Journal of Business and Administrative Studies (2022), Vol. 14, No.

Determinants of Mobile Payment Adoption by Merchants in

Ethiopia

Firehiwot Abebe
School of Information Science, Addis Ababa University, P.O.Box 1176,
Addis Ababa, Ethiopia. fire.abebe10@gmail.com
and
Lemma Lessa1
Assistant Professor of Information Systems, School of Information Science,
Addis Ababa University, P.O.Box 1176, Addis Ababa, Ethiopia.
lemma.lessa@aau.edu.et

Abstract
Nowadays the world witnessed a rapid growth in mobile commerce and the
widespread use of mobile devices. The growth of mobile commerce depends on
widely accepted mobile payment systems. However, this trend is not well
experienced in developing countries like Ethiopia. Even though merchants
somehow benefited from the rapid growth in electronic commerce and the use
of mobile devices in e-commerce, they still hesitate to effectively employ in their
day-to-day transactions. Little research has been conducted to examine and
explain the merchants' views on the new payment technology. In this paper, we
explore the factors that affect merchants’ adoption of mobile payment in
Ethiopia. The result suggests that relative advantage, ease of use, usefulness,
attitude, trust, risk/security, and cost are factors that affect mobile payment
adoption positively and significantly. Whereas compatibility is found not
significant for merchants’ adoption of mobile payment systems in the Ethiopian
context. Based on the findings, the study proposes a conceptual model for
mobile payment adoption to guide practice and future research in this emerging
area.

Keywords: Mobile payment, Mobile payment adoption, CBEBirr, M-Birr, Technology

Acceptance Model

1
Corresponding author
Firehiwot Abebe and Lemma Lessa 25

1. INTRODUCTION
People carry out transactions by using physical money in the form of coins and
bills for so long and still significantly rely on it throughout the world and still
more in the developing world (Finance Monthly, 2017; Kiong et al., 2022).
Since the diffusion of IT, people have the comfort of choosing how to carry out
payment transactions using IT instruments and services like mobile phones,
credit cards, and so on. Mobile payment is a two-sided market, where retailers
or merchants accepting mobile payments represent one side, and customers
using the service another (Apanasevic, 2013; Abrahão et al., 2016). These days,
mobile payment systems are becoming an important payment mode for today’s
businesses (Dahlberg et al., 2008; Wrobel-Konior, 2016) and have lots of
advantages over other technologies, such as interacting with anybody
anywhere, being in use independently, customized information and services,
and getting quick answers from users (Coursaris & Hassanein, 2002; Dastan,
2016). It is also much less expensive than opening bank branches especially in
rural areas (Pidugu, 2015; Wijayanthi, 2019). Mobile phones are providing an
extraordinary opportunity for expansion of financial activity in developing
countries where the number of phone users exceed the number of those having
bank accounts (Nurhussen, 2016).

Merchants are vital stakeholders in that their adoption or expansion of mobile

payment services is a pivotal determining factor for the mobile payment
environment (Pidugu, 2015; The Star, 2019). Merchants play a dual role in the
mobile payment ecosystem. From the consumers’ perspective, merchants are
service providers as well as merchants themselves being consumers of the
service providers like banks and mobile operators as they pay for the system
mostly (ISACA, 2011; Taheam et al., 2016; Su et al., 2018). Regardless of the
possible benefits of merchant adoption of mobile payment, merchants still
hesitate to employ mobile payment in their transactions, making the penetration
of merchant adoption of mobile payment relatively low compared to other
recent forms of cashless, noncontact payment modes, such as credit cards and
e-payment systems.

In line with this, there is still a poor cashless payment mechanism in Ethiopia,
especially among people in rural areas and young people without a bank
account (Mothobi & Grzybowski, 2017). In 2017, for instance, out of total
utility bills paying Ethiopian customers, 99 percent were paid using cash only,
whereas the corresponding figure was only 12 percent in Kenya, 27 percent in
Journal of Business and Administrative Studies (2022), Vol. 14, No. 1

