Understanding m-commerce payment systems through the analytic hierarchy process Yuntsai Chou*, Chiwei Lee, Jianru Chung
Yuan Ze University, Taiwan, ROC
Abstract Money is always a tempting subject; however, few works are done to address the payment issue over online commerce. This paper analyzes currently available e-payment systems and finds the stored-value card to be the best overall payment scheme for online commerce. The paper employs the analytic hierarchy process (AHP), a quantitative method of decision-making, to evaluate the performance of four e-payment systems: the credit card, the stored-value card, the smart card, and the telecommunication bill. The results show that the storedvalue card has the highest performance among the four options considered. Our findings also suggest that a payment alternative, such as the credit card, can be flawed technologically but can still become the de facto e-payment scheme due to the advantage of an established customer base. This leads us to suggest that multiple usages be added to e-payment systems with higher economic/social merits so that they can gain a critical customer base. Users will benefit as technologically more capable e-payments are widely adopted for online commerce. D 2002 Elsevier Inc. All right reserved. Keywords: M-commerce; Micropayment; The smart card; Analytical hierarchy process (AHP); Transaction costs
1. Introduction Electronic cash (or digital cash) was invented early on in the development of e-commerce. However, the reality of ecash business has proved less than exciting. Within the first few years, the issuers of e-cash went bankrupt (DigiCash), dropped the product (CyberCash), or moved into another business (First Virtual). Observing the failure of the above e-cash mechanisms and the extensive adoption of the credit card on the Internet (95% of online payments are made by credit cards in the US; Singh, 1999, p. 762), we probe the question of what payment schemes are adequate for the e-business environment. We hypothesize that, in addition to technological considerations, economic and social factors play an important role in the popularity of online payments. This paper begins by describing four e-payment systems and defining the technological, economic, and social factors that characterize these systems. It then delineates the presumptions and procedures to conduct the analytic hierarchy process (AHP). To test our hypothesis, AHP is used to obtain the relative weights among the subfactors *
and the total values of each payment system based on these weights. An ordinal ranking based on the total value gained by each payment scheme determines their relative performance. Based on our analysis of the results, we suggest policy alternatives.
2. Payment systems This paper focuses on e-payment schemes that are either currently available or have been previously put into practice for a period of time, that is, the credit card, the stored-value card, and the smart card. In addition to these schemes, the telecommunication bill is a promising method for m-commerce payment because of the surge in mobile subscription rates across countries and the installation of intelligence systems in telecommunication networks. 2.1. The credit card The credit card is the most popular payment method for online shopping today, despite its vulnerability to security breaches when used online (Turban et al., 2000, p. 277). The secure sockets layer (SSL) protocol was invented in 1994 to deter false uses. The credit card is a postpaid method.
Corresponding author. Tel.: +886-3-463-8800; fax: +886-3-463-8277. E-mail address: firstname.lastname@example.org (Y. Chou).
0148-2963/$ – see front matter D 2002 Elsevier Inc. All right reserved. doi:10.1016/S0148-2963(02)00432-0
Y. Chou et al. / Journal of Business Research 57 (2004) 1423–1430
2.2. The stored-value card The stored-value card is often viewed as a...