CASHLESS CAMPUS

Business Policy & Strategy– BUSA4890

Capstone Report

Fidan Aslanova
Gulnar Rzayeva
Jamil Imranov
Kamala Afandiyeva

April 29, 2019

EXECUTIVE SUMMARY

Evaluating the feasibility of first Cashless Campus was the primary goal of this research project.
Objective was to find reasons of low card utilization rate and suggest solutions for the client bank.
Research started with evaluation of the overall advantages of cashless payments and situation with
cashless payments in the country, finally existing literature has been reviewed and research methods
have been chosen. Research method included various techniques, such as observations, survey,
interviews, and data obtained directly from the bank. All the data was evaluated and regressed where
applicable. After analysis three main impediments of low card usage turned out to be the following:
lack of infrastructure, time consumption and non-comfortability of card payments. To solve these
problems, techniques suggested by TAM model should be implemented. The bank needs to increase
awareness of usefulness and easiness of card payments through different marketing offerings.
Increased perceptions on these attributes are positively correlated to future intention to use and thus,
will have a direct impact on actual usage of cashless payments. Solutions include decreased
commission fees for vendors, various marketing campaigns, cashbacks, events for increased literacy
and awareness. Supported with financial calculations, conclusions and recommendations have been
made and project has been proven to be feasible. Limitations of the research and further implications
of this project were also discussed.
1. INTRODUCTION

1.1. Aim of the project

This paper is aimed to study the feasibility of creating a cashless ecosystem in ADA
University. The primary objectives of the research are:
- to identify the problems that cause the low utilization rate of cashless
payments within the campus and recommend research-based applicable solutions to defuse
the impacts of these problems,
- to determine the incentives that may trigger card payments within the
university.
This study focuses on particular factors that have an influence on the decisions of
ADA Community in making cashless payments. It will provide clear insights into which
factors are more significant and identify a comprehensive strategy to adjust those factors to
meet the demand of cardholders.

1.2. Structure of the research paper

The research paper is divided into five main parts:
● Introduction - consists of the aim and objectives of the study, company background,
and overview of cashless system.
● Problem Identification and its Analysis - covers practical & theoretical exploration
of the problem, problem identification & demarcation, and plan of approach &
information requirements.
● Research Methods - includes the development of the research question, collection of
the data, and the analyses.
● Project Findings and its Implications - discusses project findings resulted from the
primary research.
● Advice on Problem Solutions. Conclusions and Recommendations - conclusions that
are made based on the research results, final recommendations to the client.

1.3. Company Background

Established in 2007, PASHA Bank is one of the leading and most diverse banks of
Azerbaijan. The bank is offering a big variety of services including all major financial
services, investment banking, trade financing and asset management, to name a few. The
bank mostly focuses on working with the enterprises from the non-oil sector of the economy
in order to help the economy diversify to its most. The bank has 7 branches across Azerbaijan
in total, and a total of 2 branches in Tbilisi and Istanbul. PASHA Bank has been awarded by
globally recognized financial organizations/entities throughout its lifetime and has received
positive ratings by the international rating agencies.
 Despite being the youngest bank in Azerbaijan, PASHA Bank has been consistently
trying to introduce financial and technological innovations to the banking sector of
Azerbaijan. Especially, the bank has been striving for expanding the cashless transactions
across the country. By this matter, PASHA Bank is highly interested in implementing a
cashless system in ADA University as a pilot project.

1.4. Overview of Cashless Payments System

According to the definition by The Fletcher School Tufts University, an economy
where purchasing and selling procedures are not executed via banknotes and coins, but rather
via “the transfer of digital information (usually an electronic representation of money)
between the transacting parties” is called cashless economy (Chakravorti, Mazzotta, 2013).
After the emergence of the electronic banking system, cashless payments started to play a role
in transactions in the 1990s. Electronic payments become common in many countries by the
2010s. The Sun (2016) reports that 1 in 7 people in the UK doesn’t use or carry cash. The
trend is becoming even more common in the rest of the world too.
Advantages of cashless payments. The cashless system is preliminarily praised for
helping the governments fight with corruption, money laundry, tax evasion, performing illegal
transactions by setting transparency in the cash transactions. Moreover, with cashless
payments there is no need to spend extra money to issue money: no need to buy paper, metal,
paint for the production of banknotes and coins, as well as pay for the work of their
production, equipment and electricity. (Rogoff, 2016). It also allows to collect economic data
more efficiently and facilitates the consumer budgeting by providing the ease of expenditure
tracking (Poh, 2017).
The biggest advantage of the cashless system for the cardholders is instant
transactions. Previously, when electronic money did not exist, in order to transfer money to
someone in another city there was a need to wait for money to be physically transported.
Now all payments can be made instantly, regardless of the place of residence. Furthemore,
bank accounts, payment systems are now quite reliably protected from the entry of fraudsters:
unlike banknotes, electronic money cannot be falsified and all ongoing operations are
recorded by the system (Stadler, n.d., p.5).
Disadvantages of cashless payments. Although cashless system has a number of
advantages that makes the economy and the households better off, it doesn’t come without a
price. For example, in many countries, there is still no stable legal regulation of non-cash
funds. That is, there are no laws that would regulate the payments process ( Sumanjeet, 2009).
Special tools are also needed for the turnover and savings of the cashless payments. These
include terminals, ATMs, plastic cards and the payment systems themselves.
The disadvantages of card payments also include a fee for obtaining a card, for annual
maintenance, fees for cash withdrawal and more.
 Moreover, the banking system, like any other, is not insured against interruptions in
work, which can lead to problems when transferring money or withdrawing it from the
account.
Privacy concerns are also one of the disadvantages of cashless transactions. Banks
and other financial institutions that provide cashless transactions have access to track the
transactions (Frisby, 2016). Fraudulent activities are also threatening since there is a risk of
cyber-attacks or digital crimes (O'Dwyer 2018).

2. PROBLEM IDENTIFICATION AND ITS ANALYSIS

2.1. Introduction
The first and the most crucial part of any research undertaking is accurate problem
identification. If initially the research problem is not specified properly, the study outcomes
will not be able to suggest reasonable solutions. To properly identify the research problem,
detailed practical and theoretical explorations were carried out.