Tanzania, and 59 percent in Sub-Saharan Africa on average (Demirguc-Kunt et

al., 2018). At the same time, out of total Ethiopian wage recipients, only 0.2
percent received through a mobile phone, compared to 37 percent in Kenya, 24
percent in Tanzania, and 19 percent in Sub-Saharan Africa on average
(Demirguc-Kunt et al., 2018). Due to this, the National Bank of Ethiopia is
spending more money on availing hard currency through printing, shipping,
distributing for commercial banks and then collecting when the money is out of
use due to worn-out and destruction of the worn-out cash money. As well there
is limited access to quicker and easier, compatible and integrated payment
solutions with existing infrastructure, reliable, secure and trusted service for
merchants to deliver. With the existing cash-based means of exchange of goods
and services, the merchant is exposed to cash theft and consuming time to
deposit in banks. Adopting mobile payment by merchants enables them to have
anywhere and anytime payment for services and goods via mobile devices.

Without merchants adopting mobile payment systems, there will not be

consumers using mobile payment services or mobile payment systems. Besides,
there is a gap between academic research and industrial practice in
understanding the merchant perspective on, and experience of, mobile payment
systems despite more than a decade of research into mobile payments (Niina &
Kristiina, 2008; Pidugu, 2015; Dahlberg et al., 2014). This gap demands a
theoretical understanding to discover factors for mobile payment adoption by
merchants and to incite deeper understanding and deliver a theoretical
explanation of how the adoption of mobile payment enhances the payment
experience of merchants. Explaining these gaps in the literature will help both
researchers and experts to appreciate the key factors that could affect merchants
in adopting mobile payments in their business transactions in Ethiopia in order
to make an appropriate model by sampling CBE Birr and M-birr. The rest of
the paper is organized as follows: The next section reviews the literature on
merchants’ mobile payments adoption, the third section presents the theoretical
model guiding the study; the section that follows details the methodology
employed. Consequently, the findings are analyzed and discussions of the
findings are presented. Finally, discuss the implications of the findings.

2. REVIEW OF RELATED WORKS

Scholars reveal that research on electronic payment has been more focused on
internet banking and mobile banking (Eisennman et al., 2006; Dahlberg et al.,
Firehiwot Abebe and Lemma Lessa 27

2014; ÖRS, 2018). Mobile payments, performing as a platform providing

different mobile services, serve and bring together two groups of users: retailers
or merchants from one side and customers from another side. These two
different groups are linked to each other by the network effect phenomenon and
represent a two-sided market (Eisennman et al., 2006).

Niina & Kristiina (2008) explored merchant adoption of mobile payment

systems by examining empirically and discussing factors that drive and inhibit
the adoption of mobile payment by merchants in Finland. Their results suggest
that the main adoption drivers are related to the means of increasing sales or
reducing the costs of payment processing, while the barriers to adoption include
the complexity of the systems, unfavorable revenue sharing models, lack of
critical mass, and lack of standardization. Richard et al. (2019), in a recent
study, found the drivers and barriers of mobile payment adoption by merchants
and provided a theoretical explanation of how the adoption of mobile payment
improves the payment experience of merchants. The study adopted an
exploratory approach by using the case study of two merchants in the retail
sector in Ghana. The findings demonstrate that, in Ghana, the business model
and nature of the business, contextual factors, and technology type, as well as
competition and cost, serve as drivers of merchant adoption of mobile payment.
On the other hand, factors such as risk, legal challenges, lack of trust, and lack
of skills on the part of some merchants to comprehend mobile payment
applications were classified as barriers to mobile payment adoption in Ghana.

Alm et al. (2022) in their part argue that the mass adoption of mobile payments
will only be triggered when the benefits – both perceived and real - become
clear to consumers and merchants. Because mobile payments are still relatively
new, the benefits largely pertain to the perceived potential until the service is
adopted widely and the benefits accrue to everyone (ControlScan, 2013).
Mohammadi and Jahanshahi (2008) established a framework for evaluating the
barriers and drivers of the customer and merchant adoption of mobile payments.
Accordingly, the distinct four categories of barriers to merchant adoption:
relative advantage, compatibility, complexity, and costs. Network externalities
and security and trustworthiness of mobile payments were also considered
relevant factors in mobile payment adoption.

