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Chapter 1
THE PROBLEM AND ITS SETTING

Introduction

The change in today’s payment systems as the pandemic happened around the globe
is drastically accelerating and is now expected to be cashless and digital. As in common
knowledge, a secure payment system is necessary for a stable economy. Over the years,
payment systems around the world have undergone different transformations as new payment
methods are now being used by the general public and new ones are being innovated. 
Moreover, aside from the pandemic, advanced technologies of payment systems are proposed
for competitive advantage worldwide. For understanding, according to Ahmed, A., Aziz, A.,
Muneeb, M. (2019), the payment system– is a third party that helps payer and payee to
transfer and receive money respectively. 

The use of digital platforms has increased in our generation now. Most people spend
their time using social media, media sharing, and service-oriented platforms. With the use of
smartphones and other gadgets to access products and services as well as payments online
have convinced people on shopping their needs and wants online and even making payments
of bills. For instance, numerous digital wallet providers such as Paypal, Gcash and PayMaya
have come into existence and played a big part in attracting consumers to have more online
transactions because of its convenient features and discount promos. With the boost of online
shopping because of the ease in accessing various products and especially the impact of the
pandemic, more and more countries are adapting to a full digital payment system since it is
perceived as quicker and more efficient.  On the other side, cash as a payment system has
been less used as different cashless and digital modes of transactions emerged such as debit
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and credit cards, digital wallets and such. (Khan and Jain, 2018) Since the outbreak, the use
of online payments increased being pushed by the fear of COVID-19 infection. 

While the rapid increase in the usage of electronic payments, there are still problems
and challenges that remain– one of these is digitalizing payment requires constant tracking to
limit the risks such as theft and security breach to reduce the doubt of consumers as threats of
these issues are still there. Therefore, financial institutions and companies will have the need 
to upgrade and invest for advanced cybersecurity systems. Another case in point is the
challenge to include all sectors with the advancement of technology regarding payment
transactions. According to the World Bank, 42% of the Filipinos do not have access to bank
accounts in the Philippines (Nair, 2016) and having one is just a step to possibly use
electronic payments. For this reason and as cashless transactions are increasing globally, the
government of the Philippines is taking initiatives for the country to focus more on the
advancement of technology to reach especially the financially excluded. (Nair, 2016) 

Theoretical Framework 

Venkatesh (2003) pointed out that technological innovations need to be accepted and
actually used; and to understand why people accept or reject technology have become one of
the most challenging areas about information systems. (Davis, Bagozzi, Warshaw, 1989)
Different researches in this field have resulted with different theoretical models that roots in
information systems, psychology, and sociology that explain a percentage of the various
reasons of a user to use technology. (Venkatesh and Davis, 2000)  

Davis (1989) proposed the Technology Acceptance Model to focus mainly on the
reasons and explain the acceptance or rejection of technology and eventually how to improve
and develop the acceptance and offering of it. (Silva and Dias, 2007) Show in Figure 1,
Davis (1989) cited that there are mainly two theoretical constructs that serve as the
fundamental reasons that determine the use of a system – perceived usefulness and perceived
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ease of use. Davis (1989) defined Perceived Usefulness as the degree to which users believe
that using a specific system would help them perform their jobs better. Consequently,
systems high in perceived usefulness is one which users believe have a user-performance
relationship. On the contrary, Perceived Ease of Use is the degree to which users believe that
using a specific system would not require a lot of effort. This explains systems which are
easier to use have higher acceptance by users. 

Furthermore, even if users see a particular system as useful but is too hard to use, they
may still perceive that the benefits and usefulness of the system is outweighed by the effort
you have to give in using it. (Davis, 1989) 

Figure 1. Technology Acceptance Model by Davis

Conceptual Framework 

The researchers conceptualized the Input-Process-Output (IPO) model as shown on

Figure 2 Research Paradigm.
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The Input frame contains the profile of the respondents in terms of sex, age,
educational attainment, and source of income. It also includes the questionnaire that will be
used to gather the data from the respondents as well as their information. 

The Process frame shows how the entire study will be done. It includes the data
gathering, analysis and interpretation of findings as well as the formulation of conclusions
and recommendations. 

The Output frame contains the obtained profile of the respondents, assessed level of
acceptability of using e-payments on personal finance of the working class and the
formulated recommendations to improve electronic payment systems.

INPUT PROCESS OUTPUT

1. Profile of the respondents 1. Compile and analyze the
1. Profile of the respondents
in terms of: data gathered through
1.1 Age questionnaire  identified 
1.2 Sex 2. Statistical treatment of
2. Level of acceptability of
1.3 Highest Educational gathered data
attainment 3. Tabulate, analyze and using e-payments on the
1.4 Occupation interpret the gathered data
personal finance of the
4. Formulate conclusions and
recommendations  working class determined
2. Constructed
3. Recommendations to
Questionnaires
improve e-payment systems
formulated

Feedback
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Figure 2. Research Paradigm

Statement of the Problem 

  This study aims to determine the level of acceptability of E-Payments in Personal

Finance of the Working Class. 

