The effect of regulation on mobile financial services

Abstract

Unlike, other emerging markets within sub-Saharan Africa, South Africa has experienced many challenges in replicating the successes of mobile money services (MMS). Literature reports that the regulatory environment is a critical barrier to the success of financial services in low-trust and institutionally compromised developing countries. As such, this study aims to investigate the factors influencing consumers’ behavioural intention to adopt MMS in South Africa, with a specific aim of establishing and investigating a linkage between the perceived effectiveness of the regulatory environment (PERE) and behavioural intention to adopt MMS. The proposed model, which is an extension to the combined UTAUT and TAM model, was validated through exploratory factor analysis, confirmatory factor analysis, and covariance-based structural equation modelling. These multivariate analyses were conducted on a data set comprising of 298 responses. The results of the study indicated that the proposed model accounted for 91.8% of the variance pertaining to the consumers’ behavioural intention to adopt MMS. Thus, demonstrating a 5.40% improvement in explanatory and predictive power over the combined UTAUT and TAM model. The study results reported several strong influences on consumers’ behavioural intention to adopt MMS, namely, PERE, security, risk, trust, and price value. The empirical results thereby provide valuable theoretical, policy and practical implementation contributions for researchers, system developers, service providers, governments, central banks, and regulatory bodies to consider in driving MMS adoption.