There are a limited number of studies conducted in Ethiopia on the adoption of

e-payment specifically on mobile payment adoption. Wondwossen & Tsegai
(2005) studied the challenges and opportunities of e-payments in Ethiopia and
Journal of Business and Administrative Studies (2022), Vol. 14, No. 1

found that the main obstacles to the development of E-payments are lack of
customer trust in the initiatives, unavailability of payment laws and regulations,
particularly for e-payment, lack of skilled manpower and frequent power
disruption. Furthermore, Bezaalem (2019) examines the factors affecting
customers’ adoption of mobile payments with a special focus on the customers
of Commercial Bank of Ethiopia, Dashen Bank, and M-Birr. Hence, local
studies focused either on the e-payment aspect in general or on customers’
adoption aspect of mobile payment and did not explore the factors affecting
mobile payment adoption by merchants in Ethiopia.

2.1 Theoretical model

Several models and theories have been proposed to study the adoption of
technology. This study adopted a research model by ÖRS (2018). The adopted
model is built based on the most frequently used constructs affecting the latent
variable in the mobile payment system. The variables reflected in this model
are usefulness, ease of use, security, cost, compatibility, social influence,
enjoyment, anxiety, Knowledge, and innovativeness. Thus, this study reviewed
different models and pick this model since it is found the best fit for the study
objective.

2.2 Research hypothesis

1) Ease of uses
Ease of use is defined as the degree to which a person believes that using a
particular system would be free from the difficulty that is, utilizing a specific
technology (like mobile payment) would be free of physical and mental
exertion (Davis, 1989; Abrahão et al., 2016). The complexity of innovation
was negatively related to their rate of adoption

H1: Ease of use has a positive effect on attitude towards the adoption of
mobile payment technology.

2) Usefulness
Usefulness is “the degree to which a person believes that using a particular
system would enhance his or her job performance” (Davis, 1989). Perceived
usefulness explains the user's recognition that the interactive mobile payment
adoption will enhance their task performance in the purchase of goods and
mobile cash (Cudjoe et al., 2015).
Firehiwot Abebe and Lemma Lessa 29

H2: Usefulness of the use of mobile payments has a positive effect on attitude
towards the adoption of mobile payment technology.

3) Relative Advantage
Relative advantage is to express to what extent the new technology or product
is perceived as better than the existing product. In relative advantage, there are
a number of sub-dimensions like the degree of economic profitability, low
initial cost, a decrease in discomfort, savings in time and effort, and the
immediacy of the reward (Dahlberg et al., 2015; Albuquerque et al., 2016). The
relative advantage of an innovation generally, as perceived by members of the
social system, is positively related to its rate of adoption (Rogers, 1995;
Abrahão et al., 2016). The potential adopters can gain an economic and social
advantage if innovation is undoubtedly advantageous (Rogers, 1995).

H3: The relative advantage of using mobile payment has a positive effect on
attitude towards the adoption of mobile payment technology.

4) Compatibility
Compatibility indicates the degree in which the technology service is perceived
as consistent with socio-cultural values and beliefs; with the previous and
present ideas; and with client needs of innovation (Rogers, 1995). Using mobile
payment systems only require understanding operation procedures and
application areas, and it does not change users’ behavior with payment activities
(Cudjoe, et al., 2015).

H4: Compatibility of mobile payment systems has a positive effect on the

attitude towards the adoption of mobile payment technology.

5) Trust
Due to the inherent nature of mobile payments, trust is believed to influence
directly or indirectly the intention of adoption and acceptance of mobile
payments because mobile services are exposed to various uncertainties and
uncontrollable consequences (Aithal, 2016; Sarder, 2016). Loss and theft of
mobile devices result in identity theft inconveniences such as frustration and
unavailability of mobile payment services caused by network failure, and data
pilfering attacks, to name just a few examples (Mallat & Kristiina, 2005).

H5: The perceived trust of using mobile payments has a positive effect on the
attitude toward the adoption of mobile payment technology.
Journal of Business and Administrative Studies (2022), Vol. 14, No. 1

6) Risk
Perceived risk in consumer adoption intention of financial technology has three
important dimensions: security, privacy, and monetary and it can be used by
merchants as well. Perceived privacy risk is defined as the possibility that inline
businesses might use personal information inappropriately invading
consumer’s privacy with mobile payment consumers authorize the retailer to
use their personal information and gain access to their bank account
(Featherman & Pavlou, 2003; Olivia, 2018), Perceived financial risk refers to
users’ perception about the possible monetary loss caused by the usage of
mobile payment (Featherman & Pavlou, 2003; Abrahão et al., 2016). The
transfer of money between accounts in mobile payment may raise great concern
about financial information, such as accounts and passwords being stolen and
the subsequent risk of losing money.

