Exploring retailer perspectives on NFC m-payment adoption

109 Pages·2015·3.59 MB·English

by  Jeremy Lourens

Exploring retailer perspectives on Near
Field Communication mobile payment
adoption using Q-methodology

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EXPLORING RETAILER PERSPECTIVES ON NEAR FIELD
COMMUNICATION MOBILE PAYMENT ADOPTION USING Q-
METHODOLOGY
By

Jeremy J. Lourens

in partial fulfilment of the requirements for the degree of

Master of Science
in Management of Technology

at the Delft University of Technology,
to be defended publicly on Wednesday 18 March, 2015 at 13:00.

Graduation Committee:
Chair : Prof Dr. Yao-Hua Tan Delft University of Technology
First Supervisor: : Prof Dr. W.A.G.A Bouwman Delft University of Technology
Second Supervisor: : Dr. Patrick van der Duin Delft University of Technology
Additional Supervisor: : Dr. Ir. Mark De Reuver Delft University of Technology

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P
REFACE

Upon completion of this thesis I would like to express my gratitude to my graduation
committee. First and foremost I would like to thank my first supervisor Prof Dr. Harry
Bouwman for showing interest in the research topic and taking time and effort to provide
guidance during the project, while still allowing sufficient buffer for me to think critically
during each phase of the project. Aside from this form of support, I would also like to thank
him for the opportunities he has presented to me, some of which were seized upon. I would
also like to thank my second supervisor Dr. Patrick van der Duin with whom I had interacted
on a less regular basis, but who provided me with valuable insights and positive support on
the occasions that we did interact. Gratitude also goes out to my additional supervisor Dr. Ir.
Mark De Reuver whose relatively higher attention to detail encouraged me to form well-
reasoned arguments throughout this thesis project. My appreciation goes out for the
different kind of support given by each member of the graduation committee, and for putting
up with a less than ideal speed of work. I can only hope that the content of this document
merits putting your names on the cover of it, and hope it will be of some use in the near
future.
In the bigger scheme of things, as this is a degree pursued abroad and away from home, I
must take time to appreciate family and friends that have supported me. In particular my
mother back home whose caring heart has been a source of inspiration on countless
occasions. Appreciation also goes to my uncle in Delft and his family who have helped me
settle in an unknown and different lifestyle and environment. Lastly I would like to show
recognition and appreciation to the Dutch ministry of education for partly funding my study
in the Netherlands. Unfortunately this is a matter taken for granted by many; but I am grateful
for the privilege and the financial support, and will hopefully have a Master of Science degree
to show up for it.

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A
BSTRACT

This research study employed Q-methodology to explore retailer perspectives on the
adoption of Near Field Communication. Near Field Communication m-payment has emerged
as a promising payment alternative for retailers in the Netherlands, offering attractive
technological advantages over existing payment methods. However, the multi-stakeholder
nature of m-payment ecosystems means that a comprehensive understanding of the
adoption factors and incentives for each stakeholder is needed in order to go past the
adoption tipping point and reach critical mass. Limited adoption of previous m-payment
systems coupled with an existing body of knowledge that has overlooked the adoption factors
for retailers have instigated the need for this research study.
This study identified 4 retailer perspective on NFC m-payment adoption. The first perspective
represents retailers that rely heavily on customer demand before being enticed to consider
adoption. This represents the typical wait-and-see behavior shown by the majority of retailers
in the past when it comes to mobile payment adoption, and this is supported by the fact that
the majority of participants loaded on this perspective. The second perspective represents
retailers that are concerned with the financial consequences of adoption and rely less on the
completeness of the mobile payment ecosystem. The characteristics of this perspective
represent a group that may be enticed to adopt by offering extrinsic motivation such as
financial support. The third perspective represents retailers that are less concerned with
financial consequences, but instead focusses on the technical competence of mobile
payment. The fourth and final perspective represents retailers that are satisfied with current
payment alternatives and will only adopt if mobile payment can improve the efficiency of
payment.
The use of Q methodology enabled a deeper insight into adoption factors that other common
techniques such as surveys may not have provided. The identification of retailer groups
extends on conventional adopter groups such as “early adopters” and “laggards”, thus
providing a wider breadth of views and responses towards NFC m-payment adoption. These
findings inform NFC m-payment providers as to who are willing and capable of adoption, thus
possibly accelerating adoption by creating a strong ecosystem. In addition, it also informs
providers on the factors they need to improve on in order to attract those who are not yet
ready for adoption. For the retailer this leads to an m-payment system that better fits their
needs so that they can take advantage of the technological benefits of NFC m-payment.