2.2. Practical Exploration

Discussions with a representative of the client bank and data obtained from the official
websites of the Central Bank of Azerbaijan and PASHA Bank have revealed certain insights into the
customer experience of PASHA Bank in the market of cashless payments:
● Currently, PASHA Bank has 10 branches operating throughout the country (8 of them located
in Baku), the amount considerably less than the number of branches per bank in Azerbaijan
which is 17 (BRI, 2019).
● The total number of PASHA Bank ATMs within the country is 28, three times less than the
number of ATMs per bank in Azerbaijan (FIMSA, 2019). Particularly in Baku, PASHA Bank
holds 19 ATMs, 11 of which supports Cash In, Cash Out and Exchange, 4 - only Cash In and
Cash Out, and 4 - only Cash Out transaction operations.
● PASHA Bank provides its clients with Mobile Bank application and Internet Banking services
enabling them to benefit from various bank services distantly with no need of approaching the
bank.
● PASHA Bank was the first bank in the local market providing both emission and acquiring of
plastic cards which support "contactless technology". This technological innovation facilitated
better customer experience by offering convenience, speed and security benefits to end users
(2014).
● PASHA Bank was the first bank in Azerbaijan to launch a non-cash payment system for
parking via a mobile application (2018).
● In the end of 2017, PASHA Bank was awarded on the categories of “Cashless payments at
POS-terminals”, “Contactless payments” and “Contactless POS-terminal infrastructure” in the
framework of a contest held by the Central Bank of Azerbaijan in cooperation with the
Azerbaijan Banks Association (2019).
2.3. Theoretical Exploration
Outlining the past-present history of the study of perceptions regarding cashless usage
and ecosystems, different scholar articles, research studies have been reviewed. In order to
get an unbiased picture of the related situation in the developing countries, time and locations
have been taken into consideration, as well.
Mukhopadhyay highlighted direct and indirect benefits of promotion of cashless
transactions in India in his research, “Promoting Cashless Payments in India”; identified
bottlenecks in that process and gives recommendations by considering several stakeholders’
perspectives such as government, sellers and banks (2015). According to the research, sellers
unwilling to accept cashless payment options is the main obstacle in a creating cashless
environment. For that reason, findings suggest that transaction fees on merchants by banks
should be minimalized; otherwise accepting cash payments is perceived costless by them. He
also states that an important incentive to encourage consumers to use more card or digital
payments can be lower bank membership fees to cardholders. Mukhopadhyay formulates
recommendations based on findings in two groups: infrastructure and instrument. For
infrastructure part, the article states that for transferring into the efficient cashless system,
market relations (supply/demand) is not sufficient in itself; merchant discount rates (MDR)
and indirect taxes on digital payments should be reduced. And the instrument to make digital
payment should also feel secure and costless to the consumers.
As a continuation of Mukhopadhyay’s research, professors V. Podile and P. Rajesh
tried to learn public perception on card payments in India after role and amount of cashless
payment transactions have become significant. “Public Perception on Cashless Transactions
in India” (2017) also attempts to learn the effects of convenience, security, costs, incentives
and procedures on cashless payments as well as identify challenges that can be faced
regarding the implementation of a cashless system. They try to achieve the research aims by
learning different customer behaviors stemming from payment methods: although credit
cards encourage more transactions than just paying with cash (Hirschma E. C., 1979),
Radhakrishan (1996), they found that acceptability of different card types by consumers can
also differ. Debit cards get more attraction of consumers due to lack of some commission fees
and trust in fast payments by the merchant side. Their findings suggest that negative
apprehensions such as sellers’ resistance to accept cashless, high card fees, poor
infrastructure, and insecurity have a negative impact on extending cashless transaction
amount in India. On the other hand, convenience and incentives are significant encouraging
factors on that issue. Podile and Rajesh also state that going through all these challenges and
increasing cashless turnover in India cannot be solved solely without government and
banking institutions’ measures.
Humbani. M and Wiese M. studied consumer readiness to accept mobile payment
services and the possible effect of gender on that regard by applying technology readiness
index (TRI) (“A Cashless Society for All: Determining Consumers’ Readiness to Adopt
Mobile Payment Services”, 2018). According to the literature, “technology readiness refers to
people’s propensity to embrace and use new technologies for accomplishing goals at home, in
life, and at work” (Parasuraman & Colby, 2014). Humbani and Wiese identified that
optimism, innovativeness, convenience and compatibility are the key drivers of technology
readiness within that theoretical framework while, on the other hand, discomfort, insecurity,
perceived cost and perceived risk are the main encumbering factors to adopt innovations.
Referring to the paper, especially, factors like convenience and insecurity have assisted the
direction of questionnaire formation of this research; as Kim et al. (2010) claimed,
convenience occurs when consumers think that technology will make their life more
convenient and they believe in the benefits of technology, therefore, there is significant
positive relationship between convenience and technology adoption. (Obe & Balogun, 2007).
To state Parasuraman and Colby (2014) on “insecurity”, it is defined as distrust emerging
from doubtfulness on the ability of technology to work appropriately and its potentially
dangerous results.
Enhancing card payments or creating cashless environments are straightforwardly
related to merchant’s attitude and their involvement within the process. Bank of Canada,
Currency Department surveys more than 500 retailers to explore merchants’ perception of
payment method on various payment methods. Different researches have shown that they pay
more for retail payments than the other member of the retail payments framework (Arango &
Taylor, “Merchant Acceptance, Costs, and Perceptions of Retail Payments: A Canadian
Survey”), (Bergman et al, “The Costs of Paying—Private and Social Costs of Cash and
Card”). According to the research, cash is considered as the least costly option to merchants
while they see debit card payments moderately costly and credit cards - most costly within
that scale. (Arango & Taylor, 2008). They also try to explore their concerns to each of these
payment methods and find out that:
1. Merchants can underestimate the cost of accepting cash (labor and other cost
linked to dealing with cash)
2. Size matters: merchants’ perceptions and actual cost can differ from SMEs to
large retailer
According to the research, what vendors appreciate in the means of payments are
efficiency, reliability, security and how possible it will generate sales. Reasons why
merchants can be prone to cash can be explained by their perception. Since cash is gathered
in the merchant’s disposal in the transaction time, from the first sight it looks convenient. On
the other hand, risk of theft, robbery, counterfeiting, human error during exchange, security
cost such as security people and cameras, storage, cash registers, reconciling are all
cost-emerging factors with accepting cash, and which are not taken into consideration by
SMEs sometimes perceptually. The research findings conclude that by considering costs of
dealing with cash, payment via debit cards is least costly, however, it also depends on the size
of the business still.
Since the implementation of a cashless ecosystem requires technological innovations,
applying technology acceptance model (TAM) is a suitable theoretical model to discuss
within that framework. Fred Davis retrieved TAM model from the theory of reasoned action
(TRA) (1975) model by Fishbein and Ajzen in 1989. TAM model has been addressed widely
to forecast and explain human behavior in various spaces. The original model covers 4
determinant factors: perceived ease of use (PEOU), perceived usefulness (PU), attitude
towards using (ATU), behavioral intention to use (BI), and actual system (AU) which are
useful to describe and link questionnaire and findings for this research. According to the
literature, related definitions can be modified as:
● “Perceived usefulness (PU)- the degree to which a person believes that paying with
cards would enhance his or her performance”. (Davis, 1989)
● “Perceived ease of use (PEOU)- the degree to which a person believes that paying
with cards would be free of effort”. (Davis, 1989)
● “Behavioral intention to use (BI)- the user’s likelihood to pay with cards”. (Chen et
al., 2002)
● “Actual use (AU)- the frequency of paying with cards and the approximate number of
times the customer pays with card in a given period of time”. (Chen et al., 2002).
TAM model is frequently referenced model in academic investigations to enlighten
human behavior when adapting innovations, contrarily, it also gets modified based on the
specific research direction. Michal Polasik and Tomasz Wisniewski rely on technology
acceptance model (TAM) for their research methodology, “Modelling customers' intentions to
use contactless cards” (2012) to explore the situation on card usage in Poland which is a
pioneering attempt in its academic direction in Poland. In that research, perceived usefulness
and perceived ease of use are connected as an influencing factor on behavioral intention to
use and eventually affecting the actual use. On the other hand, researchers follow the
argumentation of Agarwal and Prasad (1999) on the appropriateness of intentions instead of
usage since these are synchronous with usefulness and ease of usage specifically in that
investigation. Research findings by Polasik and Wisniewski suggest that usefulness of card
usage defines behavioral intention which is also affected by perceived easiness; as an external
factor demographic factors such as age, gender, education level also have an impact on using
particular card type which is also related to behavior.
To conclude, the reviewed researches and scholar articles suggest exploration of
consumers’ direction who are the end users of the cards (in our case, students and faculty
members of ADA University) and consider the costs of vendors and offer solutions to lessen
their burdens. For this paper, TAM model, 1996 modified version by Venkatesh et al. is used
which hypothesizes that easiness of use is a determinant factor of usefulness and is influenced
by cost since, as various studies suggest (Szajna, 1996), (Lucas & Spitler, 2000), TAM
requires additional construction with extra variable to develop its forecasting accuracy of
system use. This additional variable can be defined as follows:
Cost: The possible expenses of using cards i.e., infrastructure costs, accessibility cost,
and transaction fees (Constantinides, 2002), (Rupp & Smith, 2002).
Being determined by perceived usefulness and easiness, behavioral intention to use
cashless payments defines the actual usage.

