
Risk H1 H6

Perceived
Ease of Use
 Figure 2: Hypothesis Testing Results

Perceived
0.02n.s
Usefulness
0.43***

Self-
Efficacy 0.41***
-0.47***
Intention
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to Use
-0.27***

Perceived
Risk 0.13** 0.35***

Perceived
Ease of Use

*p<0.1; **p<0.05; ***p<0.01; n.s., non-significant

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