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ABLE OF ONTENTS
Preface ......................................................................................................... iv
Abstract ......................................................................................................... v
Table of Contents .......................................................................................... vi
List of Figures ................................................................................................. x
List of Tables .................................................................................................. xi
List of Equations ............................................................................................ xi
Introduction ............................................................................................ 1
Background Information ............................................................................................ 1
1.1.1 Payment industry ................................................................................................. 3
Mobile Payment ......................................................................................................... 5
1.2.1 Enabling technologies Proximity Contactless payment ....................................... 6
1.2.2 NFC vs. BLE vs. QR ................................................................................................ 6
NFC ecosystem ........................................................................................................... 9
Problem description ................................................................................................. 10
Research Aim, Objectives & Questions.................................................................... 13
Justification of the study .......................................................................................... 14
1.6.1 Research approach: A case for Q-methodology ................................................ 15
Expected Contributions ........................................................................................... 16
1.7.1 Academic – adoption literature gaps ................................................................. 16
1.7.2 Academic – ecosystems and network effects .................................................... 16
1.7.3 Academic- a case for Q ...................................................................................... 16
1.7.4 Practical contributions ....................................................................................... 16
Terms Clarification and Research scope .................................................................. 16
Organization of thesis .............................................................................................. 17
Domain ................................................................................................. 18
Offline retail payment methods in the Netherlands ............................................... 18
Near Field Communication ...................................................................................... 21
2.1.1 The initiating device ........................................................................................... 21
2.1.2 The target device ............................................................................................... 22
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NFC m-payment ecosystem ..................................................................................... 23
2.2.1 Retailer ............................................................................................................... 23
2.2.2 POS provider ...................................................................................................... 23
2.2.3 Acquirer .............................................................................................................. 23
2.2.1 Payment scheme ................................................................................................ 24
2.2.2 MCPA Service Provider ...................................................................................... 24
2.2.3 Trusted Service Manager ................................................................................... 25
2.2.4 Mobile Operator ................................................................................................ 25
2.2.5 Secure Element provider ................................................................................... 25
2.2.6 Handset provider ............................................................................................... 25
Development of the point of sale ............................................................................ 26
2.3.1 Mobile Point of Sale ........................................................................................... 26
2.3.2 Cloud-based Point of Sale .................................................................................. 27
NFC Implementations in the Netherlands ............................................................... 28
2.4.1 NFC in non-m-payment contexts ....................................................................... 28
2.4.2 NFC in M-payment ............................................................................................. 29
Summary .................................................................................................................. 33
Literature Review .................................................................................. 34
Related studies on mobile payment ........................................................................ 34
Summary .................................................................................................................. 40
Theoretical Background ......................................................................... 41
Diffusion of Innovations ........................................................................................... 41
4.1.1 Rate of adoption ................................................................................................ 41
Criticism of existing adoption theories .................................................................... 43
Four-phased diffusion process in organizations ...................................................... 43
4.3.1 Adoption ............................................................................................................ 43
4.3.2 Implementation ................................................................................................. 44
4.3.3 Use ..................................................................................................................... 45
4.3.4 Effects................................................................................................................. 45
Methodology ......................................................................................... 46
What is Q? ................................................................................................................ 46
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Strength and limitations .......................................................................................... 48
Conducting Q ........................................................................................................... 49
5.3.1 The concourse .................................................................................................... 50
5.3.2 Determine Q-set ................................................................................................ 50
5.3.3 Determine P-set ................................................................................................. 51
5.3.4 Data collection ................................................................................................... 53
5.3.5 Factor analysis and interpretation ..................................................................... 57
Findings ................................................................................................. 61
Four Factor solution ................................................................................................. 61
Factor narratives ...................................................................................................... 63
6.2.1 Factor D1: Relies on customer demand and ease of use for customer ............ 63
6.2.2 Factor D2: Enticed by financial subsidization .................................................... 66
6.2.3 Factor D3: Enticed by technical superiority ....................................................... 67
6.2.4 Factor D4: Loyal to pinnen, enticed by customer demand ............................... 69
Differences between Factors ................................................................................... 71
Consensus statements ............................................................................................. 73
Relevance of post-adoption phases ......................................................................... 74
Conclusion and Discussion ..................................................................... 76
Revisiting Research Question and Objectives.......................................................... 76
Contributions ........................................................................................................... 77
7.2.1 Academic – adoption literature gaps ................................................................. 77
7.2.2 Academic – ecosystems and network effects .................................................... 78
7.2.3 Academic- a case for Q ...................................................................................... 79
7.2.4 Practical contributions ....................................................................................... 79
Limitations of study ................................................................................................. 79
In retrospect ............................................................................................................. 80
Suggestion for future research ................................................................................ 81
References ................................................................................................... 83
Appendix A: Invitation Letter (Dutch) .......................................................... 91
Appendix B: Informed Consent (Dutch) ........................................................ 92
Appendix C: Q-set (Dutch) ............................................................................ 93
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Appendix D: Full factorial table ................................................................... 94
Appendix E: Screenshots of Q-sorting process .............................................. 95
Appendix F: Exact Factor scores and in Z-score and T-score ......................... 98

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IST OF IGURES

Figure 1: Simplified commerce supply chain ............................................................................. 2
Figure 2: Continuum of goods and services retailers ................................................................ 3
Figure 3: NFC m-payment illustration ........................................................................................ 9
Figure 4: Diffusion adopter categories .................................................................................... 10
Figure 5: Simplified diagram self-sustained innovation .......................................................... 11
Figure 6: Development online vs. offline retail in Dutch market ............................................ 12
Figure 7: Relative use of payment methods. ........................................................................... 18
Figure 8: Relative use according to transaction value ............................................................. 19
Figure 9: Chipknip transaction volume (in millions) ................................................................ 20
Figure 10: Traditional payment ecosystem ............................................................................. 23
Figure 11: NFC-enabled m-payment ecosystem ...................................................................... 24
Figure 12: Diffusion s-curve ..................................................................................................... 42
Figure 13: How to conduct Q ................................................................................................... 49
Figure 14: Grid design .............................................................................................................. 55
Figure 15: Affected factor loadings .......................................................................................... 60

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