TOWARDS AN ELECTRONIC SOCIETY: AN INVESTIGATION INTO THE EFFECTS OF PAPERLESS PAYMENTS ON CONSUMER PURCHASE BEHAVIOUR

Societies in the global scene continually become electronic as a result of the technological advances. This makes communication, banking, and payment activities change substantially from the traditional physical means which were more time consuming and cumbersome to more efficient systems experienced today. This study aims at investigating the effects of electronic paperless payments on consumer purchase behaviour. The paper will be structured into six main sectors such as the introduction, literature review, research design and methodology, data analysis and findings section, the market implications of the electronic payment systems and the finally the discussion and conclusion section of the paper.

Technological advances experienced in the last few decades have substantially changed forms of payment from the traditional paper payments to plastic and electronic payments. Such paperless payments have grown in popularity in recent years and both wholesalers and retailers have to keep up with technology or risk being obsolete. However, the new payment systems bring another challenge to small-medium enterprises which may not adopt all the available payment types as there are cost considerations to take into account.

To fully understand the effects of paperless payments on consumer purchase behaviour, this paper will focus on Singapore as it is one of the top shopping destinations and has been identified by MasterCard (2013a) as having a “strong momentum for cashless movement.” In Singapore, the most common form of paper payment is cash. However, the widely used paperless payment options available in most retailers are credit cards, debit cards, Network of Electronic Transfers – Singapore (NETS) and stored value cards such as the Contactless e-Purse Application (CEPAS) NETS FlashPay and ez-link card. All these paperless payments options account for 69 percent of the total value of consumer payments in Singapore.

NETS is a pin-based card that allows payments at point of sales (POS) and cash withdrawals at ATMS. The availability of the NETS card regardless of age exposes the young and old and has been instrumental in promoting the growth of paperless payments in Singapore. CEPAS enabled card is a smart card that allows users to store money electronically and can be used for payment by tapping it against a card reader (Mas.gov.sg 2014).

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A study done by MasterCard found that there were more payments in terms of value done through paperless systems than cash globally. The study found that 85 percent of all retail payments were transacted in cash, though this accounted for only 34 percent of all retail transaction value (MasterCard 2013b). World Payments Report in 2013 calculated that paperless payments have grown in usage by 32.3 percent between 2007 and 2011. This growth is largely attributed to the willingness of the retailers to adopt the paperless payment systems that are convenient and make it easier for customers to make payments. Therefore, businesses have a choice of providing a variety of payment options or opt to reduce the cost by accepting cash as the only payment option. Some of the costs incurred by retailers using credit and debit cards include the “merchant discount” charged by banks for every transaction made while for another paperless payment option, retailers may have to pay to rent or install the terminals needed for payment (Rysman 2007).

Governments also have a responsibility to influence its citizens to adopt paperless payment systems. This can be done through introduction of policies that encourage higher usage and acceptance of new technologies that in turn helps in reducing social cost.

The growth of paperless payment systems all over the world has attracted the attention of many researchers, and many research journals have published that investigates the various issues of paperless payments. This paper attempts to look at how paperless payments systems affect consumer purchase behaviour in relation to the volumes, frequencies, and purchasing points and how different demography can affect the perception of paperless payments. The paper will also look at how the introduction of paperless payment systems affects the small and medium size enterprises in terms of the volumes and frequency of transactions.

The timing for this paper is appropriate due to the growing popularity and increasing usage of paperless payments. In addition, this paper builds upon many published papers to identify factors of paperless payments that substantially influence purchase behaviour. This paper aims to identify the benefits of paperless payments and find out how they can affect consumer purchase behaviour. Also, how the relationship between the benefits and purchase behaviour is affected by different demographics.

The findings of this paper are expected to be able to make significant contributions to wholesalers, retailers, banks, credit card associations and the government of Singapore to plan and facilitate business operations in a secure and safety manner. By understanding the relation between payment systems and consumer spending behaviours based on the demographics, retailers, banks, and credit card associations can use the information to their benefit to market their product and services to be relevant in order to remain competitive in the market. The findings will also be instrumental to future researchers to anchor further studies in areas related to paperless payments systems and consumer purchase behaviour.

