The Effects of Online Payment Methods on the Purchasing Behavior of the Business Students of De La Salle University-Dasmarinas PDF

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The Effects of Online Payment Methods on the Passive Purchasing Behavior of the Business Students of De La Salle University-Dasmarinas

Presented to the Faculty of the Marketing Department College of Business Administration and Accountancy

De La Salle University - Dasmarinas Dasmarinas City, Cavite

In partial fulfillment of the requirements for Marketing Research

FLORES, JOHN DAEMARL M. HERNANDEZ, MARIAH THERESE O. MANALO, HYASMIN ELAINE PONCIO, HOBY KYLE A. ROCILLO, CHANEL NIKOS M. VENTURA, JOSHUA O.

July 2021

CHAPTER I INTRODUCTION It has been over a year since the pandemic started, it has been a year since the very first lockdown that initiated a nationwide closing of most businesses in the Philippines. Few months later the unemployment rate rose from 5.4 percent in 2019 to 10 percent in July 2020 (psa.gov.ph). This paved a way to enter a new way of living that requires the least physical contact with others to prevent the spread of the virus. Due to the strict implementation of social distancing, most stores have been forced to decrease the number of their employees or the worstcase scenario which is to close their business for good to lessen the loss that they occurred. SMEs then adapted to the new normal and created their online shops to be handled by ecommerce platforms like Shopee and Lazada. According to Pantano E. (2016), having an online or mobile store creates a unique experience for customers by having them save their time and their money. This means that by letting the businesses adapt to the online world by creating their own apps and websites help their ventures to meet and enter the world wide web. The closing of physical stores introduced the rising e-commerce. Shops like Lazada which a few years back were not that relevant have made their way to the top as one of the most well-known recognized apps with Shopee alongside. Ever since the release of Shopee, the marketplace where users can buy and sell have presented a rise of 97.3 million total visits per month in the country of Indonesia in 2020, with Philippines sitting in the 5th ranking in Southeast Asia with only 33.07 million views per month (statista.com). This shows at an alarming rate how online buying and selling of goods and products is now the new normal of transacting business at a faster rate. By having new modes of transacting markets also offer a new mode of payment which is cashless

transactions. This new normal mode of transaction is now used as a substitute to the traditional cash payments that use physical contact. Online and mobile banking also arise alongside the cashless transaction era which reduces the hassle of paying a cashier to receive your item to be bought. Restaurants now use cashless payments like G-cash and online banking like RCBC Mobile Pay that lessen the burden of queuing and walking towards a physical store. Furthermore, there are different modes of payment when it comes to purchasing online. This includes cash-on-delivery, e-wallets, and bank transfers. The usual mode of payment before the pandemic was cash-on-delivery. This method is the most convenient way when buying from online shops as a customer will pay only if they have the products on hand that are usually delivered to them directly. According to Ordinario, C (2020), 46% of their respondents prefer to use cash-on-delivery schemes as most do not have enough knowledge about the benefits of online transactions. As of 2015, only 1% of the 41 percent population on the internet has been made electronically, but due to the Covid-19 pandemic that started the hindrance of social interactions Filipinos then preferred to embrace the use of cashless approach (Devanesan, J 2020). Due to the high demand of using G-cash and the like, digital marketing was also emerging. As online stores were well-known, these businesses needed a way to promote their products in the same way they started which was online. Digital marketing, according to Girchenko, T. & Ovsiannikova, Y. (2016)., is “using different forms of promotion by applying digital changes”. As an era that heavily relies on technology and its digital purposes, marketing should be able to adapt very quickly to the changing world. Marketing strategies like discounts and cashbacks were introduced in the stores as a way to make their customers use cashless transactions. Moreover, there were also new stores that emerged from the digital era. Online

shops like Tala by Kyla are examples of new stores that operate in the online industry. These types of shops have become the inspiration of college students that seek to create their own business ventures online. As college students now have their own buying decisions that are now catered online in their homes, it became a norm to visit and open e-commerce platforms as a way of relieving stress and to participate in online sales. According to Finkle, C. (2018), Social norms play a role in teenager’s buying behavior as a change in social norm helps shift their decision towards buying unwanted items. Since students are prohibited from going outside, they find themselves comfortable at home. The convenience of online shopping has now become a habit and they have been learning new ways to pay online. Students have been knowledgeable about technology which makes it easier for them to understand the logic of cashless payments which led them to make their own e-wallets for the ease of their online shopping. In this modern era, together with the rising situation of the pandemic, cashless transactions have been the perfect fit for the convenience of everyone, especially young adults like college students. This generation may create new possibilities but may cause some disorders towards this new discovery. This study wants to determine the effects of online payments to college students and aims to find positive feedback for the use of new strategies in the industry as well as for the knowledge of the students.

