Cashless transaction: Adoption of digital wallet among local businesses in

Patan

Submitted by:

Bijay Maharjan

D.A.V. College

Dhobighat, Lalitpur

November, 2021
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Cashless Transaction

The advancement and development of technology, particularly the internet, offered

new methods of payment, and the concept of cashless payment was one of the primary

approaches that aided companies during the Covid-19 epidemic. Consumption and consumer

behavior are critical variables in society, notably during the 2020 coronavirus (COVID-19)

outbreak, and digitalization has been a big influence in consumer behavior, leading to new

ways of life (Yang et al., 2021). Not only does the cashless system help in times of epidemic,

but it also helps with sustainability. One of the methods for turning cashless is using a digital

wallet, which is popular due to its straightforward payment and transaction procedure.

The usage of digital wallets is increasing among major enterprises, while small and

local firms are gradually adopting and adapting to go cashless by utilizing digital wallets.

With the growing popularity of online services, electronic payments have grown increasingly

reliable, as has the number of providers and the size of their delivery networks (Li et al.,

2020). The research describes the many components that build the user's intention to adapt

the cashless payment system while considering the rewards and problems that the user faces

when adopting.

When making payments and adopting and adapting digital wallet systems, the user's

behavior, attitude, and purpose are impacted by a variety of factors. Individuals profit in a

variety of ways by opting for cashless transactions. Utility payments, pre-reservations,

microfinancing, and environmental friendliness are some of the advantages that users may

enjoy. On the contrary, various difficulties are encountered while using digital approaches,

such as internet troubles, language difficulty, and reluctance to change. The study will offer

an overview of the numerous aspects that will impact the usage of digital wallets for

consumer and local business transactions.

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Literature Review

Various studies and researches on the digital wallet have been conducted in the past.

For a poorly educated seller with limited technological understanding, digital wallets with

user-friendly interfaces were extremely straightforward to use (Iyer, 2018). According to

empirical study performed by Iyer (2018), in which 223 vendors were interviewed and

surveyed, numerous variables would affect the adoption of digital wallets by petty vendors,

and there was substantial reluctance among petty vendors to transition to e-wallets over cash.

Privacy and Security

E-wallets have grown in popularity as a result of their ease of use, according to

Marimuthu and Roseline (2020); yet, there is still a lack of information and awareness among

users, as well as fear about performing transactions due to security and privacy concerns.

Customers may lose faith in the information system provider and refuse to conduct any

electronic payment transactions unless privacy and security precautions are applied (Gitau et

al., 2014). Users have become more concerned about privacy and security as a result of the

rapid advancement of technology, which has led to a reluctance to submit financial

information over the internet and e-commerce sites (Ahmad et al., 2010). As such, the

following hypothesis is proposed.

Hypothesis 1 (H1): Privacy and security has a significantly positive effect on the adoption of

the digital wallet in local business.

Perceived Usefulness and Perceived Ease of Use

Because utilizing an e-wallet saves time and makes each payment more convenient,

perceived usefulness has a significant influence on behavioral intention (Karim et al., 2020).

Perceived Ease of Use, on the other hand, has a positive and significant influence on

Perceived Usefulness and Behavioral Intention, implying a strong relationship between

Perceived Ease of Use and Perceived Usefulness (Yang et al., 2021). As a result, Yang
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advises e-wallet providers to keep in mind that user-friendly applications might influence

users' behavioral intent to use them. As a result, the following hypotheses are proposed in the

study.

Hypothesis 2 (H2): There is a positive significant relationship between perceived ease of use

and digital wallet adoption in local businesses.

Hypothesis 3 (H3): There is positive significant effect between perceived usefulness and

digital wallet adoption in local businesses.

Availability of Resources and Education Level

The availability of resources also influences the acceptability of the digital system.

The availability of resources has been defined as the variables and technical infrastructures

that improve e-wallet usage as well as a consumer's capacity and resources (Chawla & Joshi,

2020). When enabling conditions exist, consumers frequently join in virtual communities

(Yang et al., 2021). Furthermore, the user's degree of knowledge effects his or her behavioral

intention to adopt a cashless system. A higher degree of education improves the ability to

read and write, which may be essential for e-wallet usage (Udu ji & Okolo-Obasi, 2018). As

a result, the hypotheses listed below are presented.

Hypothesis 4 (H4): Availability of resources has a significantly positive effect on the

adoption of the digital wallet in local business.

Hypothesis 5 (H5): Level of education has a significantly positive effect on the adoption of

the digital wallet in local business.

Customers, mobile wallet companies, the government, the banking sector, app

developers, and merchants may all benefit from identifying the elements that drive behavioral

intent to use mobile wallets (Chang Jin et al., 2019). This provides stakeholders with a better

grasp of the critical factors that customers evaluate when introducing the mobile wallet.
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When it comes to establishing a more personalized mobile wallet for their consumers, mobile

wallet firms may make the finest marketing options.