Objectives of the Study

The objectives of this study are;
1. To determine the effects of paperless payment systems on consumer purchase behaviour;
2. To investigate the effects of the introduction of paperless payment systems on the small and medium size enterprises;
3. To identify the benefits of paperless payment systems on both consumers and retailers.

Research Questions

Cashless Payment Studies

A number of studies have been done on the growth of cashless payments. Humphrey et al. (1996) showed that cashless transactions increased in every country they investigated and they conclude that over time, consumers in these countries will rely more on cashless payments and reduce the use of cash. Mooslechner et al. (2006), in their study later confirmed the findings of Humphrey et al. (1996). Moreover, they found that the transactional value of cash declined by 15 percent whereas debit card transactional value increased by 20 percent and credit card increased to 4.3 percent.

The growth of cashless payments has been attributed mainly to credit and debit cards while newer payment methods such as electronic money and smartphone payments are not as widely used as credit and debit cards. Mas and Rotman (2008) attributed a large portion of the growth of cashless payments to debit cards while credit cards had a lesser impact on the growth. Other forms of cashless payments such as new technologies involving electronic money and smartphone payments have not taken off successfully in Europe and had limited success in Asia. According to Mars and Rotman (2008), the limited use of other electronic money payments can be linked to the lack of clear benefits and security concerns as compared to existing payment methods. This creates a barrier that reduces the attractiveness of such new technologies as an alternative payment option. Debit card ownership almost doubled from 1997 to 2005 and credit card ownership grew about 10 percent in Austria. Cards with Quick e-purse function only grew slightly while loyalty cards with payment functions were on the decline. Their research shows that the debit cards remain the most popular payment card with weekly usage tripling to 44 percent and credit cards are the second most popular payment card with weekly usage at 6.5 percent in Austria (Mooslechner et al. 2006).

Consumer Purchase Decision

Foster et al. (2011) investigated the ownership and usage of cash, cash substitutes such as prepaid cards and credit and debit cards during a recession. They found that 99.8 percent of consumers own cash, 77.0 had debit cards and 72.2 percent had credit cards. The use of cash for payment increased during a recession while debit and credit card usage declined by 3.2 and 6.1 percent respectively. This can be explained by a reduction in bank interest rates which mean that there is none or little incentive for consumers to keep cash in the bank. Further, retailers may sometimes offer discounts to get consumers to pay with cash as it allows them to reduce their operating expenses and consumers who use cash can better manage their expenditure.

In addition to the research into the ownership and usage of cash and cards, Foster et al. (2011) found that the average person has US$69 on hand that could be used for payment. This means that theoretically, if a consumer does not withdraw more cash, he would be able to afford an average transaction of US$69 and below unless he uses alternative payment’s methods, i.e payment cards. Even if the transaction amounted to US$69, he may not want to spend all his current available cash and may want to keep some cash on hand as a precaution.

This could be used to explain why Bergman et al. (2007) findings determined that the threshold where consumers prefer using cash was for transactions below US$24. Additionally, the average cash transaction amounted to US$24.90 while the average card transaction amounted to US$93.50. Since consumers have different preferences as to when they use cash and credit cards, then it is likely that they would also have different preference when choosing when to use other payment methods such as debit cards and smartphone payments. This leads us to the hypothesis (H1) where consumers decide which form of payment to use depending on the transaction amount.