H6: Perceived risk has a positive effect on trust to use of mobile payment
technology.

7) Attitude
Attitude is defined as an individual’s positive or negative evaluation of new
technology adoption of acceptance. Attitude toward adoption is the cognitive
process that depicts the prospective adopter’s affection for adopting new
technology (Fishbein, 1979; Aithal, 2016). Attitude toward adoption is
hypothesized in different beliefs perceived ease of use, perceived usefulness,
relative advantage, and compatibility. Attitudes are described as the sum of
beliefs attributed to a particular behavior (Aithal, 2016; Nag, 2018).

H7: Attitudes towards mobile payment systems has a positive effect on the
adoption of mobile payment technology.

8) Cost
Within the context of mobile payment technologies, the cost could be defined
as the amount of money that has to be spent on the usage of mobile payment
technologies and/or required tools to acquire related technology (Aithal, 2016;
ÖRS, 2018).

H8: Cost of mobile payment systems has a negative effect on the adoption of
mobile payment technology.
Firehiwot Abebe and Lemma Lessa 31

3. RESEARCH DESIGN
An empirical quantitative research approach is employed to assess factors
affecting mobile payment adoption. The research followed a cross-sectional
survey study design as it is conducted within a specified period and place to
explore factors that affect merchants’ mobile payment adoption.

3.1 Study population and sampling

As of the end of May 2019, the number of business users or merchants for the
mobile payment system of CBE is 4,756 that of M-Birr put up at 1,309. Thus,
the total number of mobile payment accounts of consumer users in the two
selected companies was 6,065. Selecting only registered merchants from Addis
Ababa and around is because there are a lot of merchants in the area so including
everyone in the population may take too long. In order to determine the sample
size, the researchers used the formula recommended by (Yamane, 1967).
𝑁
𝑛=
1+𝑁∗𝑒
Where,
 n is a sample size

 N is a total population

 e2 is a probability of an error

Thus, the sample size for this study is determined as follows:

6,065
𝑛=
1 + 6,065 ∗ 0.5

n= 376
Since this research is aimed to identify and analyze factors for merchants'
adoption of mobile payments in Ethiopia, considering all mobile payment
service providers in the country would have been better. However, due to time
and resource constraints, only two service providers were randomly selected:
CBE Birr and M-birr. To make sure the manageability of the research process
and guarantee the achievement of a reliable outcome, a simple random sampling
technique was used for the selection of banks. Populations of the study which
are merchants of mobile payment users at the specified companies are chosen
with a systematic random sampling method.
Journal of Business and Administrative Studies (2022), Vol. 14, No. 1

Two mobile payment system providers have been selected from the available
providers randomly. These organizations were government bank (CBE-Birr)
and non-bank (M-birr) and registered (active as well as non-active), mobile
payment users, as merchants in Addis Ababa and Oromia special zone,
surrounding Addis Ababa. In addition, study participants at the specified
companies were chosen with a systematic random sampling method (Singh &
Masuku, 2014).

Closed-ended questionnaires were used as a primary data collection. The

variables and the corresponding item measurements of the questionnaire are
adopted from ÖRS (2018) for mobile payment systems. After the data was
collected the proportion of valid questionnaires that are returned were 201 from
CBE-Birr merchants and 162 from M-birr merchants.

3.2 Data Analysis Method

Out of 376 questionnaires that have been distributed to merchants, 363 valid
questionnaires were collected and used for data analysis. Descriptive analysis
has been conducted to analyze the demographic data of respondents using
SPSS version 20. Structural Equation Modeling (SEM) using Partial Least
Squares (PLS) version 2 has been used for path coefficient modeling due to its
capability of testing the effects of several interaction items.

4. RESULT AND DISCUSSION

Based on the demographics and other personal background information
obtained, 44.6% of the participants comprise of the age group of 18 to 30. And
also most of the participants (71.3%) have 1-3 years of experience using mobile
payment.

