Inspira- Journal of Modern Management & Entrepreneurship 115

ISSN : 2231–167X, Volume 01, No. 02, October, 2011, pp.115-121

Impact of Perceived Security and trust in use of

Electronic Payment System

Dr. Bindu Jain

Dr. Leena Bhatia

For any business to get succeeded, good and efficient payment system
is one of the top priorities. Safety, security, soundness and efficiency of the
payment systems ensure critical systemic stability of the business growth.
Smooth functioning of payment systems becomes a fundamental requirement
for linking with the other financial systems.
The electronic payment system includes the card companies (switch
provider), banks (acquirer and issuer), merchants and cardholders, and will
be failed in absence of any of these players. Although, the electronic payment
systems have been in trend for several years, its use and popularity is still
very limited.
Review of Literature
Electronic Commerce becomes a major component of business
operations for many companies, thus e-payment has become one of the most
critical issues for successful business and financial services (Hsieh 2001, Peha
and Khamitov 2004, Stroborn et al. 2004, Linck et al. 2006, Cotteleer et al. 2007,
Kousaridas et al. 2008).
A number of e-payment systems have recently emerged on the
Internet. Although various security measures and mechanisms have been
designed for these EPS, many security problems still remain (Hsieh, 2001,
Chou et al., 2004, Dai and Grundy, 2007 and Kousaridas et al., 2008). Hence,
there is a growing need to minimize the risks associated with e-payment
transaction processes (Tsiakis and Sthephanides 2005). However, In
comparison to the traditional payment methods, e-payment techniques have
several favorable characteristics, including acceptability, privacy, efficiency,
and convenience (Chou et al. 2004, Stroborn et al. 2004, Tsiakis and
Sthephanides 2005, Linck et al. 2006, Cotteleer et al., 2007, Kousaridas et al.
2008).


Assistant Professor , Deptt., of Business Administration University of Rajasthan, Jaipur

Assistant Professor, MCA Institute, S.S. Jain Subodh (PG) College, Jaipur
116 Inspira- Journal of Modern Management & Entrepreneurship : October, 2011

Credit card payment system has been widely accepted by consumers

and merchants throughout the world, and by far the most popular methods of
payments especially in the retail markets (Laudon and Traver, 2002). Studies
also revealed that simplicity (Schwartz, 2001; Truman et. al, 2003), trust
(Herzberg, 2003; Juang, 2006), security and mutuality (Peha and Khamitow,
2004; Baddeley, 2004) of stakeholder benefits are all of importance to the
adoption of e-commerce payment system.
Research Methodology
This study developed and implemented a survey of different people
from different parts of India. The purpose of this survey was to determine
whether Perceived security and trust causes any effect on use of Electronic
Payment System or not.
During the present study, total 234 responses were received through
internet, direct investigation etc. Among them 23 questionnaires were found
consisting of inappropriate and inadequate responses. Therefore, finally we
had total 211 responses for analysis. The following questionnaire was used for
the analysis.

Survey items for Technical Scurity in Electronic Payment System

Questionnaire items Strongly Disagree Neutral Agree Strongl
disagree y agree
It always call for user name and
password when you log-in
Various measures are provided by
it to authenticate
This offers you an opportunity to
change any of payment
information before completing the
final stage of the payment process
It provides a step to verify a
payment before the finalization of
the actual payment
This typically displays a summary
of the payment information (cost,
payee…) and the final payment
amount
A confirmation is sent to you
through one of several available
methods (online, email, etc.) to
assure you that the payment has
in fact been received
Survey items for perceived security in EPS
I perceive it as secure
I perceive the information relating
to user and transactions as secure
Impact of Perceived Security & Trust in use of Electronic Payment System 117

The information I provided in

previous transaction is helpful for
secure payment transactions
I do not fear hacker invasions into
it
Survey items for perceived trust in EPS
I trust each participant, such as
seller and buyer, involved in it
I trust the security mechanisms of
it
I trust its services
I trust the information provided
during the process
Survey items for the extent of EPS use
I use it more often than others
I am using currently and will
continue to use it
I believe that its use will increase

Hypothesis Tested
H0: Perceived security in EPS is positively associated with consumers’
use of EPS.
H1: Perceived trust in EPS is positively associated with consumers’
use of EPS.
Hypothesis testing
T- test is used to test hypotheses about the mean for small samples. As
known earlier that the t-distribution is symmetric, it resembles the normal
distribution and tending toward normal as the sample size increases. During
the current study value of t is calculated using formula:

