DIGITAL PAYMENT PRACTICES AND BUSINESS EFFICIENCY OF ONLINE

SELLERS IN CABUYAO CITY, LAGUNA: BASIS FOR INPUTS TO BUSINESS

STRATEGY

Researchers:

Fortuno, Justin Val A.

Bengoa, Johndell

Antioquia, Jalen Rose

2022
 CHAPTER 1

The Problem and Its Background

Introduction

Digital payments have the potential to broaden access to financial services for

all. The global COVID-19 health crisis, as well as government responses such as

economic lockdowns, increased the demand for contactless financial products and

services, hastening the transition to digital finance in many economies. Digital payment

is a type of payment that is made using digital methods. Both the payer and the payee

use digital modes to send and receive money in digital payments. It is also known as

electronic payment. Digital payments do not involve any hard cash (currency notes). All

digital payment transactions are completed online. It is a quick and convenient method

of payment.

The Philippines' economic recovery following the COVID-19 pandemic

necessitates a digital shift for businesses. As a result of this innovation, their operations

can continue under the new normal. The Digital Payments Transformation Roadmap of

the Bangko Sentral ng Pilipinas was developed in the Philippines' e-finance landscape

to further develop more innovative and responsive digital financial services to serve the

increasing consumer preference for digital payments (BSP, 2021).

 Security is one of the most important issues and critical factors in digital

payments. Internal factors such as difficulty using digital technology, forgetting

passwords, being unaware of digital payment services, and other in the context of digital

payment services, there is perceived security, which refers to how users believe

transactions on digital payment platforms are secure in terms of financial and personal

security. People must adapt to the use of technology in their daily lives as a result of

activities such as shopping, working, and learning at home. One of the most significant

challenges that arise from home quarantine is learning to use internet technology, or

learning to use it to communicate online for the first time.

Some companies see online selling as a way to boost productivity or for it to be

business efficient. It becomes an important aspect of business performance that can

offer significant value to the organization and other value-added chain participants. E-

commerce plays a significant role in supply chain management, where there are several

opportunities to optimize business operations by implementing current technology

based on the e-commerce concept. The majority of e-commerce implementation

decisions in business operations are based on the ability to achieve significant cost

efficiency, which translates to increased corporate profitability and market

competitiveness as cited by Barsauskas, Sarapovas, and Cvilikas (2006).

In 2018, more Filipinos utilized e-wallets or e-payment systems than credit cards,

according to BSP data. Filipinos can use platforms like GCash and PayMaya to conduct

digital financial transactions without using cash or credit cards (Zoleta, 2021). The

Bangko Sentral ng Pilipinas (BSP) said during their Ulat sa Bayan event on February 19

that PESONet transactions increased to 15.3 million in 2020, while InstaPay payments
increased to 86.7 million. The data suggest that electronic payment methods have a

significant impact on an online seller's efficiency. It also improves the effectiveness of

the corporate strategy.

A number of researchers have looked into the factors that affect business

efficiency.

However, few studies have researched the impact of digital payment practices on

the business efficiency of online sellers. This study limits the use of digital payment

methods. There has been no research on digital payment practices and business

efficiency of online sellers in Barangay Mamatid, Cabuyao City, Laguna. The findings in

the study are expected to use in the application of business strategy to improve

business efficiency. Furthermore, the goal is to ascertain the state of online sellers'

digital payment practices and how much attention these online sellers pay to their digital

payment practices. It also wants to know how digital payment practices affect business

efficiency.

Theoretical Framework

This study uses Unified Theory of Acceptance and Use of Technology (UTAUT)

as an anchor to its independent variable which is Digital Payment Practices, and Theory

of Constraints (ToC) for dependent variable which is Business Efficiency.

UTAUT identifies four direct determinants and four key moderators that

influence behavioral intention to use technology. The following determinants are

namely: performance expectancy, effort expectancy, and social influence while the four
key moderators are known as age, gender, experience, and voluntariness (Venkatesh,

Morris, Davis, & Davis, 2003). The UTAUT model is based on four constructs –

performance expectancy, effort expectancy, social influence, and facilitating condition.