Background of the study Cashless payments have been going around the country for a few years now through the use of convenient online banking solutions. The study will be focusing on the whole significance and the viability of the mode of payment. There is no doubt that a lot of people in the Philippines use online shopping websites and C. Ordinario (June. 2018) claimed that 80% or the majority of the population in the Philippines still uses the Cash-on-Delivery method of e-commerce transactions. According to the Asian Development Bank (ADB) and United Nations Economic and Social Commission for Asia and the Pacific (Unescap), Filipinos will most likely end up with COD mode of payment due to the lack of online payment or e-payment options. The study wants to be able to show some of the factors that make cashless payment significant. In the same article, it is stated that e-commerce firms are forced to depend on fragile business models due to the lack of “well-developed e-payments”. Due to the pandemic 's impact on our economy, we have been forced to rethink how we pay for things. This is a problem that has plagued us since the start of this crisis. In fact, it is one of the most important issues facing humanity today-and one that will continue to affect our society as long as we live (Lucas, D., 2020). We are living in an era where technology is advancing at an unprecedented pace. With so many new technologies being developed every day, it is no wonder that we are seeing more and more people using their mobile to access almost everything which gave birth to a new method of payment. We cannot afford to ignore these developments because they are making life easier for everyone and especially making it safer for people who are not allowed to go outside their houses. It is also very important to note that there are a lot of problems that have been solved by this technology. For example, the internet has made it possible for people to send money from one place and then transfer it to another without

any hassle. This is a great way to make transactions faster and cheaper. It is also a good idea to keep in mind that the internet has changed our lives tremendously. (Tirupathi, M. & et. al., 2019).

Statement of the Problem This study aims to determine the effects of online payment methods on the purchasing behavior of the College of Business Administration and Accountancy Students of De La Salle University-Dasmarinas. In order to gather the data needed, the researchers will be conducting interviews and disseminating survey questionnaires. The content of the methods stated shall answer the questions the following questions which are the essential inquiry to fully understand and define the research respondents’ response and attempt to answer the following research questions: SOP1: Is there a significant effect between online payments and the ability to tell whether which payment option is much more beneficial among college students?

SOP2: Is cashless payment an accepted mode of payment among teenagers buying in online purchases than Cash on Delivery (COD)? SOP3: Does cashless payments create a significant impact on consumer preferences when online shopping?

Research Objective Generally, this study aims to examine the purchasing behaviors of DSLU-D CBAA students when it comes to using online payments. 1.To identify if cashless payments affect the way a consumer shops online. 2. To identify what possible factors are affecting on how the students select their payment options 3. To assess if the mode of payment available affect the perspective of the buyer in buying different products Significance of the Study This research paper will be a significant endeavor in the rising field of online businesses in the Philippines. Helping the small local businesses to determine their main focal points perception and behavior in providing their customers accessibility upon their payment options. The study primarily aims to provide enough information about the effects and gathered information about cashless payment especially during the current global state. It can help educate consumers and future researchers about the topic that may or may not create a significant impact on the scope and limitation of the study. Furthermore, the study can also be a way of giving basic information on financial literacy to further expand their knowledge when it comes to banking, especially to college students who are preparing to have jobs and basically handle their finances better when purchasing online or upfront. This in line will help the researchers gather information on college students’ perception when it comes to online or cashless transactions.

Scope and Limitations of the Study The study aims to determine the effects of online payment methods on the purchasing behavior of the College of Business Administration and Accountancy Students of De La Salle University - Dasmariñas. Cashless transactions would be the main focus of the research and would be limited to online payments. These cashless transactions include e-wallet, online banking transactions, e-commerce payment gateway and prepaid card payments. This study will not cover the purchasing behavior of other consumers. Each respondent will be given an online survey questionnaire to answer and the result of the study will only be applicable to the respondents and the majority of the students that are studying in De La Salle University Dasmarinas that are studying Business Administration and Accountancy.

CHAPTER II REVIEW OF RELATED LITERATURE This chapter presents a review of foreign and local literature gathered via electronic and conventional databases. MILLENNIAL BUYING BEHAVIOR A study in Polytechnic University Manila studied the factors that affect the buying factors of millennials and investigated the relationship between the buying behavior and purchase decision of millennials. The researchers used descriptive research by random sampling to see the current situation. The results revealed the millennials consider the following factors: sales promotion, advertisement, social environment, feedback, logistics and payment processes. They used Pearson Correlation Coefficient or Pearson’s R to find out that there is a significant relationship on the factors in online shopping and Consumer Purchase Decision Process. Thus, online businesses must take into consideration these factors in designing and implementing their online shops to experience sales growth. (Nartea, Santos, & Goyenechea, 2019) A study in India which is focused on their rising online retailing industry was conducted to determine the factors influencing the online buying behavior of college students. They used a convenience sampling method in the sample of 25 college students and qualitative content was used for the data. The findings indicated the main influencing factors for shopping: availability, low price, promotions, comparison, convenience, customer service, perceived ease of use, attitude, time consciousness, trust and variety seeking. The study recommended more research regarding the online buying behaviors to help arise more business strategies in their country.