Where = Sum of observations of first variable

= Sum of observations of Second variable

n=Number of Observations
Value of tabulated t was noted from t-table at 5% level of significance
for 20 degrees of freedom. After comparing calculated and tabulated values of
t, the result was concluded according to the following:
 If calculated value of t > tabulated value of t then Null hypothesis is
rejected and alternative hypothesis is accepted.
118 Inspira- Journal of Modern Management & Entrepreneurship : October, 2011

 If calculated value of t < tabulated value of t then Null hypothesis is

accepted. Observations and Results
Technical Security and Respondents
The major security issues at the time of transaction are whether the
payment system provides login facility, proper authentication system,
modification and verifications facilities and displays Summary and
Confirmation messages or not. Thus during the present research these
questions were included in the questionnaire.
During the present study, it has been observed that among all
respondents, 35% strongly agreed and 54% only agreed with the technical
security provided at the time of electronic transactions whereas only small
number of people (2%) disagreed or strongly disagreed for the same. So
almost 89% people believed that technical security is present there in
electronic payment system. (Chart I)

Perceived Security and Respondents

The results shown that among all the respondents only 49% perceived
EPS as a secure system whereas 29% did not agree. (Chart II)
Impact of Perceived Security & Trust in use of Electronic Payment System 119

Perceived trust in EPS

The questions of this part included trust in all the parties involved in EPS,
trust in security mechanism, services and the information provided to the
users at the time of transaction. The results were as follows:
Although only 49% perceived EPS as a secured system but almost 60% had
shown their trust in the EPS system. Not only this but only 18%

Usages and Future of EPS

In this section, the users were asked whether they are regular user of EPS or
not and in near future will they still continue with EPS or not. They also
shared their views on the future scope of EPS. The results indicate that only
13% of the respondents don’t show EPS as a future payment system whereas
77% agreed on the fact that the future choice is Electronic payment instead of
cash payment. Only small number of people (i.e.,10%) were found neutral on
this discussion. (Chart IV).

Hypothesis Testing and Conclusion

Hypothesis 1:
H0: Perceived security in Electronic Payment System is positively
associated with consumers’ use of Electronic Payment System.
120 Inspira- Journal of Modern Management & Entrepreneurship : October, 2011

H1: Perceived security in Electronic Payment System is not positively

associated with consumers’ use of Electronic Payment System.
To prove this we have taken two variables: Perceived Security which
includes four basic questions as explained earlier and Future Use which
includes three questions. After conducting t-test, we have got value of t= -
6.13572 for Electronic Payment System and -7.56771 for Mobile Payment
System.
For Electronic Payment System (Hypothesis 7)
Computed value of t -6.13572
Tabulated value of t at 5% level of
significance for 20 degree of 2.09
freedom

When we compared the computed value of t with the tabulated value

of t, we have observed that the calculated value of t < tabulated value of t.
thus H0 is accepted. So we can conclude that Perceived security in Electronic
Payment System is an important issue related to consumers’ use of Electronic
Payment System and Mobile Payment System and influences it positively.
Hypothesis 2:
H0: Perceived trust in Electronic Payment System is positively
associated with consumers’ use of Electronic Payment System.
H1: Perceived trust in Electronic Payment System is positively
associated with consumers’ use of Electronic Payment System.
To prove this we have taken two variables: Perceived Trust which
includes four basic questions as explained earlier and Future Use which
includes three questions. After conducting t-test, we have got value of t= -
3.03615 for Electronic Payment.
For Electronic Payment System (Hypothesis 8)
Computed value of t -3.03615
Tabulated value of t at 5% level of
significance for 20 degree of 2.09
freedom
When we compared the computed value of t with the tabulated value
of t, we have observed that the calculated value of t < tabulated value of t.
thus H0 is accepted. So we can conclude that Perceived trust in Electronic
Payment System is also an important issue related to consumers’ use of
Electronic Payment System and influences it positively.
Any Payment System must meet security requirements; otherwise
customers will ignore the respective payment procedure. It is however
important to realize that security is an essential condition, not a
commensurate one. Fulfilling all essential conditions causes a customer to
Impact of Perceived Security & Trust in use of Electronic Payment System 121

accept a procedure as a usable method of payment in principle (and thus, at

least, not to exclude its usage), while fulfilling one of the commensurate
conditions could turn, then, this acceptance into actual usage.

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