PESTEL Analysis
 PESTEL Analysis is a tool designed to identify the political, economic, social,
technological, environmental and legal factors of the external macro environment. Through
PESTEL Analysis this paper examines the external factors that can affect the feasibility of
creating a cashless ecosystem in ADA University.
Political. Switching the economy to a cashless system has been an interest of the
Azerbaijani government for a long time. In the meeting dedicated to the “Results in 2012 and
upcoming issues in 2013”, President Aliyev has stated the importance of the cashless system
and that the government is going to work on encouraging the cashless payments further. The
Central Bank of Azerbaijan created a Government Payment Portal in order to develop a
cashless payments infrastructure and ensure the execution of settlement on behalf of the state
budget in cashless form. The Ministry of Taxes, the Ministry of Internal Affairs, the State
Social Security Fund, the State Road Police and the State Customs Committee, which are
essential public institutions, have been integrated into the system. Moreover, the CBAR as
licensed two card processors - “Azericard” and “MilliKart” and the CBAR - ensure the use
of technology and modern payment tools to achieve the development of cashless settlements
(Rustamov, 2014).
Economical. In 2013, total payments through Government Payment Portal totaled 712
million AZN (Rustamov, 2014). The payment services are provided by the commercial banks
that operate in the territory of Azerbaijan and also “Azerpost” LLC — the national operator
of postal services. During 11 months of 2013, total turnover of payments in the country with
card payments was 8.5 billion AZN. The total amount of cash withdrawal with payment cards
was about 94% of the total turnover (8 billion AZN), which ultimately shows the small
portion of electronic payments with payment cards in the country. According to statistics
published by the Central Bank, the number of bank card transactions totaled nearly 6.8, worth
over an estimated 1 billion manats. However, roughly 4.8 million of those transactions (70%),
nearly 830 million of manats in cash, were withdrawn at ATMs (Samexa, 2015). This
suggests either a poor merchant acceptance network or a customer need for immediate
liquidity. The average amount of transaction at POS-terminals was under 40 manats (Samexa,
2015). It is expected that the amount of cashless payments will increase between 2018-2020.
The goal of the state at the end of the “State Program on Digital Payment Expansion in
2018-2020”program is to reduce the cash transaction from 74% to 40%. For now, overall
cash transactions are accounted to be around 200 billion AZN, only 26% of them being
electronic.
Social. Withdrawal of money from Automatic Teller Machines (ATMs) has seen a
sharp decline, from 88.2% to 57.1%, in 2014 compared to 2011 (Saxena, 2015). The change
is interpreted by the notion that “individuals typically become more comfortable with
electronic payments over time, not less”.
As of July 2014, roughly 7.5 million of Azerbaijani population was above the age of
15 years, and a median age of nearly 30 years (Samexa, 2015), a part which contain
underserved population. Provided data suggests that timing is important to reach this segment
of the population; moreover, new financial products are more welcomed by young people
who try them via alternative channels, and additionally, they are more adept at using those
that involve technology (Samexa, 2015). In general, low level of financial literacy, the habit
of the population to cash, the risks of card fraud prevent the increase of non-cash payments in
the country (“Problems of post-crisis”, p.52).
Technological. In order for a country to switch to cashless payments, it needs to have
an advanced infrastructure system and a decent level of technological advancement. An
alternative payment channel for the underserved people is the self-serving kiosk (cash-in
machines) (Samexa, 2015, p.20). Million is one of the largest self-serving kiosk providers in
Azerbaijan. Another provider is e-Manat which has nearly 2000 of machines in the country,
1300 of which are in Baku. With nearly 800,000 monthly users, it is estimated that each user
makes an average of 5-6 merchant payment transactions.
While surveying people, Asian Development Bank (Samexa, 2015, p.22) has
revealed that the respondents think the POS-terminals are not “close” to them, and therefore,
it was not convenient for them to find a place where there is a POS-terminal. A low level of
development of the infrastructure for cashless payments, the difference in payment system of
the technological platforms in the country are shown as reasons that discourage people from
using more electronic payments (“Problems of post-crisis”, p.52).
Environmental. Since the environmental studies are about general environmental
costs of cash and the benefits of the cashless society, they are also applicable to Azerbaijan.
Rochemont (2018, p.12) suggest that raw material production for paper notes include:
“…global warming potential from biogenic sources eco-toxicity potential due to the
use of pesticides during cotton cultivation, freshwater consumption due to the use of
irrigation water during cotton cultivation…”
However, plastic cards do not come without a price; producing a 5 grams standard
bank card has 21 grams of carbon footprint (Tompson, 2019).
Legal. According to the “Law of the Republic of Azerbaijan on non-cash payments”,
all kind of cashless transactions are legal in Azerbaijan although various conditions apply. In
order to increase the access to payment systems, as well as to encourage competition in the
payment services market, a draft law "On payment services" was developed (“Problems of
post-crisis”, p.47). Payment service users’ rights on protection was also aimed in this law.
However, there are neither clear rules pointing the customer protection for cashless payments
nor agencies that ensure protection issues which could deal with cases such as disputes
regarding requirements of a paper vs digital receipt provision (“Problems of post-crisis”,
p.27). Moreover, “Azerpost” LLC has also started to offer payment services alongside the
commercial banks in the country after the amendments to the legislation (Rustamov, 2014,
p.15).

2.4. Problem Definition and Demarcation

Relying on practical exploration and literature review above, client company observes a
business opportunity to spread its services by implementing cashless ecosystems in large vendors of
Baku such as mall, business buildings. As debit cards have already been given to ADA students
starting since 2017, establishing pilot project in such a closed ecosystem such as ADA University can
suggest further insights to forecast and construct cashless ecosystem plans which also coincide with
strategic goals of government in recent years on making financial system transparent as described in
PESTEL analysis. This opportunity, on the other hand, rises existing challenges that despite the fact
that students have been provided with cards already, usage rate of these means in campus area is low
based on the preliminary observations.

2.5. Plan of Approach and Information Requirements

Detailed directions from literature review and researches offer clear insight on how to
approach to the current case with payment system in the campus and which bodies can be
involved into the research. In order to give a solid solution on achieving higher rate of card
payments and cashless turnover, vendors, students, faculty/staff who were provided by means
of cashless payments, and client person have been contacted. This research requires both
quantitative and qualitative ground since consumer satisfaction and feasibility of the plan are
equally important for the research objectives. Qualitative data resources are coming from the
face to face interviews with vendors and discussions with client person. Surveys for students
and academic staff gives both descriptive and numerical data. The client side has also shared
the related data about the number of distributed cards to students. Statistical tools were used
to explain correlations if needed. The data is acquired on technical capacity of vendors for
accepting cards; the factors affecting individuals to choose payments methods in the campus
area via surveys to explore habits and decision-making process of the campus members on
how to make payments, how affordable and beneficial is to choose card payment types.