Earlier studies examined perceived usefulness, digitalization uptake, social effect,

promoting conditions, lifestyle compatibility, perceived confidence, and willingness to adopt

an e-wallet. Previous study has been insufficient in the understanding of influencing

variables, information and insights, and the utility of adopting a digital wallet in local

businesses.
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Analysis

The major purpose of this cross-sectional study is to look at the characteristics that

influence local businesses' use of digital wallets. To do this, descriptive statistics were used.

To explain the factors in this study, the data was statistically measured.

Data collection

The study's demographic consists of Mangalbazar service users of local businesses

(Patan). The study's sample size was 385, as determined using a sample size calculator with a

95% level of confidence and a 5% error margin, but the population number of consumers

aged 18 to 35 who use a digital wallet remains unknown. However, for this investigation,

only 105 sample sizes were used. The samples are selected using Convenience Sampling.

Since physical surveying was difficult due to covid-19 pandemic constraints, this study relied

on a Google Forms survey for primary data collection. The respondents were sent the

questionnaire between March and early April. The Google Form is a convenient instrument

for data collection.

Measurement and Scale

For this research, a well-structured questionnaire was developed. It was divided into

two sections: demographic information and variable-based questions. Demographic

characteristics included age, gender, permanent address, and education level. Three questions

were included concerning respondents' digital wallet use status and the payment methods

they use for transactions. The factors were assessed using a five-point Likert Scale, with 1

indicating highly agree, 2 representing agree, 3 representing neutral, 4 representing strongly

disagree, and 5 representing severely disagree. Each variable contained four, five, eight, six,

four, and four Likert statements: perceived ease of use, perceived utility, privacy and

security, available resources, level of education, and digital wallet acceptance. At the end,

there was only one open-ended question.

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Using the computer software applications Ms-Excel and SPPS version 23, the

obtained data is tabulated and examined using graphs and statistics such as pie charts and bar

graphs. For the systematic examination and interpretation of the acquired data, Correlation

Analysis was applied.

A pilot study for this research was conducted with a sample size of 10 persons from

D.A.V. College who had transactional experience with local and small enterprises. Any

inconsistencies detected during the pilot research were rectified before actual data collecting,

ensuring that data interpretation was not harmed.

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Results

Demographic Characteristics

Table 1 shows the demographic characteristics of the respondents in this research.

Males (55.2%) clearly outnumbered females in the survey (44.8 percent). The major portion

of responders (81%) were aged 20 to 24, with 17.1 percent aged 25 to 29, and 1.9 percent

aged 30 to 34. The majority of respondents (81%) held a bachelor's degree, while 12.4

percent had only finished high school and 6.7 percent held a master's degree. The large

portion of respondents (77.1%) lived in Bagmati Province, with 3.9 percent in Province 1, 9.5

percent in Province 2, 1.9 percent in Lumbini and Sudurpaschim Provinces, and 5.7 percent

in Gandaki Province.

Table 1

Demographic Characteristics

Baseline Characteristics Frequency (N=105) Percentage (%)

Gender

Female 47 44.8

Male 58 55.2

Age Groups

20-24 years 85 81.0

25-29 years 18 17.1

30-34 years 2 1.9

Education Distribution

Bachelor's Degree 85 81.0

Master's Degree 7 6.7

Up to High School 13 12.4

Permanent Address
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Province No. 1 4 3.9

Province No. 2 10 9.5

Bagmati Province 81 77.1

Gandaki Province 6 5.7

Lumbini Province 2 1.9

Sudurpaschim Province 2 1.9

Digital Wallet Usage

Table 2 displays the respondents' digital wallet usage status. According to the

research, 96 out of 105 respondents had used one of the available digital wallet services. 57

of the 96 respondents who have used a digital wallet only use one of the digital wallet

platforms, while 27, 10, and 2 of the 96 respondents who have used a digital wallet use two,

three, and four digital wallet platforms, respectively. 9 of the total respondents had no prior

experience with digital wallets.

Table 2

Status of Digital Wallet Usage

No. of Digital No. of

Digital Wallets N
Wallets Used Respondents

0 - 9 9

eSewa 51

Cellpay 1

1 Fonepay 1

IME Pay 1

Khalti 3 57

2 eSewa, Banking apps 1

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eSewa, Cellpay 2

eSewa, Fonepay 2

eSewa, IME Pay 5

eSewa, Khalti 17 27

eSewa, Cellpay, IME Pay 1

eSewa, Khalti, Cellpay 1

3 eSewa, Khalti, Fonepay 2

eSewa, Khalti, IME Pay 5

eSewa, Khalti, QPay Nepal 1 10

4 eSewa, Khalti, Cellpay, IME Pay 2 2

Total 105 105

Furthermore, Figure 1 depicts the respondents' preferred digital wallet application.

According to the survey, 93.75 percent of 96 respondents who have used a digital wallet have

used eSewa, while 32.29 percent, 7.29 percent, 14.58 percent, 1.04 percent, 5.21 percent, and

1.04 percent have used Khalti, Cellpay, IME Pay, QPay Nepal, Fonepay, and Banking

applications, respectively.