H1 – The type of payment used is affected by the transaction amount

However, Soman (2001) found that the choice of payment could also be affected by factors such as convenience, accessibility, acceptability, and habit. Bergman et al. (2007), Loix et al. (2005) and Mooslechner et al. (2006) investigated the factors that affected the use of payment cards. Mooslechner et al. (2006) found that income and education and cash are inversely related where the higher the income and education, the less likely cash will be used. Age increases the use of cash where older consumers tend to use cash more often. Bergman et al. (2007) showed that the age and educational background of consumers “significantly affected the choice” between cash and credit card while household size and income and gender had little effect. Furthermore, Bergman et al. (2007) and Mooslechner et al. (2006) found that the likelihood of paying with credit cards increases as education level rises and consumers between the ages of 25 to 44 years were the least likely to use cash for payments. Similarly, Loix et al. (2005) found that language and education have an impact on the awareness of credit cards. The authors further support the relation between education and credit card usage. Consumers with primary school education were the most unlikely to use credit cards and the likelihood of using credit cards increases with education level. Conclusions of Loix et al. (2005) were further supported by Mooslechner et al. (2006) findings where both research found that income levels affected awareness, ownership, and intensity of credit card usage. Higher income levels were found to lead to higher awareness, ownership, and intensity of use.

Similar to credit cards, debit card usage decreases as age increases. Education levels played a similar role where consumers with primary school education were the most unlikely to use debit cards. However, consumers who had non-university higher education had higher debit card usage compared to consumers with university degrees.

The findings that education and age affect the usage of credit and debit cards could be due to the different levels of understanding of technology. Consumers with higher education are more likely to understand and accept new technology and can relate to the perceived convenience and time savings of cashless payments while older consumers and less educated consumers may prefer the instantaneity of paying for their purchases now rather than the concept of ‘buy now, pay later’ that comes with credit cards.

Generally speaking, cashless payments allow consumers to not be restricted by the amount of cash they have on hand for purchase and permit them to easily track their spending electronically thus providing greater convenience. However, it has not been investigated how the perceived convenience of cashless payments are able to influence purchase behaviour. Since consumers are not limited by the amount of cash they have on hand, it is possible that consumers purchase more due to the convenience of cashless payments.

H2 – Perceived convenience of cashless payment do not restrict the amount that consumers have to spend which allows consumers to spend more.

Consumers are usually not required to pay fees for cash withdrawals and the only obvious cost incurred to use cash is the annual fee of the card used for the withdrawal (Bergman et al. 2007). Similarly, credit and debit cards use does not incur fees for card transactions and the only obvious cost is the annual card fee. Bergman et al. (2007) calculated the cost of cash, including the loss of bank interest by withdrawing cash and time cost of cash withdrawals and at the POS, is higher than credit cards. Furthermore, Humphrey et al. (1996) found that countries with low crime rates provides a safer environment for cash transactions and such countries rely more on cash whereas countries with high crime rates uses less cash and rely more on cashless payments. For example, Japan’s low crime rate led to high cash payments during POS, low credit card usage and almost no payment by debit cards. While proving that cashless payments are safer, there are little insights of how purchase behaviour is affected by the safety of cashless payments. It is possible that in a high crime situation, the use of cashless payments may increase purchases since consumers are no longer limited to spend the amount of cash they have available whereas for low crime situation, the safety of cashless payments may or may not affect purchases.

H3 – Depending on the crime rate of different countries, the safety of cashless payment may increase consumer purchase.

Chatterjee and Rose (2011) investigate the link between credit cards and the likelihood to spend more compared to paying with cash. They found that consumers behave differently when buying with a credit card compared to when they were paying with cash. Also, the authors note that consumers who use credit cards prefers products that provided better benefits which led to a higher willingness to pay while those who used cash preferred products that were lower on cost. Similarly, Soman (2001) confirms Chatterjee and Rose findings as their research found that consumers were more likely to purchase more compared to consumers who paid via cheque.

In addition to the difference in product perception and preference when using different payment methods, Chatterjee and Rose (2011) also explained that consumers feel an immediate “pain of payment” when using cash while cashless payments “makes the pain of payment less obvious.” Khan and Craig-Lees (2009) note that the tangibility of cash means consumers are aware that “something of value is being exchanged.”

In addition, Soman (2001) highlighted that the difference between cheque and credit card payment. The author noted that cheques and debit cards have a short delay before the amount is deducted from consumers’ bank accounts while credit cards have a longer delay before the credit bill is presented to consumers and consumers have additional time to make payment. Payment modes with short time delay “strongly affect decision making” while those with longer time delay have a smaller impact. Soman (2001) attributes this to four reasons. Firstly, delayed payments can be seen as further in time and are not as important. Secondly, consumers do not feel the impact of payment unless they have value taken from them and view credit cards as “a commitment to pay” but does not represent the actual payment. Thirdly, consumers may be more susceptible to obvious changes in their wealth than to payment still in the process. Lastly, when consumers receive their credit bills, they are presented in a list with all their other purchases charged to the card which helps to reduce the impact of individual purchases.

They are able to see and feel a loss of value in exchange for a product which reduces the value of the product whereas for mobile payment, consumers just tap their device against a reader and there is not physical exchange of any tangibles. The research by Chatterjee and Rose (2011) and Khan and Craig-Lees (2009) are useful as a basis to delve further and include other forms of cashless payments. H4 – The use of cashless payments increases purchases.

Klee (2006) in the study that investigated if time is an important determinant in deciding which payment mode between debit card and cheque is used found that consumers prefer debit cards over checks as debit cards uses significantly less time than cheques. Through this research, we know that consumers prefer minimizing the amount of time taken for a transaction to be effected. Cheques require time to fill in the amount and sign whereas debit cards only require PIN. Since there is no way to find out the actual time required until the transaction is over, we need to investigate if consumers perceive that using cash require a longer time than cashless payments and if they take the perceived time difference into account when deciding to use cash or cashless payments.

H5 – Perceived time savings between cash and cashless payments determines the type of payment.

According to the study done by Braga, Isabella, and Mazzon in 2013, fourteen propositions suggesting that the digital money also impacts consumer behaviour and elicits similar effects like that of credit cards. In the present borderless world, the society is increasingly becoming paperless. The use of money as a means of payment has substantially evolved to an extent that in the past few decades, payment has become less physical but more digital. The study notes that credit cards, 24/7 retailing, cash machines, and instant credit are marketing innovations that offer more than ever, convenient and easy operation. This elicits impulsive purchasing behaviour (Roberts & Jones 2001). Digital money through online platforms is even easier to use, more convenient and less salient than the use of credit cards any other payment modes. These paperless payment systems encourage consumers to make payments without thorough reflection on their expenditure, and as a result despite being convenient their spending behaviour increases the purchasing probability in spending amounts that consequently might prompt compulsive behaviour. Further, studies also evidence that paperless payment techniques have effects on consumers’ health, since making payments using credit cards potentially increase the possibility of engaging on less healthy choices (Thomas, Desai & Seenavasin 2011).

Conceptual Model

In determining the effects of paperless payment systems on consumer purchase behaviour and the effect on small and medium size enterprises, the conceptual framework below show the factors influencing the type of paperless payment adopted, the benefits accrued from the adoption of paperless payments and the effects of the introduction of paperless payments on consumer behaviour as well as on the small and medium size enterprises.

The researcher adopted quantitative research design in which online questionnaire identified respondents was used to collect primary data from 100 participants drawn from Singapore. The respondents were chosen from all the age groups above age 18, who were allowed to own paperless payment systems like credit, debit cards on other online payment like Pay Pal, eBay among many others. This was to ensure proper representation of all the groups to produce credible analysis and results.

Based on the preliminary analysis as indicated in table 2 below, there is a strong indication by 68% of respondents that the introduction of paperless payment systems to a larger extent influences their purchases and behaviour. The most influenced groups are those between 18 and 29 years at 85%, 30 and 39 years at 80% and 40 and 49 years at 80% in that order. The elderly are the least influenced at only 40%. The explanation given is that it is easier and secure to walk along with electronic cards instead of hard cash and that they have to choose outlets that have machines supporting the electronic cards for any purchases made. This analysis confirms hypothesis one that there is a substantial effect of paperless payments on the purchases and behaviour of consumers in Singapore. Thus, this means that the introduction of paperless payment systems influences consumer purchases in terms of volumes, frequency and shopping places.

