Chapter One comprises mainly of the background of this research and the problem statement that arises are defined elaborately with the research objectives and its significance to this study. Limitation that may arises are also touched on lightly. Research structure are laid out as a guide of the flow of the study.
When it first started, money was a physical substance like gold and silver and it could also be in a live form such as cattle.
Cowrie shells and cattle were one of the oldest forms of money. Currently, although much of the money used in everyday transactions is still in the form of physical notes and coins, its quantity is small in comparison with the intangible money that exists only as entries in bank records. Perhaps coins and banknotes will one day become obsolete.
The industry has come up with other variants of payment mode. One of such mode is credit cards. Over the last decade, the plastic payment card market has grown tremendously bringing the industry life cycle into its mature stage.
Competition becomes fiercer among banks and merchants with most of the possible sources of value added have been exploited.
Bargaining power of consumers also increases with so many to pick and choose from. Given the drastic changes of the financial industry, financial institutions find themselves needing to work harder to retain their customers and change the way of banking. One of the less exploited method of payment in Malaysia is Electronic money or E-money.
Refer to Figure 1.0 for the evolution of payment systems in Malaysia since 1970s.
E-money is a common type of electronic money which acts like an “electronic purse”. Users can store certain amounts of money in a virtual mode to make payments. Electronic money is user friendly, more convenient than banknotes and accessible through mobile phones; which are now being used more in place of personal computers. Mobile phones have become an important tool for performing personal and professional activities CITATION Cha15 l 1033 (Chauhan, 2015).
Figure 1.0: Evolution of Payment Systems in Malaysia since 1970s CITATION Yaa16 l 1033 (Yaakub, et al., 2016)All this while, mobile phone serves as a device for communication; connecting people since inception. However, with the change of lifestyle and the introduction of internet, more functions are added.
Serving more advance purposes other than conventional ones. Smartphones refer to the combination of both computer and mobile phone functionalities that works on a more advance operating system, with the ability to download and install applications when connected to internet CITATION Moh13 l 1033 (Mohd Suki, 2013). With the wide usage of mobile phones or smart phones, consumers are starting to engage in mobile payment.
Globally, mobile phone users are higher compared to people with banking accounts CITATION Cha15 l 1033 (Chauhan, 2015). E-money payment allows contactless payment as users only need to scan their phones at the payment terminal. Using Near-Field-Communication (NFC) Technology, data are transferred from one device to another when bring into close-proximity; usually only within few centimetres distance of each other.
This will completely change the way people pay for things and affect the retail industry whereby they will no longer accept physical cash but just an electronic form of cash transferred from consumers’ mobile phone through an application to retailers’ payment terminal which is fast and convenience. Its goal is to make procuring easier with an automatic personal financial transaction record keeping CITATION ASe09 l 1033 (Seetharaman & Rudolph, 2009).
Develop by Sony and Philips in late 2002 CITATION DuH l 1033 (Du, 2013), NFC is foresee to be the future medium of contactless electronic payment CITATION Jai151 l 1033 (Jain & Dahiya, 2015) in replace of wallets, credit cards, debit cards and others. It is said to be the next big thing. NFC used for electronic payment makes the SIM card in devices, a contactless smart card thus making the smart phone work as a mobile wallet. Figure 1.1 illustrates the operating system of NFC.
Figure 1.1: NFC Operation modes for E-money payment CITATION Jai151 l 1033 (Jain & Dahiya, 2015)NFC has been adopted in many countries such as Hong Kong, South Korea, Singapore CITATION deR14 l 1033 (De Reuver, et al., 2014), Japan, Germany, UK and Spain CITATION Abd15 l 1033 (Abdel-Aleem Ali, 2015).
Toll charge system CITATION Dia14 l 1033 (Dias, et al., 2014), public transport payment, petrol station CITATION ASe09 l 1033 (Seetharaman & Rudolph, 2009), mobile payment CITATION Abd15 l 1033 (Abdel-Aleem Ali, 2015), attendance taking, healthcare industry, tourism CITATION Pes12 l 1033 (Pesonen & Horster, 2012) and many more are using this technology.
Virtual money can be loaded into electronic wallet CITATION AlO12 l 1033 (Al-Ofeishat & Rababah, 2012) which users can access anytime anywhere. Examples of NFC applications can be seen in Figure1.2 below.
Figure 1.2: Some examples of NFC Applications CITATION Rah l 1033 (Rahul, et al., 2015)
While this is not exactly new payment method worldwide, only now Malaysians are able to use their phones as a tool for payment moving from traditional cash towards cashless environment namely E-money. Maybank through its partnerships has begun to provide mobile payment to its customers CITATION Leo13 l 1033 (Leong, et al., 2013).
E-money adaption enables service providers to meet the demand of more tech savvy consumers CITATION Cha14 l 1033 (Goi, 2014) of the younger generations. It also provides enormous benefits to consumers in term of ease of use and cost of transactions.