4.1 Internal Consistency Reliability (ICR)

Reliability concerns the extent to which a measurement of a phenomenon
provides a stable and consistent result (Heale & Twycross, 2015). According to
Heale and Twycross (2015), reliability is also concerned with repeatability
under constant conditions. Testing for reliability is important as it refers to the
consistency across the parts of a measuring instrument. Cronbach’s alpha is a
measure of internal consistency, that is, how closely related a set of items is as
a group. In this study, the reliability test used as an internal consistency measure
is Cronbach’s Alpha coefficient with a cutoff value of 0.6 and Composite
Reliability with a cutoff value of 0.7 as recommended (Fornell & Larcker,
 Firehiwot Abebe and Lemma Lessa 33

1981). Cronbach’s alpha (α) is commonly used in social and behavioral

sciences to measure ICRs that range alpha values from 0 (completely
unreliable) to 1 (completely reliable). However, it is blamed to provide a
conservative measurement in PLS since it assumes all indicators are equally
reliable. In contrast, PLS prioritizes indicators according to their reliability,
resulting in a more reliable measure called composite reliability. Hence, ICR is
basically measured using composite reliability in this study.

According to Fornell & Larcker (1981) and Wong (2013), ICR values larger
than 0.7 are desirable to assure strong internal consistency reliability. In the
measurement model, composite reliability ranged from 0.867 to 0.895 and
Cronbach’s alpha range of 0.701 to 0.843. Therefore, high levels of internal
consistency and reliability have been demonstrated among all reflective latent
variables. Outer loadings for indicators of reflective variables show individual
indicators’ reliability. The reflective variables are more than the minimum
acceptable value of 0.7 (Table 1).

Table 1. Composite Reliability and Cronbach’s α values

Average Variance
Factors Cronbach's Alpha Composite Reliability
Extracted (AVE)

Adoption/Actual use of
0.701 0.870 0.770
Mobile Payment

Attitude 0.843 0.895 0.680

Cost 0.769 0.867 0.684

Compatibility 0.754 0.891 0.803

Ease of use 0.790 0.877 0.704

Relative Advantage 0.775 0.869 0.689

Risk/Security 0.791 0.877 0.705

Trust 0.831 0.888 0.664

Usefulness 0.840 0.895 0.681

Table 1. Composite reliability, Cronbach’s α values, and AVE

Journal of Business and Administrative Studies (2022), Vol. 14, No. 1

Convergent Validity (AVE)

The two most common construct validity measures are convergent validity
and discriminant validity (Wong, 2013). According to Fornell & Larcker
(1981), convergent validity involves the degree to which individual items
reflecting a variable converge in comparison to items measuring different
variables. A commonly applied criterion of convergent validity is the Average
Variance Extracted (AVE) which reflects the average commonality for each
latent factor in a reflective model. Besides, AVE values should be greater than
0.5 that confirms at least half the variance of indicators is explained by the
respective factor (Wong, 2013; Fornell & Larcker, 1981). Table 2 shows that
all values of AVEs were greater than the threshold value. Each factor
surpasses the value of 0.5 showing that model validity is established
convergent validity is confirmed. (Henseler, Hubona, & Ray, 2016; Wong,
2013; Chen, et al., 2019).

Discriminant Validity
Discriminant validity is another means of assuring construct validity. While
convergent validity involves the degree to which individual items reflecting a
construct converge in comparison to items measuring different constructs,
discriminant validity tests whether the items do not unintentionally measure
something else (Fornell & Larcker, 1981; Mothobi & Grzybowski, 2017)).
There are two common approaches to determining discriminant validity in
PLS-SEM.

1. The square root of AVE is larger than the correlation between any pair of
corresponding latent variables; discriminant validity is confirmed (Fornell &
Larcker 1981; Cheung, 2019). The table below demonstrates that the square
roots of AVEs (highlighted and bold on the diagonal) are larger than all the
correlation values that confirm discriminant validity.