Looking at the effect of plastic money, several respondents, especially the over 60 years old group, noted that there is a danger of overspending and impulse purchasing associated with the use of cards. This danger is mostly faced by the consumers owning credit cards who occasionally spend in debt and eventually not able to manage their finances well.

In response to the question whether the introduction of paperless payment system affects small and medium size enterprises, 70% agreed. One respondent who apparently worked as a cashier in one of the medium size enterprise confirmed in her explanation that several customers stopped purchasing from the store after learning that there were no card support machines to facilitate paperless payment. Shoppers also confirmed that they had to shift to outlets that accepted paperless payment support systems. This finding confirms hypothesis 2 that there is a substantial effect of paperless payment on a small and medium size enterprises in Singapore.

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Marketing Implications

As the society becomes more electronic in communication and payment systems, there are several implications both to individuals, business organization and the society in general. For consumers, communication and paying for services has become much easier without having to carry cash all over they go and without necessarily raising several vouchers which are time consuming. This development however comes with a responsibility to both consumers to take up the paperless payment platforms and the business organization and service providers in Singapore to invest in paperless payment supporting systems. There are also several marketing implications to the introduction paperless payment systems. These include increased marketing and training cost and increased cost of installation of paperless payment systems to support paperless transactions (Smith & Lasher 2008).

Increased Marketing Activities

Based on the findings of the study that there is a substantial influence of the introduction of paperless payment system on consumer purchase behaviour, the service providers have to design a more customer-engagement marketing strategy, especially after understanding customer interaction and consumer behaviour in relation to their preferred mode of payment. Service providers must increase marketing activities to remain competitive thus this involves offering secure and efficient payment systems at low transaction costs. The marketing activities include mass media advertising, online marketing through websites and in the social media, using sales and marketing teams, public relations activities, direct marketing to engage customers and orchestrate the delivery of the end-to-end customer experience and to convince consumers to adopt and acquire the Smart cards, Visa cards and embrace other online payment systems like PayPal, EFTs, eNETS, ASIAPAY among others which offer real time funds transfer (Mas.gov.sg 2014). The implication of the increased marketing activity means increased costs in relation to recruitment of marketing teams, funding sales and marketing promotions and paying for the mass media advertisements as well as web hosting costs (Smith & Lasher 2008).

E-Payment Systems

The owners of Book Bunker require e-payment systems to enable them to process their payments electronically. E-payments entail not only the electronic transactions themselves, but also the infrastructure required for billing and buyer authentication. Bothma & Geldenhuys (2008) note that the availability of suitable e-payment system is a major factor for Book Bunker, as it will enable the owners to realize the full potential of e-commerce as a commercial medium.

The proposed e-payment method must address all the factors of security with ease of use as the most important factor for the customers. Zongqing (2004) notes that customers are concerned about secure transmission of payment details and financial information. Secondly, it is important to address the issue of safety of information stored in the Book Bunker’s database server. Finally, Mary and Joe Johnson must address the issue and find the person, who will have access to the information they provide over the internet, since they cannot see the faces of the people, who are sitting on the other end of the connection (Zongqing, 2004).

E-Payment Options

There are many different types of e-payment methods for online consumers. The most common and currently preferred by business owners and customers methods include credit cards, smart cards, debit card, PayPal, electronic checks, and electronic wallets (Bothma, Geldenhuys, 2008). In order to accept these cards, the Book Bunker’s website must have a merchant account, payment processing software, and procedures to protect its customers and itself against fraud.

Apart from securing a merchant account, an e-business must also have in place a process for getting card transactions authorized and enable processing of credit card transactions. Botha (2004) notes that the payment processing software comes with a monthly processing fee. The owners of Book Bunker must download the software into their website in order to enable payments to be processed.