Financial transaction cost can decline significantly as E-banking expands CITATION Nso02 l 1033 (Nsouli & Schaechter, 2002). Apart from that, consumers do not have to bring physical cash or cards when travelling or going shopping, which saves a lot of hassle and not to mention space. Carrying large sum of cash or insufficient cash can often be a hindrance for many CITATION DuH l 1033 (Du, 2013). Apart from that, bringing only credit card to a cash only store is also a nuisance.
Although mobile payment has been used for years, it has yet to reach a mass market CITATION deR14 l 1033 (De Reuver, et al., 2014). E-money is not something new in the world, but it is relatively quite new in Malaysia. Only a few banks have implemented E-money facilities in Malaysia (Refer to Figure 1.3).
Figure 1.3: Comparison of Commercial Banks in Malaysia that offers different online banking facilities CITATION Ban16 l 1033 (Bank Negara Malaysia, 2016)
Maybank partnered with a big established company in China – Ant Financial Services Group (Ant Financial) CITATION Sya17 l 1033 (Jaafar & Syahirah, 2017) had recently roll out their first E-money enable namely Alipay merchant terminals in June 2017.
These terminals will provide a payment service that is swift, seamless and secure. However, it is only available at major retail outlets such as Royal Selangor, Eraman Duty Free and Poh Kong Jewellers CITATION Sta17 l 1033 (Star Media Group Berhad, 2017).
Until now many Malaysians are yet to feel secure or comfortable with online banking. Online banking has been in Malaysia for almost 2 decades since Year 2000 CITATION Sug00 l 1033 (Suganthi, et al., 2000) yet many Malaysians are still uncomfortable.
Personality and perception of customers will significantly influence the use of internet banking CITATION Yoo13 l 1033 (Yoon & Steege, 2013). Now, with the introduction of E-money, consumer’s acceptance and perceptiveness are yet to be determined.
The Internet penetration in Malaysia is still low (Refer to Chart 1.0 and Table 1.0) compared to the population of Malaysia (Refer to Figure 1.2). It is hard to determine an actual figure of online users in Malaysia, as some of the online users are not registered as Internet subscribers.
They assess the Internet at their workplace, free hotspot places or through Internet cafes. As for mobile banking, the penetration rate is low at only 10.9% of Malaysian population as at June 2013 CITATION Cha14 l 1033 (Goi, 2014).
Chart 1.0: Number of registered third level domain names (Jan 2008 – June 2017) in Malaysia CITATION MYN17 l 1033 (MYNIC Berhad, 2017)Table 1.0: Number of registered third level domain names (Jan 2015 – June 2017) in Malaysia CITATION MYN17 l 1033 (MYNIC Berhad, 2017)
Figure 1.4: Malaysian population as at December 2016 CITATION Dep17 l 1033 (Department of Statistics Malaysia, 2017)Furthermore, the pre-requisite to use this technology is consumers and merchants alike need to have NFC-enabled devices which currently is still not that common or widely affordable in Malaysia.
Therefore, Malaysians might not be ready to accept and use mobile payment of e-money widely on their day to day dealings. The potential use of electronic payment system is lacking consumer confidence CITATION ASe09 l 1033 (Seetharaman & Rudolph, 2009).
Through this study, the researcher try to raise awareness, educate and to better understand the reason why this nascent technology is not adopted widely in Malaysia.
E-money enable delivery of low-cost and speedy money transfer through mobile phone CITATION Sum15 l 1033 (Sumedha, 2015). Deficiency of trust and acceptance in a system can be a possible obstacle for boundless use of any technological modernization even with many advantages.
The purpose of this study is to find out the criteria attributing towards implementation of e-money or contactless payment mode via mobile phone in Malaysia in their daily payment transaction. To understand are they willing to use e-money to pay instead of cash. The study will use Technology Acceptance Model (TAM) and Unified Theory of Acceptance and Use of Technology 2 (UTAUT2) Theory.
This research will be conducted on different gender and races in Malaysia. Different age segmentation of Malaysians will also be targeted.
To carry out this research, the following questions need to be addressed:
These questions will be able to shed more light on the relationships between the independent variable and dependent variable – E-money implementation in Malaysia.
There are several limitations that arises from this study. Some of them are:
Many other potential variables are not included and considered such as culture, awareness, security and lack of legal guidelines and regulations.
Respondents may not be able to fully represent Malaysians as-a-whole due to limitation of age and area of coverage of respondents.
As this is relatively new in Malaysia, not many studies or research have been conducted on it.
Figure 1.5: Structure Outline
There will be five chapters all together in this dissertation as shown in Figure 1.5. Chapter one will elaborate about the background of the study and its purpose.
Followed by Chapter two which talks about the literature review of this research and the studies and opinions of other researchers.
Chapter three is the methodologies used to garner data from the survey that will be conducted. Survey strategies, sampling methods, questionnaire pilot test and finalization are elaborated.
Chapter four describes the information extracted from the survey conducted, data analysed and its analysis methods. It also explains about the interpretation on the analysis results.
Lastly, Chapter five comprises of critical discussion on the results and information assimilated form the various test conducted. Conclusion that were made and the recommendations that were given.