MPA MPA/U MPC MPCM MPEU MPR/S MPRA MPT

MPA 0.824

MPA/U 0.869 0.877

MPC 0.587 0.865 0.827

MPCM 0.501 0.425 0.266 0.896

Firehiwot Abebe and Lemma Lessa 35

MPEU 0.498 0.452 0.316 0.370 0.839

MPR/S 0.459 0.391 0.257 0.389 0.659 0.839

MPRA 0.688 0.619 0.470 0.477 0.491 0.489 0.830

MPT 0.615 0.526 0.348 0.519 0.496 0.500 0.624 0.815

MPU 0.525 0.538 0.479 0.317 0.230 0.304 0.418 0.249

Table 2.Construct Discriminant validity Fornell-Larcker Criterion

b. Using cross-loadings. Cross-loadings are obtained by correlating the

component scores of each latent variable with all other items. To assure
discriminant validity, the loading of each indicator should be higher for its
designated variable than or any of the other variables and each of the variables
loads highest with its own items. The correlation of the latent variables scores
with measurement items needs to show an appropriate pattern of loading, one
in which the measurement item load highly on their theoretically assigned
factor and not high on other factors. This can be identified by taking the cross-
loading output from SmartPLS into the Excel sheet and using the conditional
formatting to highlight all cell values greater than 0.6 (considering the lowest
indicator reliability equals 0.754).

Structural model and Hypothesis Test

Path coefficient assessment

Path coefficients of a structural model can be interpreted as standardized beta (β)
coefficients of ordinary least squares regressions to indicate the causal relationship
direction and its strength. While the algebraic signs indicate the agreement between
the initial theoretical assumption and the actual empirical result, the coefficient
magnitude indicates how well the relationship is strong. The strength varied from -1
to 1 in where an absolute value closer to 1 indicates high strength while the value
closer to 0 indicates weak relation. Moreover, the significance level of these β
coefficients is very important to confirm the hypothetical relation. An accepted t-
value equal to 1.96 is required to have a significant result at p< .05 (Wong, 2013;
Fornell & Larcker, 1981; Henseler, Hubona, & Ray, 2016). If p ≤ 0.05 (or
alternatively absolute value of the t-value is less than 1.96) the hypothesis is accepted
indicating the significance of the finding at least with a 95% level of confidence,
otherwise it is not accepted. Both p-value and t-value justify the significance of
relations: only relations possessing significant correlation should be taken into
account. This study sets a limit to significance at 5%, thus, only relations exceeding
1.96 t-values (alternatively p-values of below or equal to 0.05) are considered
Journal of Business and Administrative Studies (2022), Vol. 14, No. 1

significant. A summary of path coefficients along with the t-value is presented in the
table below to show whether the initially assumed relations are confirmed or not.
Accordingly, all of the coefficients, except that of H4, are significant at the 5%
significance level providing strong support for the hypothesized relationships. Based
on the above parameter the results of the model analysis are presented in Table 3
below.

Figure 1. Combined Structural and Measurement Models

Mobile payment excessively impacted by cost and attitude towards the

payment system. For this study, we use average cost value and average
attitude to determine merchants’ adoption and use of mobile payments.
Hence, the attitude of merchants to adopt mobile payments is significantly
impacted by usefulness, relative advantage, trust, and Ease of use, in their
order of influencing strength as shown in table 3.

Hypothesis Original Sample Standard

T Statistics P
Constructs Sample Mean Deviation Status
(|O/STDEV|) Values
(O) (M) (STDEV)
H1 MPEU -> Not
0.127 0.127 0.038 3.383 0.001
MPA Rejected
H2 MPU -> Not
0.274 0.272 0.045 6.080 0.000
MPA Rejected
Firehiwot Abebe and Lemma Lessa 37

MPRA -> Not

0.320 0.320 0.055 5.853 0.000
H3 MPA Rejected
H4 MPCM->
0.093 0.096 0.054 1.706 0.089
MPA Rejected
H5 MPT -> Not
0.235 0.235 0.045 5.251 0.000
MPA Rejected
H6 MPR/S -> Not
0.500 0.505 0.038 13.286 0.000
MPT Rejected
H7 MPA Not
0.552 0.552 0.014 38.085 0.000
->MPA/U Rejected
H8 MPC Not
0.542 0.542 0.012 46.904 0.000
->MPA/U Rejected
Table 3. Path coefficients and T-values