Specifically, the study seeks to answer the following sub-questions:

1.   What are the demographic profile of the respondents in terms of the following aspects:

1.1 Age

1.2 Sex

1.3 Highest Educational attainment

1.4 Occupation

2. What are the level of acceptability of e-payment in personal finance of the working class
with respect to:

2.1 Time

2.2 Accessibility

2.3 Security

2.4 Cost

2.5 Convenience

Hypothesis
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The respondents, which are part of the working class, do not accept the idea of e-
payments in their personal finance and are not willing to adopt it in their daily life.
Scope and Limitations of the Study 

This study will focus only on the acceptability of e-payments in personal finance of
the working class. The researchers will conduct a survey virtually to the respondents which
fit the characteristics of the working class and are only limited to the people currently living
in the Philippines. The people who do not fall as part of the working class are not within the
scope of this research.

Significance of the Study

The researchers believe that this study will be a great help to the following
individuals and organizations:

Online Business Owners. To help online entrepreneurs in improving and widen the
available options in their payment systems. 
Companies. To help essential industries such as Meralco, Maynilad and Manila
Water in improving their electronic payment systems. 
Digital Wallet Providers. To help the digital wallet providers such as Paypal, Gcash,
and Paymaya in improving or upgrading their features and to reach out for the people who do
not have the right access and lack knowledge about their services. 
Future Researchers. This research study will serve as a basis and reference for
future researchers undergoing the same nature of study. 

Definition of Terms 

Acceptability. The quality of being satisfactory and able to be agreed to and agreed of.
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COVID-19. An infectious disease caused by a newly discovered coronavirus. 

Cybersecurity. The protection of internet-connected systems such as hardware, software and
data from cyber-threats. 
Digital Platforms. Handles an end-to-end business process necessary to achieve the
improved experience for customers, employees, and partners. 
Digital Wallet. A software-based system that securely stores users’ payment information and
passwords for numerous payment methods and websites.
Digital Wallet Providers. Financial accounts that allow users to store funds make
transactions, and track payment histories by computer.
Electronic Payment. Used for paying goods or services on the internet. 
Pandemic. Prevalent over a whole country or the world. 
Payment Systems. Any system used to settle financial transactions through the transfer of
monetary value. 
Personal Finance. A term that covers managing your money as well as saving and
investing. 
Working Class. Persons in a social class marked by jobs that provide low pay, require
limited skill, or physical labor. 

Chapter 2
Review of Related Literature and Studies 

Over the last decade, World Payment Reports showed that the number of non-cash
payment transactions escalated rapidly depicting a 53.5% increase from 2010 to 2015 that
reached 432.9 billion transactions. This rapid change was shown from the leading markets
from growing Asia and CEEMEA countries. (Driga, Dura and Cristea, 2016) With the boost
of easier access to online shopping, transferring money to different parts of the world and
digital payment transactions in general, the amount of users of electronic payments rise as
well. Different technology innovations take place through the years and with one of the most
increased competition there is, the electronic payment systems. Payment systems, usually
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used interchangeably with terms such as payment gateway and payment method, are the
instruments that connect and help the payer and the payee to transfer and receive money
respectively. Payment systems’ history dates back to the beginning when people purchase
goods and services by paying goods and services as well. (Ahmed, Aziz and Muneeb, 2019)
Because of innovations where payment service providers began to design and develop
banking facilities that can be accessed and performed using personal computers and later,
smartphones, there are now a number of electronic payment systems that transcend
traditional instruments or payment types such as cash payments where the handing of actual
cash is the payment process or check payments where payer and payee process the payments
through their banks with checks. Electronic payment systems are instruments that make it
possible to process payment transactions through the internet usually for e-commerce
purposes which is a method for conducting business over the same manner, the internet.
(Ahmed, Aziz and Muneeb, 2019) 

According to Driga, Dura and Cristea (2016), the innovations to help countries be a
non-cash society has an important point in the economic growth. One point in this case,
electronic payment systems help in reducing costs in the circulation or the move of money
even around the world. However, despite the different innovations in this field, financial
inclusion is still a present-day problem. Wealthy households have it easier to immerse their
lives in the digital financial system which makes it easier for them to perform these economic
activities which help them avail cheaper and easier transactions for daily purposes. (Radcliffe
and Voorhies, 2012) Financial system providers must continuously work on giving everyone
the same access to these services as a lot of poor households still have it hard on having one.
These people are the members of the working class. The people, who, according to Michael
Zweig, a scholar in working-class studies, have little control or authority over their jobs with
low wages. They are individuals also specifically defined as those who are in the labor force
without a bachelor’s degree – high school graduates, people who did not graduate from
college and or associate-degree holders. (Draut, 2018) 
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Came the pandemic in 2020, evidence of institutions adopting financial technology,

specifically electronic payment systems, rise again as Covid-19 is reinforcing existing trends
to increase the digitization of payment systems. People shifted in using non-cash payment
systems as social distancing was enforced on everyone because of the “new normal” and
safety protocols. Governments encourage people to use digital and electronic payment
methods as a precautionary measure against the virus. (Sornagesh, Ganesh and Sathish,
2020) 