3. RESEARCH METHODS

3.1. Introduction
After careful investigation of existing literature on cashless payments this paper
proceeds with discussion of research methods tailored to the specifics of the research
problem. This section also describes in detail research design and technique used in data
analysis. Overall, the aim of the research is to contribute to the big change in payment
patterns of the members of a university.

3.2. Research question

Discussion with the client and observation of infrastructure and payment behavior on
ADA campus defined the research problem. Results showed that despite the availability of
the bank cards and ATMs, ADA University students are not using them for payments on
campus. The purpose of this study is to investigate the reasons of low usage of cards at points
of sales on campus and suggest solutions for them.
Research question
What are the reasons of low card payment utilization rate at ADA university and
which measures should be taken to turn campus into the cashless environment?
3.3. Research design
Sections of the research design includes 4 main subsections: data collection methods
and instruments, population and sample chosen, actual data collection procedure, and actual
data analysis method.

3.4. Data collection methods and instruments

Observation. To evaluate the situation with cashless payments at ADA University
observation was used as the initial method of data collection. It involved observation of
physical infrastructure at the university, i.e. availability of POS terminals, cash-in ATMs, and
average time of payment processing. More detailed information is available in Appendix 3.
Survey. Survey questions were designed specifically to understand the rationale
behind cash payments as well as potential motivating factors and readiness for cashless
payment system. The survey included demographic questions to collect information on age,
gender, position at university, and amount of money spent on lunch. Dichotomous Yes/No
questions, multiple choice of single as well as multiple choice needed to understand behavior
of the sample are part of the questionnaire. Likert scale type of questions are hypothesis
based on which researches have built their analysis of incentive programs. Survey is divided
into 3 sections. The first one is for demographic purposes. Second explores information about
card and frequency of its usage, reasons demotivating ADA community from cashless
payments. Depending on answer of Question number 6, Section 1 respondents will be
directed to the next section or to the last, if the answer is negative. The last sections studies
respondents’ wishes and preference for cashless payments. Survey questions are presented in
Appendix 1.
Interview. With the purpose of acknowledging the perspective of vendors at ADA
University, interviews were chosen, and specific questions were asked. Questions were meant
to help researchers to understand under which circumstances merchants would be willing to
promote more card payments. Appendix 2 includes all the questions asked during the
interview.
Data from the bank. Information on turnover and fees of vendors were requested
from the client bank for analysis purposes.

3.5. Population and sampling

The above-mentioned research procedures are conducted at ADA University and
designed for its students, faculty members, and vendors; only partial information for financial
data is obtained from the bank. The current population of ADA University is approximately
2500 people. For survey purpose, sample size of students and faculty for more than 500
people is targeted. Three of the four existing merchants (Paul, REM Service, Cinnabon,Books
& Bytes) have been interviewed except Books & Bytes since they did not want to cooperate
for research despite our several attempts.
 For the survey with students, simple random sampling has been used. Each student
from all cohorts and schools had an equal chance to participate in the survey since it has been
shared via email which everyone who was admitted to ADA university owns. However, for
the faculty members, survey has been spread based on their availability which is
non-probability convenience sampling.

3.6. Actual data-collection

Observation. During the week each point of sale was observed by the assigned
researcher. Observation of payment preferences was conducted the whole day, especially
during the lunch break from 12:00-14:00, the pick hours for cafes. In addition to this, the
researchers recorded and compared time a single purchase takes to be paid via card and cash.
Another observation focus was directed towards infrastructure availability for cashless
payments. Number of ATMs for cash-in procedures and POS terminals were recorded for
analysis purposes.
Survey. After exploring existing surveys and discussing questions with the project
advisor, final version of the survey with 16 questions was prepared using Google Forms.
Questionnaire was distributed electronically to students and faculty of ADA University via
mail, Facebook and WhatsApp groups. It took 3 weeks to gather desired response rates that
would make the results statistically significant and not biased.
Interview. Upon availability of managers of merchant shops on the campus, time slots
were determined and interviews were conducted. Although initially the group was planning
to interview all 4 merchants available at ADA University, during negotiations one of the
cafes refused to be interviewed. This issue was reported to the project supervisor and the
team proceeded with interviewing other 3 cafes. It took 40 minutes to interview REM
Service, 15 minutes for Cinnabon, and 10 minutes for Paul. The interview questions can be
found in Appendix 2.
Data from the bank. Data on overall situation with cashless payments was requested
from bank representative through the client. Before data was provided all members of the
research had signed non-disclosure agreement that all the data would be kept confidential and
would be used for academic purposes only within the framework of the capstone project. This
data was needed to enrich the feasibility analysis for financial purposes, however, obtained
end data was not sufficient due to absence of tracking body in the bank such as CRM.
Provided data included only commissions on card transactions and the number and type of
the distributed cards due to the fact that information on vendor turnover was not available.

3.7. Actual data analysis

Despite the fact that 500 people were targeted for data collection, actual number of
responses could reach only 314 driving response rate down to 63%. The sample comprised
161 females and 153 males. As main respondents were students, 87% of answers came from
the age group of 16-25. One of surprising results is 37 negative responses on question about
holding a card; instead, all the students were expected to have a card since ADA University
distributes debit cards to all the students in the first year of their admission. Detailed data is
presented in Table 1.

Collected data was analyzed and regressed using statistical tool (STATA); it is
discussed in detail in the subsequent section.

4. PROJECT FINDINGS AND ITS IMPLICATIONS

4.1. Introduction

This section discusses project findings resulted from primary research presented in the
previous section. Implication of key findings is discussed correspondingly.

4.2. Observation findings

As a first step in exploring the current condition of cashless payment system in ADA
University, the availability of bank ATMs within the campus was examined. Currently, there
are two operating bank ATMs (PASHA Bank and International Bank of Azerbaijan) located
in the Student Center of ADA University. These ATMs accept “Cash-In” & “Cash-Out”
transaction operations. Moreover, there are 2 self-service payment terminals which accept
only “Cash-In”s – Emanat and ExpressPay located in B building, ground floor; however,
PASHA Bank cards cannot be cashed in from here.

Afterwards, the existing situation with POS terminals was examined in all points of
sales (REM Service, Cinnabon, PAUL, Books & Bytes) within the campus. REM Service
currently has only one POS terminal acquired by PASHA Bank despite 3 checkout counters.
PAUL is equipped by two POS terminals: one acquired by PASHA Bank and the other by
Unibank. Cinnabon holds only one POS terminal. Although card payments are accepted and
POS-terminals are available, none of merchants clearly displays card logos on the door/near
the cash desk which may result in non-awareness of potential buyers about possibility of
cashless payments. It is also important to note that Books & Bytes currently does not accept
any card payments and holds no POS terminals.

A small experiment for the purpose of observing time spent by a cashier to process a
single payment, from entering order to the cash register and printing an invoice, was
conducted. As observation showed, cash and card payments take on average 20-30 seconds
for all the merchants located at ADA University. Considerable deviation was observed in
REM: payment procedure with a chip card took 36 seconds. Such a long procedure can be
explained by the fact that REM possesses only 1 POS-terminal and thus, each time
POS-terminal is needed, cashier has to walk to another cash desk to take it.

All the results of observation are summarized in Appendix 2.

4.3. Interview findings

Interviews were planned for all 4 vendors located at the university, yet in spite of
several attempts, one of the vendors, Books&Bytes, rejected to give interview on this topic.
From the answers of remaining 3 vendors it can be concluded that merchants are not
motivated to promote cashless payments in a closed environment of a university; the most
commonly cited reason is commission on cashless payments.