Based on the analysis result, attitude (MPA) towards the adoption of Mobile
payment is modeled as a function of MPRA, MPCM, MPEU, MPT, and
MPU. From this, mobile payment Perceived ease of use (MPEU) was
hypothesized to have a significant positive effect on merchants’ attitude (H1).
The empirical evidence of the study indicated that PEU is the second powerful
factor in affecting customers’ attitudes to adopt Mobile payment with a path
coefficient of 0.127 and a p-value < 0.05 (or t-value >1.96), thereby
supporting the Hypothesis H1. This aligns with the findings of (Pal, Vanijja,
& Papasratorn, 2015; ÖRS, 2018). This suggests that merchants perceive that
Mobile payments are easy to learn and use. Therefore, H1 is accepted.

Perceived usefulness is “the degree to which a person believes that using a

particular system would enhance his or her job performance” (Davis, 1989;
De Leon, 2019). MPU was hypothesized to have a significant positive effect
on merchants’ attitude (H2). The empirical evidence of the study indicated
that MPU is the first powerful factor in affecting merchants’ attitude to adopt
Mobile payment with a path coefficient of 0.274 and a p-value < 0.05 (or t-
value >1.96), thereby supporting the Hypothesis H2. This suggests that
customers perceive that mobile payments are useful. Thus, H2 is accepted.

MPRA is included to capture to what extent the new technology or product is

perceived as better than the existing products. MPRA was hypothesized to
have a significant positive effect on merchants’ attitude (H3). The empirical
evidence of the study indicated that MPRA is the second powerful factor in
Journal of Business and Administrative Studies (2022), Vol. 14, No. 1

affecting merchants’ attitudes to adopt mobile payment with a path coefficient

of 0.320 and a p-value < 0.05 (or t-value >1.96), thereby supporting the
Hypothesis H3. This suggests that customers acquire relative advantages from
the adoption of mobile payments as the latter enables them to purchase
without time or place constraint, avoid queues, and improves their
performance. Therefore, H3 is accepted.

Compatibility indicates the degree in which the technology service is

perceived as consistent with socio-cultural values and beliefs; with a previous
and present idea; and with client needs of innovation (Rogers, 1995; Junadi &
Sfenrianto, 2015). MPCM was hypothesized to have a significant positive
effect on customers’ attitudes (H4). The empirical evidence of the study does
not indicate that MPCM affects merchants’ attitude to adopt mobile payment
with a path coefficient of 0.093 and a p-value > 0.05 (or t-value <1.96).
Therefore, failing to support the Hypothesis H4. This suggests that the effect
of compatibility on the merchant’s attitude for the adoption of mobile
payment is not statistically significant. Therefore, H4 is not accepted.

Due to the inherent nature of mobile payments, trust is believed to influence

directly or indirectly the intention of adoption and acceptance of mobile
payments because mobile services are exposed to various uncertainties and
uncontrollable consequences. MPT indicates the degree to which the
technology service is perceived as trusted by users. MPT is a dependent
variable that is affected by MPR/S (risk/security). MPT was hypothesized to
have a significant positive effect on merchants’ attitude (H5). The empirical
evidence of the study indicated that MPT is the fourth powerful factor in
affecting merchants’ attitude to adopt mobile payment with a path coefficient
of 0.235 and a p-value < 0.05 (or t-value >1.96), thereby supporting the
Hypothesis H5. This suggests mobile payments are perceived as trustworthy,
reliable and secured by customers. Therefore, H5 is accepted.

Perceived risk in merchants’ adoption intention of financial technology has

three important dimensions: security, privacy and monetary. Perceived
privacy risk defined the possibility that inline businesses might use personal
information inappropriately invading consumer’s privacy with mobile
payment consumers authorize the retailer to use their personal information
and gain access to their bank account (Thakur & Srivastava, 2014). MPR/S
was hypothesized to have a significant positive effect on merchants trust (H6).
The empirical evidence of the study indicated that MPR/S is the most
Firehiwot Abebe and Lemma Lessa 39

powerful factor in affecting merchants trust to adopt mobile payment with a

path coefficient of 0.500 and a p-value < 0.05 (or t-value >1.96), thereby
supporting the Hypothesis H6. This suggests that customers perceive that
mobile payments have low risk. