The Role of Risk in E-Retailers’ Adoption of Payment Methods: Evidence for Transition Economies

Posted: 8 Jul 2011

See all articles by Leo Van Hove

Leo Van Hove

Vrije Universiteit Brussel (VUB)

Farhod Karimov

Westminster International University in Tashkent

Date Written: July 7, 2011

Abstract

We use logit analysis to exploit a self-collected dataset on the payment and delivery options offered by the vast majority of B2C websites in 5 Central Asian transition economies. Specifically, we conduct a supply-side test of the Transaction Context Model, which highlights the role of perceived risk. Our results confirm that higher product risk increases the probability that e-retailers adopt lower-risk, ‘pay now’ instruments (such as debit cards). Moreover, merchants who offer higher-risk delivery options are also more prone to adopt higher-risk payment instruments (such as credit cards). Our control variables also yield interesting results. Pure plays are more likely to adopt online payment methods and less likely to adopt offline alternatives. Sites that target international markets are also more likely to adopt online payment methods, but do not shun (local) offline substitutes. Finally, we find partial evidence that the offline penetration of a payment instrument positively affects its online adoption.

Keywords: online payment methods, transaction context, risk, delivery methods, B2C e-commerce, transition economies

Suggested Citation

Van Hove, Leo and Karimov, Farhod Pulatovich, The Role of Risk in E-Retailers’ Adoption of Payment Methods: Evidence for Transition Economies (July 7, 2011). Available at SSRN: https://ssrn.com/abstract=1881450 or http://dx.doi.org/10.2139/ssrn.1881450

Leo Van Hove

Vrije Universiteit Brussel (VUB) ( email )

Department of Applied Economics (APEC)
Pleinlaan 5
Brussels, B-1050
Belgium
+32 2 614 84 49 (Phone)

HOME PAGE: http://research.vub.ac.be/applied-economics/members

Farhod Pulatovich Karimov (Contact Author)

Westminster International University in Tashkent ( email )

12 Istiqbol St
Tashkent, 100047
Uzbekistan

HOME PAGE: http://www.wiut.uz/en/university/staff/fkarimov/

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