Response about circumstances under which vendors are ready to fully switch to card
payments were obvious. None of them are motivated to foregone cash and accept cards only.
Merchants firmly believe that with cash they incur incremental cost, while card payments
include fees. REM Service suggested decreasing transaction fee otherwise, administration of
REM Service plans to increase meal prices in case of growing card payments . REM Service
representative also noted that after devaluation of 2015 ADA University have started rarely
using their catering services during big events; with high costs REM now earns less and does
not want to overwhelm itself with additional fees.

Interview with vendors also suggests that merchants are not willing to
provide bonuses or discounts. They assume they will incur only cost and no
benefits in return.
During the interviews with the vendors, it was revealed that the daily number of
people who purchase goods from the vendors are approximately:
- 600 for REM Service
- 200 for Paul
- 150 for Cinnabon
Since Books & Bytes rejected the interview, there is no data regarding the daily
average number of people who visit this vendor. However, in order to get the results as closer
as possible to the real numbers, the research assumes that there are at least 350 visits to the
outlet.
When asked about the average spending of an individual, vendors responded close
numbers with an average of 4 AZN per person.
For simplicity, the research assumes that all outlets are working 22 days in a month.
The transaction fee per electronic payment is 2% in PASHA Bank POS-terminals.
Monthly cost of accepting only cashless payments are as follows:
Commission per transaction 2%
 Average spending per person (in AZN) 4

Average number of buyers 1300

Total transaction fee for one day (in AZN) 104

Total transaction fee for one month (in AZN) 2288

Given the numbers, with simple calculation, it turns out that if all vendors in ADA
University go completely cashless, they will incur 2288 AZN additional cost in the form of
transaction fees. During the interviews, the vendors clearly stated their unwillingness to incur
this cost since the cost of cash for them is significantly low; considering the fact that the
highest direct cost associated with cash is the encashment cost, which is 50 AZN per service.

4.4. Statistical analysis

Consistent with the research objective 1, aim of this analysis is to find causes of non-usage of

card payments on campus.

Research question 1: What are the reasons of low card payment utilization rate at ADA

university?

To explore low frequency of card usage within the university researchers used ordinal

logistics regression model based on data collected from the survey. The underlying factors

lowering actual use of card payments are taken as independent variables; frequency of

cashless transactions is regarded as a dependent variable. More information on variables can

be found in Appendix 4.

FREQUENCY= α + (NO_SECUR) + (NO_REWARD) + (TIME_CONS)

+ (NO_INFRASTR) +(NO_COMF) + (gender) +(position)

+ (card_type) + (ADUM) + ε
 : Lack of infrastructure, absence of rewards, security, comfortability and time

consumption issues of card payments have no effect on frequency of cashless payment

method at ADA University.

: Lack of infrastructure, absence of rewards, security, comfortability and time

consumption of card payments have an effect on frequency of cashless payment method at

ADA University, ceteris paribus.

Table 3 demonstrates correlation coefficient for every variable tested. All variables are in the

range of -0.8 and 0.8, except for card_hold variable. This variable creates multicollinearity

between variables and thus, has been excluded from the model. To adjust regression for

heteroskedasticity, robust command has been used.

Table 4 shows the outcome of the regression where the independent variable is current

frequency of card payments on campus. Absence of reward, infrastructural limitations, and

non-comfortability of cards have shown statistically significant results. Negative coefficients

indicate that as long as reward programs, infrastructure, and comfortability problems exist

there is a lower probability that people end up in higher category of card usage. Thus, these

variables are proven to be the reasons of low card usage at ADA University and null

hypothesis can be rejected.

Following TAM model, the research proceeds to the next research objective of finding

incentives that can stimulate cashless environment.

Research question 2: which measures should be taken to turn campus into the cashless

environment?

To answer this question, ordered logistics regression has been run. It is built on three models

each of which tests relationships between different variables. Correlation matrix and

summary of regression results are given in Table 5 and 6 respectively.

Model 1:

USEFULNESS = α + β_1(EASINESS) + ε

H_0: Perceived easiness of card payments has no effect on perceived future buying patterns

related to cashless payments at ADA University.

H_1: Perceived easiness of card payments has an effect on perceived future buying patterns

related to cashless payments at ADA University, ceteris paribus.

Positive coefficient at 95% confidence interval indicates that the probability of increased

perception of usefulness of plastic cards will drive people’s behavior towards higher category.

Therefore, the easier cards payments are, the more likely card holders are to perceive their

cards to bring them efficiency and usefulness. This supports alternative hypothesis, so null

hypothesis can be rejected.

Model 2:

BEHAVIOR = α + β_1(USEFULNESS) + β_2(EASINESS) + β_3(COST) + ε

H_0: Perceived usefulness, perceived easiness, and perceived costs of card payments have no

effect on likelihood of cashless payment method at ADA University.

H_1: Perceived usefulness, perceived easiness, and perceived costs of card payments have an

effect on likelihood of cashless payment method at ADA University, ceteris paribus.

Two out of 3 variables are statistically significant with 1% significance and have positive

coefficients. Increased perception about usefulness and easiness of cards will increase the

probability of switching to a cashless system in the future. However, “COST” factor, i.e.

perceived additional spending, is not relevant to this model due to insignificant result. All in

all, alternative hypothesis is accepted at this case.

Model 3:

FREQUENCY = α + β_1(BEHAVIOR) + ε

H_0: Perceived likelihood of change to cashless payments has no effect on frequency of

cashless payment method at ADA University.

H_1: Perceived likelihood of change to cashless payments has an effect on frequency of

cashless payment method at ADA University, ceteris paribus.

Final model suggests that perception of future behavior has an increased chance to change

actual usage of card payments on university campus. Thus, it can be concluded that

alternative hypothesis is accepted.

5. ADVICE ON PROBLEM SOLUTIONS.

5.1. Introduction
Implications of the research findings lead to final recommendations and
conclusions of this research project.

5.2. Proposed Solutions

Infrastructure
Survey findings revealed that the absence of decent infrastructure is a significant
impediment for the utilization of cashless payments within the university. The possible reason
for that can be derived from the observation findings: REM Service has only one POS
terminal despite three checkout counters which increases the queues and time spent on
checkout counter if there is more than one person who wants to pay with card. For this
reason, the researchers recommend to provide each checkout counter with POS terminals
acquired by the client bank.

Commission
During the interviews, the vendors have clearly stated that the commission on
cashless transactions is severely high. The current fee on transactions via PASHA Bank
POS-terminal is 2%. While discussion with the company official, it was revealed that the cost
of the transactions for the bank is 1.5% per transaction. As previously stated, average
spending per person is 4 AZN. By simple calculations,

Commission per transaction 2%

Profit per transaction (in percentage) 0.50%

Average spending per person (in AZN) 4

Turnover from one transaction (in AZN) 0.08

Profit from one transaction (in AZN) 0.02

Commission per transaction 1.7%

Profit per transaction (in percentage) 0.20%

Average spending per person (in AZN) 4

Turnover from one transaction (in AZN) 0.068

 Profit from one transaction (in AZN) 0.008

As seen from the table above, holding the average spending at 4 AZN and the cost of
transactions at 1.5%, and when the commission is 2%, the profit per transaction is 0.02 AZN.
In order to incentivize merchants and prevent possible price increase in the goods sold by the
merchants, the commission can be reduced to 1.7%. In this case, the profit that bank will
make is 0.008 AZN, which is quite low compared to 0.02 AZN. The difference between
profit when the transaction fee is 2% and 1.7% is 2.5 times. This ultimately means that if the
number of transactions when the commission is 1.7% is 2.5 times more than the transactions
when the commission is 2%, the profit that bank loses because of the decrease in the
transaction fee will be covered. For clearer understanding, assuming the current number of
transactions per day is 100, calculations are made in Table 7.
As seen from the Table 7, profit decreases from 2 AZN to 0.8 AZN when the
commission is reduced from 2% to 1.7%. However, the amount that is lost due to the
decrease in commission is covered when the total number of transactions increase to 250,
which is 2.5 times more than 100.
By implementing this strategy, the bank can decrease the cost that the merchants are
incurring, and as aforementioned, discourage the inflation in the prices of goods to some
extent. Even if any price increase happens, it is not going to happen overnight, since the
number of cashless payments will not explode in one day either.