Electronic Cash

This e-payment system will enable the customers of Book Bunker to pay for the books online by transmitting over the internet a unique electronic number or other identifier value (Botha, 2004). The advantage of using electronic cash instead of credit card is that it entails lower processing costs for the seller and no special credit card type authorization for the buyer.

Smart Cards

A smart card is a small electronic device of approximately the size of a credit card that contains electronic memory. Bothma & Geldenhuys (2008) note that electronic cash can be transferred over a telephone line or over the internet to and from the smart card. One disadvantage of using a smart card is the need for special equipment. The online shoppers of Book Bunker must attach a special card reader to their PCs to read their card; offline merchants must also have a specific card reader to read a smart card. The second disadvantage is the risk of theft, which may deter users from loading a smart card with big amounts of money (Bothma, Geldenhuys, 2008).

Electronic Checks

An electronic check is the electronic version of a paper check. Book Bunker can use electronic check, which contains the same information, as a paper check, and is based on the same legal framework; it can be used for any transaction, where a traditional paper check is used. Kalakota (1997) says that electronic checks will be suitable for the Book Bunker’s customers, who want to use micropayments. The advantage of using e-checks is that the conventional cryptography of electronic checks makes them easier to process than other items based on the public-key cryptography. Also, since e-check contents can be attached to the Book Bunker’s remittance information, the electronic check will easily integrate with EDI applications, such as accounts receivable (Kalakota, 1997).

Credit Cards

Book Bunker can use credit cards in order to facilitate online transactions for its online customers. Through credit cards, the payment will be made with the number available on the card. In order to ensure that it is only the owners of Book Bunker, who will receive this number, it is transmitted over a secure line (Meier, Stormer, 2009). The advantage of using credit card is that they are available and accepted worldwide. Moreover, the Book Bunker’s owners will not face many hurdles in the implementation of such system and will not need special software, which makes the second advantage of using credit cards. In this context, the customers will only need to enter their credit card number together with the name of the card owner into a special form (Meier, Stormer, 2009). In this context, Montague (2010) says that credit cards will enable Book Bunker to capture a large market share, because this system dominates the majority of the e-commerce solutions.

Credit cards are also convenient for the buyer. Many banks add a small basic charge for processing payments by credit card and lure in corresponding turnover with additional discounts. Meier and Stormer (2009) say that one of the limitations of credit cards is absence of a security mechanism. This implies that if a hacker steals a credit card number, it will be still sufficient to buy products online. The second disadvantage is that credit cards are not anonymous. Meier and Stormer (2009) claim that when a product is purchased, the owner of the credit card and its number become known to both the seller and the banks involved in the processing of payments. The third disadvantage of credit cards is that they will be expensive for Book Bunker. Credit card institutions and banks require Book Bunker to pay relatively high basic charges, as well as a percentage of sales to them (Meier, Stormer, 2009).

Debit Cards

Book Bunkers can use debit cards to facilitate the online coverage of transactions. They include ACH, direct debit, electronic checks, and bank transfer services. The advantage of using these methods is decreased costs. Books Bunker will incur a fraction of the costs, but they have chargeback limitations (Montague, 2010). ACH has an ability to limit fraud and identity theft, which will give an additional guarantee to the customers (Montague, 2010).

PayPal

Book Bunkers can use PayPal, which is a credit card-oriented payment system. Meier and Stormer (2009) say that for Book Bunker to use PayPal, it is necessary to register with it. PayPal uses a simple, yet effective, means to protect itself against credit card abuse. The description of this deduction on the credit card statement contains a number (Meier, Stormer, 2009). The first step is to open a PayPal account and incorporate it to your site. The idea of Book Bunker offers both system PayPal and direct credit card payment. The second step is to use reliable and proven shopping cart and payment system service, such as LML Payment Systems and BeanStream. The third step is to offer credentials for payments guarantees (Meier, Stormer, 2009).