In this day and age and even before the pandemic, according to the World Payments
Report 2018, the usage of electronic payment continuously arises globally where transaction
volumes are approximately 41.8 billion which almost consists 8.6% of all non-cash
transactions in 2016. The global non-cash transaction volumes during 2015-2016 rose to a
rate of 10.1%, higher than the predicted 9.1% rate in World Payment Report 2017.  In this
report, it also includes that the growth of non-cash transactions in the markets of developing
countries in Emerging Asia, CEMEA (Central Europe, Middle East, and Africa), and Latin
America was driven by the monetary incorporation endeavors and the acquisition of mobile
payments. The report’s E-wallet Market Analysis stated the fast-growing of the e-wallet
market and to fill particular customer needs, e-wallets have emerged such as Paypal which
offers present time and cross-border e-payments across numerous nations. In Asia, the QR
code-based application is rapidly spreading and e-wallets adopted this as a method of
payment considering that scanning of QR code is convenient and easy for the customers.

As indicated in the report launched by Capgemini and BNP Paribas (2018), in the
past few years, BigTech players such as Google, Apple, Facebook, and Amazon, have tested
and launched their own payments apps and e-wallets and offer a distinct value proposition to
customers in five distinct areas. BigTechs are entering peer-to-peer payments taking
advantage of the increasing rate of mobile phone users, utilizing their stored customer data to
present personalized products and services like goods ordering and bill splitting. BigTechs
are able to offer a seamless customer experience with the use of their advancement in
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technology which gives more secure and smoother transactions such as checking-out and
fund transfers. They have loyalty rewards included in their e-wallet offerings for the
customers which give the ability to earn and spend points, and to further expand their
financial services offerings, BigTechs added bill payments, lending to merchants, and
insurance products, forming a digital ecosystem.   

According to BSP Digital Payments Transformation Roadmap 2020-2023, as of

January 2020, more than half of the Philippines’ 105 million populations are internet users
which are approximately 63 million people. This is seen as a development that strengthens
the change in payment systems and another one is the increasing mobile phone penetration
rate which exceeded 100% as reported in the 2015 country diagnostic of the Better Than
Cash Alliance (BTCA). However, despite a large number of mobile phone users in the
country only 12% of users and 21% of adults who own an account carry out financial
transactions through mobile phones and the internet. Summing it up, only 1 in 10 adults
perform financial transactions with the use of mobile phones and the internet.  

As noted by Hassan, et al. (2020), secured electronic payment systems play a big role
in the success of e-commerce since consumers consider the security in using payment
gateways. Credit cards and debit cards are most used in making online payments. However,
credit card fraud cases online are increasing because of security vulnerability. The
confidentiality of data and information provided by the consumers are considered in making
online payments. 

Kanagavalli and Vinoth (2016) cited the problems with relation to online payment
systems such as identity theft which happens when the identity of the consumer or user gets
copied and used by anonymous people or entities, credit/ debit card misuse when the details
are hacked and misused, service issues when the server encountered problems during the
settlement of payment, online frauds due to fake websites and payment gateways, and double
payment when the payment made gets automatically refreshed and will demand for another
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payment. Kanagavalli and Vinoth (2016)  proved that some people prefer the other mode of
payment which is the cash-on-delivery rather than the online payment system because it
provides safety and security. 

Furthermore, according to the BSP Digital Payments Transformation Roadmap

Report, a number of Filipinos remain financially excluded despite the innovations in the field
as the FIS report shows that 51.2 million people still lack a transaction account which serves
as a basic instrument to further perform other financial services digitally having the main
reason is the lack of enough money. Additionally, the lack of awareness of these individuals
for using financial services and even using mobile phones alone. These certain reasons also
determine the thinking of other people to prefer traditional payment methods instead of
digital and electronic systems. 

In the Philippines, according to BSP or the Bangko Sentral ng Pilipinas, one of their
vision and targets by 2023 is to promote financial inclusion and digitization of payments as
they enforce policies and regulations regarding it to move the progressive turn towards a non-
cash economy. They envision to strengthen the preference of the consumers to use digital
payments instead by converting 50% of the total retail payments of the people to digital and
to expand the financial inclusion to 70%.