3 M’s of Marketing and the “Easy. Useful. Secure.” Campaign

While planning a promotional campaign, an organization has to take the 3 M’s of
marketing into consideration. The concept includes the market, message, and medium (or
media) of the campaign to and through which the promotion will be directed. Parrish (2015)
notes that in many cases, the organizations are asking wrong questions to themselves when
they are building a promotional campaign. Urbach (2002) goes even further, stating that
organizations are starting to think about the medium of the promotion before they think about
the market and message; it all should go backward; as Parrish (2010) states, “Market,
Message and Medium – crucially, in that order. “First, the market, i.e. the target audience of
the campaign should be identified through demographic, psychographic, and economic
indicators (Payson, 2002); then, meaningful message should be developed to the specific
audience (Urbach, 2002); at the end, based on the market size, message and availabilities, the
medium (i.e. the media through which the campaign will be delivered) should be decided on
(Lorraine, 2010).
The campaign that is developed to fuel the implementation of cashless campus project
is called “Easy. Useful. Secure.” Here, the company should deliver the core values that the
card payments have; the easiness, the usefulness, and the security. It should be noted that this
campaign does not aim to increase the cashless payments, rather to increase the awareness
among the ADA University members that the card payments are easy, useful, and secure.
 The market of the campaign should include both the students and their parents, and
the faculty and staff members of the university. Students are the ones who are going to make
the cashless payments within the campus; however, in most of the cases, it is their parents
who are the source of income. Therefore, the parents should be included to the market as
well.
The message of the campaign is actually clear from the name of the campaign: “Easy.
Useful. Secure.”. However, in order to increase the customer awareness about the
comfortability, easiness and usefulness of card payments, a graspable message should be
included within the communication of the campaign. For example, it should be noted that
card payments are comfortable and fast since people do not need to count their money when
they pay and count the change, again. Moreover, contactless payments are effortless and easy
to use which, in turn, increases the perceived usefulness of cashless payments. Usefulness of
card payments can also be communicated by emphasizing the ability to track the payment
transactions via mobile banking applications which improve user performance and
productivity. In order to address the security concerns of the cardholders, the company can
communicate the benefits of 3D security system offered by the client bank (SMS
notification).
The medium (or media) of the campaign may vary. Creatively designed poster may be
the first communication method since there are a lot of boards within the campus to put the
posters on. Moreover, the social media can be effectively used to promote the campaign. For
instance, Facebook has an option that restricts the paid promotions to an identified area, and
only ADA University community can be targeted through this social media network for the
campaign. For the social media promotions, creative and understandable, at the same time,
informative videos about benefits of card payments may be shot and placed. Posters are also
an option for the social media. Furthermore, event marketing is another option suggested.
Informative events, such as, seminars or info-sessions can be organized to increase the level
of awareness of the easiness, usefulness, and security of the plastic cards among the
community.
Incentives
1. Cashback
The analysis of the survey results revealed that reward programs (cash-back, bonuses
and discounts) have a significant impact on utilization rate of the card payments within ADA
university. Empirical evidence also supports the positive effect of reward programs on debit
card usage (Carbó-Valverde and Liñares-Zegarra, 2009). Therefore, in order to incentivize the
ADA Community to use their debit cards more frequently, the client bank is recommended to
implement a competent reward system.
Since the interviews with the merchants disclosed their unwillingness to cooperate
with the client bank in offering any kind of reward programs on purchases made with cards,
cashback can be the most suitable reward program for the client bank. Cashback can be
described as a type of deferred discount. The essence of the cashback scheme is quite simple:
customer purchases a product, after which a certain percentage of the price is returned back
(more often to a bank card or mobile phone account). For banks , this is an effective method
to encourage customers to actively use their bank cards, which leads to the growth of
commission income. Each bank sets its own cashback percentage, and typically, this figure
ranges from 1%-5%. Due to its costliness, cashback offering generally requires a cooperation
between merchants and banks. Since the merchants operating within the campus are reluctant
to cooperate on reward programs, PASHA Bank can consider offering cashback on a
temporary basis as a part of its “Easy. Useful. Secure.” marketing campaign. In this case, the
cost of offering cashback will also be accounted as a marketing expense. The suggested
timing for the campaign is the beginning of September 2019, when the new semester starts,
new students are admitted and cards are distributed. Considering the average cashback
percentage set on food products in the country ranges from 0.5% to 1% , the recommended
cashback percentage for the client bank is 1%.
2. Campaigns
Campaigns and activities can also be considered as loyalty programs and need a
well-established CRM system for the tracking purposes. Moreover,e all campaigns may
include rewards that are not only applicable to the university, but also to the outside vendors
that the bank is or will be cooperating with. For example, during the International Women’s
Day eve, the bank can offer discounts, bonuses, or gifts in a partner flower boutique. The
same can be applied in New Year’s Eve; rewards may not specifically be given for the use
only in the university, but rather in restaurants, bookshops, cinemas, the places where
students spend most of their time.
First user:
User of the month: The users who had the highest number of transactions, highest
volume of transactions, highest variety of the transaction, or all three of the categories may be
rewarded each month. The rewards may include small discounts, bonuses, or physical gifts
provided by vendors. Such method also works well with network factor in the campus; since
the concept address to students, their friends, and can be spread by good word-of-mouth.
Discounts and bonuses may be the most frequently used ones, but physical gifts can also play
a good role; they are tangible and can attach additional value to the cashless payments.
Seasonal campaigns: During the most famous holidays and special days, the bank
can offer various discounts and bonuses for people. The bank can announce the days that the
reward programs will be taking place a few days before to create interest and excitement
among the university members. The rewards may include special holiday themed gifts such
as Christmas shirts or Nowruz event tickets which are not costly for merchants and can easily
be implemented.
Surprise campaigns: Occasionally, the bank can have campaigns that are not
explicitly announced beforehand. Instead, the bank can apply a countdown to an identified
date with a communication of “something special is coming, get your PASHA Bank cards
ready”. With great promotion, the interest of the university members can be attained.
Moreover, the campaigns or activities on that special date also should be quite different and
interesting so that the community 1) talks about it passionately, 2) shares on the social media,
and 3) doesn’t forget about it.
5.3. Financial Consequences of the proposed solutions
On Facebook, up to 1,200 people can be reached with $1/day budget, the same
amount and budget for Instagram. It is assumed that this budget is enough for the promotions
considering the fact that the population of the university is around 2,500 people. The
suggestion is to daily promote on both social media platforms for the first month, and then
decrease the frequency to 10 days/month (for 12 month). Refer to table 8.
Info-sessions are to be held once a year. Seminars for increasing the financial literacy
of students, one events at the beginning of each academic semester (two events in an
academic year in total). Refer to table 9a and 9b.
Recommended cashback rate is 1%. According to the survey results 78% of the
respondents show their interest to cashless payments if all problems are solved and incentive
measures are taken. From this numbers, it is assumed that during 12 months of the project
implementation, at least half of the university community who showed interest will switch to
cashless payments. Average spending per person is constant at 4 AZN. The growth rate of
cashless payment users is 100 people for each upcoming month. Refer to table 10.