Securing Online Payments

Secure Socket Layer (SSL)

Secure Socket Layer (SSL) is a protocol, which is used by Book Bunker’s sites to encrypt all communication including credit card details during transmission over the internet. Tan (2004) says that the use of SSL by Book Bunker provides the mechanism to securely transmit data from one location to another with transactional integrity. For Book Bunker to use SSL, they should install X.509 certificates from a trusted third party CA on a merchant web server. After the installation of SSL, a customer’s browser is able to enter a secure session with a merchant’s web server and all communication over the channel is encrypted at 128 bits (Tan, 2004). Once the information arrives at the merchant’s website, all the information is decrypted and becomes accessible to the merchant. Tan (2004) articulates that while SSL facilitates integrity and security in transferring information between the buyer and the seller, it does not provide any intrinsic authentication capabilities for the customer or the merchant.

The disadvantages of using SSL is that no mechanism to provide strong authentication of the cardholder or merchant. Botha (2004) says that SSL does not have any controls over what the merchant does with the customer’s or cardholder’s payment details. There is also lack of policy and legal framework to allow a customer to trust a merchant (Botha, 2004).

Secure Electronic Transaction

Secure Electronic Transaction (SET) was built by Visa and MasterCard in 1996, to add confidence to payment card transactions over the internet. Tan (2004) says that SET will provide Book Bunker’s customers authentication, as well as transactional integrity and confidentiality during online payments. The suitability of SET in this context is on the basis that it not only encrypts a transaction, but also ensures against fake identity by authenticating both the cardholder and the merchant involved in the transaction through the use of digital certificates issued by a CA on behalf of the card issuer (Tan, 2004). According to Zongqing (2004), SET protects buyers, since the buyer’s credit card information is transferred directly to the credit card issuers for verification and billing, rather than to the merchant, who by this mechanism is unable to see the customer’s credit card information.

Transport Layer Security

Transport Layer Security (TLS) provides authentication, confidentiality, and integrity, which protect against message tampering, eavesdropping, and spoofing. The TSL protocol is based on the SSL 3.0 protocol specification.

Securing Websites Database

Book Bunker’s database should be designed and hosted on a secure server. It is important for the owners to look for the hosts offering a secure server to enable the transmission of encrypted data. Since Book Bunker will be required to carry out online credit card transmission and other types of web communication that should be protected against unauthorized access, the web host must provide a secure server (Botha, 2004). According to Bosworth, Kabay and Whyne (2012), access to the Book Bunker’s database must be controlled properly by authenticating the credentials of the requesting principal, and then verifying, which objects the authenticated principal is authorized to access. The security of the database in this case can be assured by enforcing web client authentication to the database, enforcing web client authorization for access to the database records, and changing easily guessed passwords (Bosworth, Kabay, Whyne, 2012). It also important to ensure that passwords are read from encrypted files and are not kept in the program code. Book Bunker’s owners must configure and maintain internal access controls.

Sales teams must also be trained on the new technology to pass the knowledge to consumers and increase its use. In Singapore, paper-intensive industries such as property management, insurance, banking, healthcare and utilities are among the high interest industries that need to convince their customers to adopt electronic bill delivery. It is for a reason that the cost of printing and mailing multi-page statements monthly is very high. On the other hand, electronic billing and payment can cut such costs by more than half, thus such industries should conduct a considerable amount of marketing to promote e-bill and e-payment. The marketing teams should be trained to present the benefits of e-billing and e-payment to customers (Smith & Lasher 2008). Such benefits include ability to access bills anytime and from anywhere, no bulky papers for invoices and statements that clutter homes and offices, easy, secure and prompt irrespective of distance payments without walking to the service providers to do payments and present receipts. This is ideal for the increasingly busy and mobile society in Singapore.

