Mobile Payment Adoption : An Empirical Investigation on Alipay

Rapid development of financial technologies has brought about novel mobile payments for consumers. In this study, we seek to investigate the impact of mobile payment adoption on consumer consumption behaviors, and the interrelationships between mobile payment and other existing payment methods. Adopting this new financial technology may substantially change consumer multichannel consumption behaviors, thereby posing challenges to multichannel operations management. Questions such as whether mobile payments simply represent an innovation that chips away at older technologies, or whether intrinsic interrelationships among different payment methods exist beyond simple substitutions between generations of technology, are yet to be answered. We rely on a unique data set from a large Asian bank, which records transactions of 2,016,132 credit cards from 1,541,769 consumers based on different payment methods. The mobile payment under study in this paper is from Alipay, which is now the largest mobile payment platform in the world. We employ the difference-in-differences method coupled with matching to quantify the impact of mobile payment adoption. Our findings show that mobile payment adoption leads to a 2.93% increase in total transaction amount and a 7.14% increase in total transaction frequency. Furthermore, we show that mobile payments act as a substitute to physical-card payments and lead to declines in transactions with physical cards. However, interestingly, the overall transaction activities through offline channels still increase due to the enhanced usage of mobile payments. Finally, we find that mobile payments act as a complement to personal computer (PC) payments and lead to an increase in transactions through online channels. Our work offers managerial implications for bank and retail managers on multichannel operations management by disentangling these countervailing consumer behaviors associated with mobile payment adoption