6. CONCLUSION AND RECOMMENDATIONS

6.1. Introduction
Researches have been assigned a task to research the feasibility of cashless campus idea.
Their findings revealed the source of the problem and analysis suggested solutions needed to
increase cashless payments. Overall, the project is feasible.

6.2. Research Limitations

However, some limitations should be disclosed. These are resulting from
methodology techniques and limited data shared by vendors and client persons.
- For faculty members, non probability convenience sampling has been used,
therefore, not all members had an equal chance to participate (due to
availability reasons).
- To present more accurate financial and feasibility analysis on solutions and
recommendations, researchers have asked for financial and operating costs
data, however, vendors did not disclosed their precise information because of
confidentiality, and even one of them evaded to be presented within this
research. Limited data obtained from client business is because of lack of
related body/department within the organization. As per discussion with client
person, since customer relations manager (CRM) system is not sufficient in
the bank, it is not possible to track all financial details regarding campus
vendors.
We acknowledge that in case of absence of mentioned limitations, findings and
recommendations would carry more validity.
6.3. Future impact
 By implementing all the recommendations listed in this paper, PASHA Bank
will not only increase the number of cashless transactions inside the ADA University campus,
indeed, if all the projects and campaigns are successfully applied, university students will
become loyal members of PASHA Bank plastic cards and this will have many indirect
benefits for the bank:
1) Students are not spending money only within the campus. The amount and
places they spend their money may vary, although. The university students will tend to use
their PASHA Bank cards more even outside the campus, which will increase the card usage
traffic.
2) The students will use their PASHA Bank cards after graduating the university
(loyalty).
3) The students can influence their family or their surroundings to switch to
PASHA Bank cards as well.
Aforementioned factors may not directly be related to the implementation of the
project within the campus and campaigning the plastic card usage, but they will increase the
use of PASHA Bank cards among the people indirectly.

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Appendices

Appendix 1: Survey

Section 1: Background Information

1. What is your gender?
● Female
● Male
2. What is your age?
● 16-25 years
● 26-39 years
● 40-60 years
● Over 60
3. What is your position in the university?
 ● Student
● Faculty/staff member
4. How much do you spend daily within the campus (in AZN)?
● 0-5
● 5-10
● 10-15
● More
5. You mostly spend on:

❏ Breakfast
❏ Lunch
❏ Drinks, snacks
❏ Students services (printing, locker, fees, penalties)
❏ Other: __________

6. Do you have a bank card?

● Yes
● No
If the answer is “Yes”, respondents move to Section 2.
If the answer is “No”, respondents move to Section 4.

Section 2: If Respondents Have a Bank Card

1. What is the type of your card?
❏ Contact card (with a chip)
❏ Contactless card (with a pay-wave)
❏ Other:__________
2. How often do use your bank card to make payments within the campus?
● Everyday
● Several times a week
● One-two times in a month
● Once every few months
● Never
3. Choose the statement you agree with
❏ I am concerned about security of card payments
❏ I find card payments time-consuming
❏ I think that the current payment infrastructure of ADA University is not decent
enough (lack of POS terminals, lack of cash in ATMs)
❏ My card does not provide any reward programs (bonuses, cash-back)
❏ I do not feel comfortable paying with card
❏ Other: __________
4. What would incentivize you to use your bank card more often within the campus?

❏ Greater security of card payments

❏ Faster transactions
❏ Cash-back
❏ Discounts
❏ Bonuses
❏ Other: ___________

Section 4: Current Beliefs and Future Behaviour

1. Which payment method would you prefer to use in the university?
❏ Cash payments
❏ Debit/credit/salary cards payments
❏ Online banking services
❏ Mobile payment apps
❏ Other: ___________
2. What kind of merchandise shops would you like to see on campus?

❏ ADA specific t-shirts, souvenirs, bags

❏ Bookshops
❏ Sports Center and Bar
❏ Markets
❏ Music and Video Sales, Cinema
❏ Other: ___________

3. Evaluate the following statement: I find card payments easy to use

1 2 3 4 5

Strongly disagree ○ ○ ○ ○ ○ Strongly agree

4. Evaluate the following statement: I believe card payments are a useful payment method

1 2 3 4 5

Strongly disagree ○ ○ ○ ○ ○ Strongly agree

5. Evaluate the following statement: In general, I believe card payments are costly

1 2 3 4 5

Strongly disagree ○ ○ ○ ○ ○ Strongly agree

6. Evaluate the following statement: How likely are you to start using your bank card or using
it more often in the next 12 months?

1 2 3 4 5
Strongly disagree ○ ○ ○ ○ ○ Strongly agree

Appendix 2: Interview

1) Do you have sufficient and decent infrastructure for receiving card payments?
· If yes, please specify (ex: the number of available POS terminals, ATMs).
· If not, please specify.
2) Do you currently accept any type of card payments, or plan to in the next few years?
3) Would you consider going cashless (less cash)?
· If yes, what are the biggest benefits you anticipate from cashless payments?
· If not, what concerns do you have about going cashless?
4) How much turnover you need to recover your costs of accepting more cashless
payments?
5) Do you think that cashless payments could increase your turnover with current
conditions?
· If not, why?
· If yes, in which conditions you think cashless payment could increase your
revenues?
6) What specifically would incentivize you to accept more cashless payments (ex: lower
commission or transaction fees)?
7) Do you believe that offering special reward programs (bonuses,discounts) would
encourage more customer spending on campus?

Appendix 3: Observation Checklist

YES NO

ATMs with cash-in transaction option are available within the ✓

campus:

Merchants are equipped to accept cashless payments:

YES NO

REM ✓

Books & Bytes ✓

Cinnabon ✓

PAUL ✓
Merchants make customers aware that they accept card payments (put card logos on doors
or invoices):

YES NO

REM ✓

Books & Bytes ✓

Cinnabon ✓

PAUL ✓

Each cashier has at least 1 POS-terminal:

YES NO

REM ✓

Cinnabon ✓

PAUL ✓

For payment via cash to proceed (from cashier entering information to the
cash register to getting a bill) it takes on average:

20-30 30-40 40-50

seconds seconds seconds

REM ✓

Cinnabon ✓

PAUL ✓
For payment via simple chip card to proceed (from cashier entering
information to the cash register to getting a bill) it takes on average:

20-30 30-40 40-50

seconds seconds seconds

REM ✓

Cinnabon ✓

PAUL ✓

For payment via contactless card to proceed (from cashier entering

information to the cash register to getting a bill) it takes on average:

20-30 30-40 40-50

seconds seconds seconds

REM ✓

Cinnabon ✓

PAUL ✓

Appendix 4: Description of main survey variables

FREQUENCY

The survey section that addresses actual usage frequency is Section 2

designed specifically for cardholders. Answers on each category of dependent

variable have a sequential order and are coded from 1 to 5 where “Never” is the

lowest (1) and “Everyday” is the highest (5) category indicating more frequent

usage of card within the campus:

1: Never

2: Once every few months

3: One-two times in a month

4: Several times a week

5: Everyday

Based on question 3 dummy variables are created. Each vote for the
following statements is coded as 1 and 0 otherwise:

NO_SECUR: I am concerned about security of card payments

TIME_CONS: I find card payments time-consuming

NO_INFRASTR: I think that the current payment infrastructure of ADA

University is not decent enough (lack of POS terminals, lack of cash in ATMs)

NO_REWARD: My card does not provide any reward programs (bonuses,

cash-back)

NO_COMF: I do not feel comfortable paying with card

USEFULNESS: Enhancement of one’s performance

EASINESS: Paying with cards is free of effort

COST: Cost associated with cashless system implementation, fees

BEHAVIOR: Measures intention to use cards in the near future

 Table 1: Descriptive statistics for demographic characteristics

Demographic Characteristics No. Obs. Percent Cumulative

Gender 314 100

Male 153 48.73 48.73
Female 161 51.27 100

Position 314 100

Student 277 88.22 88.22
Faculty 37 11.78 100

Age 314 100

16-25 years 273 86.94 86.94
26-39 years 29 9.24 96.18
40-59 years 10 3.18 99.36
Over 60 2 0.64 100

Card holder 314 100

Yes 277 88.22 88.22
No 37 11.78 100
Card type 277 100
Chip 118 37.58 37.58
Paywave 159 50.64 88.22
-- (37) (11.78) (100)

Table 2A: Descriptive statistics for main characteristics

Dummy variables No. Obs. Percent Cumulative

NO_SECUR 277 100

No 263 83.76 83.76
Yes 14 4.46 88.22
-- (37) (11.78) (100)

NO_REWARD 277 100

No 223 71.02 71.02
Yes 54 17.20 88.22
-- (37) (11.78) (100)

TIME_CONS 277 100

No 220 70.06 70.06
Yes 57 18.15 88.22
-- (37) (11.78) (100)

NO_INFRASTR 277 100

 No 178 56.69 56.69
Yes 99 31.53 88.22
-- (37) (11.78) (100)

NO_COMF 277
No 192 61.15 61.15
Yes 85 27.07 88.22
-- (37) (11.78) (100)

Table 2B: Descriptive statistics for main characteristics

Ordinal variables No. Obs. Mean Median Standard Dev.

FREQUENCY 277 2.317 2 1.302

USEFULNESS 314 3.764 4 1.119

EASINESS 314 2.687 3 1.190

COST 314 4.121 4 0.961

BEHAVIOR 314 3.401 3 1.273

 Table 3: Correlation matrix

Variab FRE NO NO_R TIM NO_IN NO g po car

les QUE _SE EWA E_C FRAS _C e sit d_t
NCY CU RD ONS TR O n io ype
R MF d n
e
r

FREQ 1.000
UENC
Y

NO_S 0.007 1.00

ECUR 0 00

NO_R -0.14 0.09 1.0000

EWAR 83 45
D
TIME -0.13 0.16 0.1102 1.000
_CON 13 79 0
S

NO_I -0.33 0.06 -0.043 0.235 1.0000

NFRA 29 87 7 3
STR

NO_C -0.36 0.02 0.0282 0.029 -0.2022 1.0

OMF 74 52 2 000

gender 0.069 0.06 -0.012 -0.05 0.0005 -0.0 1.

3 84 9 70 476 0
0
0
0

positio -0.22 -0.0 0.0593 -0.01 -0.0393 0.1 - 1.

n 24 547 01 002 0. 00
0 00
7
8
5

card_t 0.233 -0.0 -0.073 0.041 0.1093 -0.1 - -0. 1.0

ype 0 012 6 2 550 0. 16 000
0 66
0
9
3
 Table 4: Frequency and Reasons of low card usage

Variables Model

NO_SECUR 0.4147739

NO_REWARD -0.8310058**

TIME_CONS -0.0428497

NO_INFRASTR -2.313603***

NO_COMF -2.182518***

gender 0.2755248
 position 1.094608**
card_type 0.9568998***
age Dummies Yes

No. of Observations 277

Wald Chi-square 114.38

Pseudo R2 0.1893

NOTE: The coefficients with 1% significance are followed by ***, coefficients with 5% by **, and coefficients
with 10% by *.

Table 5: Correlation matrix RQ2

Variables BEHAV USEFUL EASIN CO

IOR NESS ESS ST

BEHAVI 1.000
OR

USEFUL 0.6110 1.0000

NESS
EASINES 0.2642 0.1580 1.0000
S

COST 0.2238 0.3796 0.0303 1.0

000

Variables USEFUL EASIN

NESS ESS

USEFUL 1.0000
NESS

EASINES 0.1580 1.0000

S
Variables FREQUE BEHAV
NCY IOR

FREQUE 1.000
NCY

BEHAVI 0.1404 1.0000

OR
 Table 6. TAM

Variables Model(1)
 BEHAVIOR

USEFULNESS 1.314547***

EASINESS 0.316145***

COST -0.0189354

No. of Observations 314

Wald Chi-square 126.49

Pseudo R2 0.1716

Variables Model(2)

USEFULNESS
 EASINESS 0.2386148**

No. of Observations 314

Wald Chi-square 6.49

Pseudo R2 0.0081

Variables Model(3)

FREQUENCY

BEHAVIOR 0.1897163**

No. of Observations 277

Wald Chi-square 4.09

Pseudo R2 0.0059

NOTE: The coefficients with 1% significance are followed by ***, coefficients with 5% by **, and
coefficients with 10% by *.

Table 7. Marginal effect of decrease in commision fees

Commission per transaction 2%

Profit per transaction (in percentage) 0.50%

Average spending per person (in AZN) 4

 Average daily number of cashless
transactions 100

Turnover from 100 transactions (in AZN) 8

Profit from 100 transactions (in AZN) 2

When the transaction fee is reduced to 1.7%,

Commission per transaction 1.7%

Profit per transaction (in percentage) 0.20%

Average spending per person (in AZN) 4

Average daily number of cashless

transactions 100

Turnover from 100 transactions (in AZN) 6.8

Profit from 100 transactions (in AZN) 0.8

If the number of transactions increase by 2.5 times, i.e. becomes 250,

Commission per transaction 1.7%

Profit per transaction (in percentage) 0.20%

Average spending per person (in AZN) 4

Average daily number of cashless

transactions 250

Turnover from 250 transactions (in AZN) 17

Profit from 250 transactions (in AZN) 2

 Cost calculation for the marketing activity and campaigns
Posters

Table 7.
Activity Cost

Poster design 20 AZN

Print (A3) x 30 posters 30 AZN/poster

Total cost 50 AZN

Social Media Promotions

Table 8.
Activity Cost

Monthly promotion for the first month ($2 + ~120 AZN/month

VAT 18%)

Monthly promotions for upcoming months ( ~40 AZN/month

12 month) ($2 + VAT 18%)

Total cost 560 AZN

Event marketing within the campus

Table 9a.
Activity Cost

Location fee 0 AZN

Promotion with posters 30 AZN

Transportation cost 10 AZN

Total cost 40 AZN

Table 9b.
Activity Cost
 Guest speaker 200 AZN x 2 events

Coffee break 100 AZN x 2 events

Transportation cost 10 AZN x 2 events

Promotion with posters 30 AZN x 2 events

Total cost 680 AZN

Cashback

Table 10.
Activity Cost

Cashback cost 0.04 AZN/person

Cashback cost for 100 people/month - first 96 AZN

month

Cashback cost for 200 people/month - 192 AZN

second month

Cashback cost for 300 people/month - third 288 AZN

month

Cashback cost for 400 people/month - 384 AZN

fourth month

Cashback cost for 500 people/month - fifth 480 AZN

month

Cashback cost for 600 people/month - sixth 576 AZN

month

Total cost 2,016 AZN