Increased cost of Installations

As part of marketing strategy, service providers in Singapore must incur installation costs as part of the implication to the adoption of paperless payment systems. These include acquisition of Electronic Card Readers and installing payment systems that are compatible with the major online payment platforms to support customer purchase activities. It must be noted from the findings of this study that most consumers prefer convenient payment and choose to purchase stores based on the availability of the paperless payment systems convenient to them. For this reason, 70% of the respondents felt the small and medium size enterprises lost business for failure to instantly embrace the paperless payment systems for cost reasons.

Increased Sales Volumes

The introduction of paperless payment systems brings good news to enterprises that support such payments. According to the finding of this study, there is a substantial effect of the electronic payment on consumer behaviour in relation to the volumes, frequency and places of purchases. Many consumers tend to spend money in the credit cards more frequently than before either to fuel cars, buy household goods from supermarkets, and pay for services at food joints among many others. This means increased sales volumes and increased profits for service providers.

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Recommendations

Based on the findings that there is a substantial effect of paperless payments on the purchases and behaviour of consumers in Singapore, service providers need to understand the trends in consumer purchases and offer services payment opportunities that favour consumers. Being that the introduction of paperless payment systems influences consumer purchases in terms of volumes, frequency and shopping places, it is recommended that service providers in Singapore increase their stocks and fully install safe paperless payment support systems to offer a variety of payment systems that take care of all types of customers and systems that guarantee the safety of customer personal information. A number of consumers are sceptical about adopting paperless payment systems for fear of exposing their personal information to fraudsters. To give assurance to customers, it is recommended that the producers of Smart cards, Visa cards and other online payment systems like PayPal, EFTs, eNETS, ASIAPAY ensure security of customer’s personal information at all times. Consumers on the other hand are advised to remain discipline in their expenditure for the paperless payment systems not to turn to be a burden, especially for the impulse buyers.

In relation to the finding of hypothesis two, it is recommended that small and medium size enterprises to adopt new technology as the society becomes more electronic. This will minimize the effect of paperless payment on a small and medium size enterprises in Singapore, thus maintain their clients and remain competitive.

Discussion and Conclusion

This research draws its strength from the primary data collected from a well-represented group of respondents. Since paperless payment systems affect all consumers in the current digital society, and more especially in Singapore that has largely adopted the technology, the finding in this case from respondents not limited to a particular region in Singapore will adequately represent the larger population.

This paper only focussed on the effect of paperless payment systems on consumers and on small and medium size enterprises. Government perspective was not sought in this case and the safety measures put in place by the providers of smart cards was not sought. The findings of this study therefore, only gives the trends towards and electronic society, but does not give finer details on which paperless payment systems whether through use of smart cards or through online platforms like PayPal is more efficient and has adequate safety measures. Future researchers need to focus on that area for consumers to know which systems will guarantee safety of their personal information, without subjecting themselves to fraudsters who may be taking advantage of the technological advances to rob people.

The findings of this research will be vital for consumers, marketing agencies, business owners and the government. More consumers get to know paperless payment systems through this research and change in behaviour will be beneficial to the businesses that have adopted the system. There are also several marketing implications to the introduction paperless payment systems. These include increased marketing and training cost and increased cost of installation of paperless payment systems to support paperless transactions. This research paper will also make a substantial contribution to the government, which is responsible for policy making. Government of Singapore will therefore act on the basis of the large number of consumers embracing paperless payment to develop adequate financial policies that will ensure the system is safe and private information will not be exposed. Finally, small and medium size enterprises will be enlightened by this research to know the cause of their falling sales volumes. This means that all businesses that intend to be competitive in the future must adopt new payment systems to maintain or improve their sales since 68% of the respondents prefer using paperless payment system.

Based on the literature reviewed and the findings of this paper, it is clear that the society, especially Singapore is fast becoming an electronic society based on most activities such as communication, banking and now payment systems, which are becoming more electronic. The study reveals that more consumers’ behaviour in relation to the volumes or purchase, frequency and places of purchase is influenced by the payment systems available. More consumers prefer paperless payment systems. This has substantial implications on marketing, government operations and businesses in Singapore, which have to incur installation costs to support the paperless payments.