Digital payments adoption of informal small and medium enterprises in South Africa’s township economy

Abstract

The use of cash for making and receiving payments in South Africa’s townships continues to grow, despite the proliferation of alternative payment methods. Merchants operating informal businesses are reluctant to accept payments digitally, which further contributes to the socio-economic burdens experienced in townships.

This study investigated merchants’ intention to use digital payment acceptance methods, specifically in the informal sector. The UTAUT2 was employed, extended with the Perceived Risk Theory.

The study adopted a quantitative research approach. A questionnaire was used to collect data from 120 respondents online and face-to-face. The questionnaire was based on previously researched and theorised literature. Factor analysis, particularly Principal Components Analysis, was used to analyse the results. Correlation analysis was conducted to test the hypothesis, followed by multiple regression.

The findings revealed that the independent variables Performance Expectancy, Effort Expectancy, Price Value and Perceived Trust all positively influenced the behavioural intention of informal merchants to use digital payment acceptance methods. Performance Expectancy had the strongest influence, whilst Perceived Risk was not found to have a negative influence on the behavioural intention of informal merchants to adopt