Performance expectancy refers to the level at which individuals expect the

implementation of technological solutions will improve their business results. Effort

expectancy relates to the ease of use of the innovative solution. Social influence

represents the degree to which individuals believe those in their social environment

expect them to use an innovative technological solution. Facilitating condition relates to

the existence of organizational and technical infrastructure to facilitate the use of new

technology. Social influence and Facilitating condition would not affect the foregoing

discussion with regards to the digital payment practices.

As cited by Klapper (2022), Digital payments can increase an entrepreneur’s

profitability by making financial transactions with customers, suppliers, and the

government more convenient, safer, and cheaper. According to Kuscu, Cicekcisoy, and

Bozoklu (2021), more companies have started performing their company operations

through e-commerce. In this way, the purchase of the goods and services produced in

any part of the world by consumers depends on the healthy and secure functioning of

millions of e-payment processes performed on the internet every day. In this context,

the subject of e-payment and e-payment systems, which are among the basic elements

of uninterrupted and healthy functioning of the e-commerce-related process, is an area

of research coming into the forefront recently with its various aspects.

In relation to the foregoing discussion, UTAUT is being used in the study in order

to know what would be the performance of the business in the adoption of digital
payments that would result in the business’ efficiency and may come up with business

strategies.

On the other hand, R. Robinson of Indeed.com (2021) defined Theory of

Constraints as a method that helps identify factors in a process causing efficiency

issues. The methodology helps improve these processes and resolve problems. This is

a scientific approach that has a history in manufacturing, but professionals can apply it

to other industries as well. Many types of businesses can use the theory of constraints

to increase efficiency and profits. If the digital payment practices used by online sellers

makes them more profitable and sustainable, the efficiency of their business might

increase or somehow show better results.

Conceptual Framework

Based on the analysis of the preceding theoretical framework and formulation of

research concepts, the conceptual framework of the study is shown below to emphasize

the relationship of independent variable to the dependent variable.

Independent Variable Dependent Variable

Assessment of level of

Assessment of the business efficiency in

adoption of digital payment terms of:
practices:
Mobile Wallet Profitability,

Electronic Fund Transfer Sustainability

 Figure 1. Research diagram

Figure 1 depicts the connection of the independent variable to the dependent

variable, through which the independent variable specifies the adoption level of digital

payment practices, which includes the mobile wallet and electronic bank transfer,

whereas the dependent variable indicates the level of business efficiency comprising

profitability and sustainability. The arrows conveyed the relationship of the independent

and dependent variables to each other.

Statement of the Problem

The study focuses on the digital payment practices and business efficiency of

online sellers in Cabuyao, Laguna to enhance the adoption of the digital payment

practices. Specifically, it intends to answer the following questions:

1. What is the impact on the adoption of digital payment practices of online sellers

in terms of:

1.1 Mobile Wallet,

1.2 Electronic Fund Transfer,

2. What is the level of business efficiency of online sellers in terms of:

2.1 Profitability,

2.2 Sustainability
 3. Is there a significant relationship between the adoption of digital payment

practices to the business efficiency of online sellers?

4. Do the digital payment practices singly or in combination significantly impact the

business’ efficiency of online sellers?

5. Based on the quantitative results of the study, what business strategies may be

put into the business of online sellers?

Note: Is this what panelists said so? It should be connected to your Theory…

Hypotheses

Based on the previous studies and theories cited, null hypotheses proposed in

this study are indicated below.

Ho1: There is no significant relationship between the adoption of digital payments

to business efficiency.

Ho2: The adoption level of digital payment practices does not singly or in

combination significantly impact the level of the business’ efficiency of online sellers.