(Jadhav, V., & Khanna, M, 2016) CASHLESS ONLINE TRANSACTIONS According to “The World Bank’s” latest 2020 report, there are efforts to enhance the digital interface in the Philippines, however, there are certain obstacles such as low competition and regulatory constraints in the telecommunication markets. The Philippine economy has its digital payment still growing and the majority is cash-based and according to the Global Findex Database, almost the majority of Filipinos prefer to pay their utility bills in cash rather than using bill payment systems. Only 5% of people pay their utility bills with their bank accounts or mobile digital bank accounts. The world bank stated in their report that some E-commerce providers and services are beginning to remove a Cash-on-Delivery payment method such as Shopee and Lazada, a pretty well-known online E-commerce service in the country. This is due to the operational costs that have been damaged caused by issues such as refusal of receiving parcels. These e-commerce sites are also promoting more on the digital payments with having their very own top-up system for online payment options as their very own solutions to fix the problems facing such as the mentioned issue. According to a study in India by Thirupathi, M & et.al. (2019), The biggest benefit of cashless transactions is that they guarantee that all economic transactions are recorded. Digitalization makes it slightly possible to control black market money, which is often detrimental to national economies and contributes to the government’s increased tax revenue. It is stated in the same study that India only has 5% of the population where their fund transactions are driven by the use of e-wallets and e-payments. The same study focused more on depth of

their digital payments including; Banking cards, Mobile wallets, Internet banking, and Mobile banking, such as their very own banking app which is Bharat Interface for Money. The researchers of this paper also thoroughly discussed the advantages and disadvantages of cashless payments. Some of the advantages they stated include having a more comfortable experience when transacting, another is its low cost wherein some cases a lot of online banks charge for service fee and some do not charge anything, another advantage is the waivers/discounts and cash backs, lastly is the records of personal transactions that enables an individual track where their money is being used and is useful as a budgeting instrument. However, the disadvantages include security issues, a need for internet connection to be able to process a transaction, costly which is mostly in contrast to one of the advantages, lastly is the data management which stated a higher risk of revealing data to someone else. The study stated six findings to be exact, most of them is how cashless payments redefine significantly in the world of transactions. One, they found that cashless transactions reduce the use of block currency, which means that all transactions must be lawful. Two, the cashless exchange eliminates the need for people to bring physical cash, as well as robbery in banks and elsewhere. Three, cashless transactions make it simple to move money from one person to another in an emergency. Four, customers get benefits such as discounts, gifts, and offers when they use online transactions. Five, it reduced human effort such as physical presence in the bank, queueing, and needless conflicts with bankers. Lastly, is that cashless payments or transactions are the most beneficial to banks in terms of avoiding large crowds in banks and placing stress not only on the customer but also to the workers in the bank. (Thirupathi, Vinyagamoorthi, Dr. Sp. Mathiraj, 2019). According to Medium.com (2018), 1 out of 7 people in the United Kingdom no longer carries or uses cash. It was also stated in their survey that 75% of their respondents had answered

that they prioritize using their credit or debit card as their daily payment option and only 11% of their respondents had preferred to use cash. This alone answers the fact that cashless transactions are rapidly rising as a mode of payment that everyone can agree on. Nowadays, because of the pandemic, going out to pay people’s bills has become a second option as there are now ways in which their bills can be paid online. The Philippines, as a country that highly uses cash as their payment, had been forced to accelerate to use cashless transactions to prevent physical contact with other people (Lucas, D. 2020). Online payments like G-Cash and Paymaya had been available as other ways of paying in restaurants and physical stores to prevent physical interactions and have smoother transactions. To sum it all up, cashless transactions have been a great help in doing transactions. Not only does this reduce the risk of cash theft but this also makes transactions a lot faster because payments can be received instantly. Moreover, the study of Kemaman (2020) found that the most important aspect influencing market adoption of cashless payments is ‘perceived Ease of Use’, followed by Perceived Usefulness.’ The study found that a cashless society in Kemaman was viable in view of the fact that it was easy to use and learn. Their results showed that cashless payments in the country allure more consumers to transact and it has been shown that payments via mobile or ewallets have been part of their daily lives. (Mohamed, Sa’ad, Rahman, and A.F.R. Zakaria, n.d, 2020) A study in Sweden is conducted to see variables that influence the mode of payment used by the customers in relation to their buying decisions and if there is, how it applies to the consumer's consumption. The study was created through a survey led by the Swedish National Bank, Sveriges Riksbank (2020) which examined the factors within different age groups and education attainments and nationalities. Moreover, their hypothesis was proven that impulse

buying, and the increase of consumption has been one of the impacts of consumers using cashless payments. The study gathered results which determined the factors that influence consumer buying behavior in terms of using cashless payments. (Brzoska & Hjelm, 2020.)

CHAPTER III 3.1 FRAMEWORK

Based on the Diffusion of Innovation Theory which explains how, over time, an idea or product gains momentum and diffuses (or spreads) through a specific population or social system. The end result of this diffusion is that people, as part of a social system, adopt a new idea, behavior, or product (LaMorte, 2019.)

The following conceptual model shows one

independent variable (Online Cashless Payment) and one dependent variable (Purchase Behavior).

Figure 1. Conceptual Framework

3. 2 HYPOTHESIS

Figure 2. Hypothesis Framework 3.2.1 Moderating variables Convenience The literature on consumer convenience in a traditional retailing environment has revealed two factors of primary importance in delivering convenient service to customers: timesaving an...