Specific Information and communication technologies including the internet has significantly changed the way economic transactions occur (Niranjanamurthy, 2014, p. 670). Online shopping has become a modern day concept for customers all over the world. It has made shopping more effortless; prices can be compared and customers can review products and services before a purchase decision is reached (ALraja and Aref, 2015, p. 913). The online consumer behavior has now become a major research area for both psychologists and information technology scholars with most research areas being an analysis of how consumers become adopted to the use of online stores. However, recent research now needs to investigate purchase and repurchase behaviors of online shoppers with specific reference to online payment which is an important process for business transactions to be completed on the internet.
Ecommerce development has led to an ongoing payment transformations from the traditional brick and mortar methods to now sophisticated online electronic- cash equivalent methods and third party payment methods. In the present global survey of ecommerce payment trends, it has been shown that the credit card payment option accounts for a whopping 40% of total online environment payments (Meeker, 2015, p. 12). While other third party methods such as PayPal have also significantly been adopted, use of credit cards continues to be preferred method of payment on the online front due to its convenience. While online shopping websites promote user perceptions of easy to use mechanism employed on the electronic commerce hence the overall trust and ability of the site to carry out the complete transaction, generic users of electronic payments methods are normally torn between the security, convenience, cost, anonymity, traceability and control requirement of their method of choice. The paper is thus a review of how online credit card appears as to tradeoff between traceability and anonymity, security and convenience and control and cost.
It is imperative for an online customer to select the most convenient payment methods so that it will work for both the customer and the retailer (Al-Khouri, 2014, p. 176). For the purposes of this this research, the research topic and hence the research focus will be on the use of online credit cards as a payment method with specific references to factors that influence a customer’s choice of credit cards as a secure and convenient method of payment.
The main research objective in this study will be to investigate the relationship that exists between credit card payment method in online website and the perceptions of the end users on the security, convenience and economic viability option. This study reviews the factors that influence the choice of credit card option as a means of payment in online shopping. Other objectives in this research will include:
This research is meant to increase the understanding of the use of credit cards in the period that has witnessed prosperity in the ecommerce development. Customers are now more concerned with their security and privacy issues in a period where the internet is the driver of uncertainty in perceptions due to the anonymity it promotes. In this research the four main research questions are meant to increase the theoretical understanding of the determinants of credit card as a choice in payment method in online shopping. These research questions are:
What are the factors that influence a customer’s online payment method of choice?
What relationship does exist between customer’s perceptions and overall purchase behavior?
Does choice of credit card as a method of payment influence future shopping behavior of the customer?
Is product uncertainty a determinant of credit card payment method choice?
Those four research questions have been chosen because of the limited research knowledge that exists on payment methods relative to other topics in the ecommerce industry. This is true in all disciplines ranging from information technology, marketing, finance, information technology and psychology. The research questions are also justified in the light of sharper focus on the authenticity and trustworthiness of online sellers and product uncertainty as main determinants of choice of methods of payment methods in online shopping (Xu and Riedl, 2011, p23).
The following hypotheses were assumed in this study:
There exists a relationship between sales volume and payment method option chosen by the customer.
Many customers are willing to consume ecommerce products and services when they understand that the method of payment they are using is secure.
Customer security perceptions play a bigger role is a customer’s choice of credit card as a method of payment.
In any research type, data collection aspects are important to a research as inaccurate data leads to inaccurate and invalid results (Robson and McCartan, 2016, p32). To this end this research utilizes qualitative and quantitative methods in data collection. In this research, there is extensive use of literature reviews as well as expert opinions. The study involves use of information from market surveys, technical and academic journals, and company reports. The study also involves collection of primary data inform of oral and written interviews with both the customers and online service providers.
Quantitative data collection methods
Quantitative data collection methods often rely on random sampling and other structured data collection instruments whose intent is to gather responses from predetermined categories of questions. They produce data that can be summarized, compared and generalized. These methods are concerned with testing hypothesis from randomly chosen samples whose characteristics are the generalization of the whole population (Robson and McCartan, 2016, p67). The quantitative data collection method in this study includes interviews and questionnaires.
Interviews and questionnaires
The primary research data will involve the administration of questionnaires to online and offline customers who make use of the online shopping as part of their shopping experiences. These will include face to face interviews where oral questionnaires will be used and written interviews where open and close ended questioners will be used. These interviews will also be conducted through emails where questioners will be administered to the customers. The respondents in the interviews will then be grouped according to their demographic features and the factors that influence their choice of credit card as a means of payment analyzed. In the selected group that will take part in the study, they must be ones who use credit card as their primary option in online shopping while also having an option of a second means of payments. The respondents will be distributed across all the industries and across the continents.
The secondary research data will be from profiling of particular customers’ online payment activities and the overall purchases volume over a period of three months through survey of online business organization databases. This methodology will involve comparing, the sales volume that an electronic commerce business makes from customers who buy their products using credit cards as well those who use other methods of payments. The sales volume will also be compared with other ecommerce businesses in the same industry. They will then be analyzed to investigate if there is any observable pattern. The selected sample of ecommerce businesses to be profiled must have different electronic payments gateways that they implement in their ecommerce website. The results will then be analyzed and conclusions drawn.
Qualitative data collection methods
These are exploratory research methods that are meant to gain understanding of underlying reasons and opinions. This data collection method involves the uncovering of truths through unstructured techniques (Robson and McCartan, 2016, p108). In this research the qualitative data collection method will involve review of ecommerce payment summary reports from the industry, government documents and discussions with experts in finance and technology. The documents to be reviewed will include technical and academic journals over a period of five years that analyzes the trends in the ecommerce payment.
Electronic payment transfer trust as digital cash or signed promises and are used as a proof of the authenticity of a customer and their intention to pay for online services and products. This simple premise is essentially how credit cards and other electronic payments methods work. The digital cash are just signed messages which do not carry any identification of the sender hence anonymous in nature. A key point to note is that the electronic payment is by itself a small part of real interaction that exists between the customers and the online service a product provider. This therefore means that the appropriate electronic commerce needs to implement supporting services such as the ability to prove that the service or the product was actually paid for and is secure for the users.
Recent studies have investigated, effects of transaction type, demographic variables and methods of payment attributes on the consumers overall decision of the choice of payment method. Overall these research shows that a customer’s method of payment is determined by characteristics which can be divided into three bold categories of category, payment method and consumer. The transaction based characteristics is defined by transaction context and product price, the payment method characteristics involve product payment is based on perceived risk, payment method and product type while the consumer characteristics are based on the demography and method adoption (Walczak and Borkan, 2016, p. 677).
ALraja, M.N. and Aref, M., 2015. Customer Acceptance of E-Commerce: Integrating Perceived Risk With TAM. International Journal of Applied Business and Economic Research, 13(2), pp.913-21.
Al-Khouri, A.M., 2014. Electronic Payments: Building the Case for a National Initiative. Advances in Social Sciences Research Journal, 1(3), p.195.
Niranjanamurthy, M., 2014. E-commerce: Recommended Online Payment Method-PayPal.
Meeker, M., 2015. INTERNET TRENDS 2015-CODE CONFERENCE. Glokalde, 1(3).
Robson, C. and McCartan, K., 2016. Real world research. Wiley.
Walczak, S. and Borkan, G.L., 2016. Personality Type Effects on Perceptions of Online Credit Card Payment Services.
Xu, Q. and Riedl, R., 2011. Understanding Online Payment Method Choice: An Eye-Tracking Study.