Figure 1

Preferred Digital Wallets

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100.00 93.75
Percentage (out of 96 using respondents) 90.00
80.00
70.00
60.00
50.00
40.00
32.29
30.00
20.00 14.58
10.00 7.29 5.21
1.04 1.04
0.00
eSewa Khalti Cellpay IME Pay QPay Fonepay Banking
Nepal apps
Available Digital Wallets

Figure 2 depicts the respondent's average digital wallet usage over the course of a

month. In average, 48 percent of all respondents (50 out of 105) use a digital wallet 1 to 5

times each month. Similarly, 29 percent (31 respondents out of 105) and 8 percent (9

respondents out of 105) utilize it 6 to 10 times and 11 to 15 times every month, on average.

Six respondents (6 percent of all respondents) use their digital wallet more than 15 times each

month. The remaining respondents (9 percent of the total) do not utilize the digital wallet.

Figure 2

Average Digital Wallet usage in a month

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6; 6% 9; 9%

1 to 5 times
11 to 15 times
50; 48% 6 to 10 times
31; 30% More than 15 times
Never

9; 9%

Hypothesis Testing

Karl Pearson's Correlation is used to test the hypotheses of this investigation. Table 3

shows the association between the variables, with Adoption of Digital Wallet as the

dependent variable and Privacy and Security, Perceived Ease of Use, Perceived Usefulness,

Availability of Resources, and Level of Education as the independent variables.

Hypothesis 1 (H1): Privacy and security has a significantly positive effect on the adoption of

the digital wallet in local business. The correlational analysis findings suggest that 'privacy

and security' and 'adoption of digital wallet' have a somewhat favorable association (r=0.313).

Hypothesis 1 is so accepted.

Hypothesis 2 (H2): There is a positive significant relationship between perceived ease of use

and digital wallet adoption in local businesses. The correlational investigation finds a

significant positive relationship (r=0.437) between 'reported ease of use' and 'adoption of

digital wallet.' As a consequence, Hypothesis 2 is accepted.

Hypothesis 3 (H3): There is positive significant effect between perceived usefulness and

digital wallet adoption in local businesses. According to the correlational study (r=0.346),
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there is a somewhat positive relationship between 'perceived utility' and 'adoption of digital

wallet.' As a result, Hypothesis 3 is confirmed.

Hypothesis 4 (H4): Availability of resources has a significantly positive effect on the

adoption of the digital wallet in local business. The correlational study results demonstrate a

substantial positive link (r=0.476) between 'availability of resources' and 'adoption of digital

wallet'. As a result, Hypothesis 4 is accepted.

Hypothesis 5 (H5): Level of education has a significantly positive effect on the adoption of

the digital wallet in local business. The correlational study reveals a strong positive link

(r=0.480) between 'degree of education' and 'adoption of digital wallet'. As a result,

Hypothesis 5 is accepted.

Table 3

Correlations between variables

Independent Variables
Dependent Variable
PEU PU PS AR LE

ADW Pearson Correlation .437** .346** .313** .476** .480**

Sig. (2-tailed) .000 .000 .001 .000 .000

N 105 105 105 105 105

Note. **. Correlation is significant at the 0.01 level (2-tailed), PEU = perceived ease of use;

PU = perceived usefulness; PS = privacy and security; AR = availability of resources; LE =

level of education; ADW = adoption of digital wallet

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Discussion

This study looked at the many elements that influence digital wallet use among small

enterprises. This study confirmed that there is a considerable positive association and effect

between the various factors and digital wallet adoption. One of the contributing factors,

privacy and security, has a moderately good influence on the adoption process (H1). As a

result, digital wallet service providers should think about making their services more

trustworthy, safe, and private for their consumers. Similarly, perceived ease of use

demonstrated a high positive link with digital wallet adoption (H2). As a result, the digital

wallet service provider should concentrate on new technologies and procedures that will

enable consumers to use the service successfully and efficiently, saving time and money.

Similarly, perceived utility has a strong positive influence and association with digital wallet

adoption (H3). As a result, service providers should persuade consumers that utilizing a

digital wallet is helpful and useful, and users will consider using digital methods as a feasible

choice. Furthermore, there is a favorable association between the availability of resources and

the usage of digital wallets (H4). Users are more likely to use a service if the resources are

available. As a result, service providers can present a variety of offers and possibilities to

assist consumers in gaining access to resources. Furthermore, there is a favorable association

between education level and digital wallet adoption (H5). As a result, digital wallet service

providers may assist in training and properly advising consumers on how to utilize digital

systems, as well as improving technical education on digital techniques and transactions.

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Conclusion

As per the findings of the study, different factors impact the user's practice and

adoption of digital systems in local and small enterprises for transaction techniques. The

study focused on the factors driving digital wallet adoption, with privacy and security,

perceived ease of use, perceived utility, resource availability, and level of education.

Providers of digital wallet services must guarantee that their services are safe, trustworthy,

and private. In addition, the service should be made simpler to understand by utilizing

improved technology and methods. Furthermore, both digital wallet service providers and the

government should work together to develop technical knowledge of digital systems.

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