Scope and Delimitation

The scope of the study included the assessment of the adoption level of digital

payment practices of online sellers with sub-variables such as mobile payments and

electronic bank transfer. This also included the assessment of the level of business

efficiency to its profitability and sustainability. Other variables that might be related to

digital payments such as its components (i.e., Point-of-sale, QR code, and banking
cards) shall not be part of study because the only focus of the study is the efficiency of

the target respondents. The respondents of the study are only those online sellers

specifically the Business to Customer kind of business that are DTI-registered from the

beginning of 2018 to 2021 and are still operating today or opened during that span and

are located in Cabuyao City, Laguna.

Significance of the Study

With a good practice of using digital payments, online sellers will achieve their

goal of increasing their profit due to the significant impact on their business and its

efficiency. Thus, this study is made with a purpose of providing information that will be

beneficial to the following:

Online Sellers. This study will assist them in determining whether their

businesses have adopted new digital payments in order to upgrade their current digital

payment methods for maximum business efficiency.

Starters of online business. The findings of this study can be used to

determine what types of digital payment practices are being used to improve efficiency.

The findings of this study can also be used to inform them about how digital payments

can be used to improve the efficiency of their business.

The Researchers. This study will help them to accumulate knowledge and

information regarding the formulation of business strategies about digital payment

practices, thus allowing them to gain more knowledge and opportunities for future

decision-making.
 The Future Researchers. The result of this study can serve as a foundation for

future references as this can provide knowledge and information for similar or related

study.

Definition of Terms

The following terminologies are defined conceptually and/or operationally.

Business Efficiency. For the purpose of the study and according to Indeed.com (2021)

it refers to how much a company or organization can produce as it relates to the amount

of time, money and resources needed. In other words, a business's efficiency measures

how well it can transform things like materials, labor and capital into services and

products that produce revenue. Aziz (2008) stated that electronic payment increases

operational efficiency and improves productivity levels through expedient payments and

receipts of funds.

Digital Payment Practices. The term is defined by S. Bhatia (2021) as transactions

that take place digitally or online and involve no physical exchange of money. This

means that both the payer and the payee exchange money using electronic means.

Online Sellers. As defined by T.J Carter (2020), an online seller is somebody who

uses digital means to sell their products, goods, or services to buyers locally or

internationally. Online seller usually use an online marketplace to help reach wider

audiences, and even fulfillment companies so goods can reach buyers quickly.
Mobile Wallet. According to E. Mew and J. Millan (2021), mobile wallet is an application

on a mobile device allowing individuals to store and use payment and loyalty cards, pay

their bills, make peer-to-peer-payments, issue cheques, store e-receipts, and use

coupons directly from the application.

Profitability. Nguyen T.N.L and Nguyen V.N. (2020) explained that profitability is one of

the vital elements for performance evaluation, showing the proportion of profit in

comparison with asset investment, equity, or sales. Profitability also is a useful tool for

forecasting the performance of businesses in the future .

Sustainability. As cited by Clough, Wayne, Chameau, and Carmichael (2006),

sustainability is a process that helps create a vibrant economy and a high quality of life,

while respecting the need to sustain natural resources and protect the environment. It

expresses the principle that future generations should live in a world that the present

generation has enjoyed but not diminished. Sustainability requires trade-offs, especially

across time. Firms must choose between investing less for smaller profits sooner and

investing more for greater profits later (Laverty, 1996).

Electronic fund transfer. Geva (2003) cited that fund transfers or payments are

broadly defined to include non-cash payments to third parties, cash withdrawals, and

transfers from one account to another.

Business Strategy. D. Chaffey and S. Miller (2021) defines e-business strategy as a

long-term plan for putting in place the right digital technology for a company to manage

its electronic communications with all partners - that's internal through the intranet and
externally through to customers, suppliers and other partners. As defined also by

IMD.org (2022), business strategy is a clear set of plans, actions and goals that outlines

how a business will compete in a particular market, or markets, with a product or

number of products or services.

Note: It should be a definition not from defined from the authors..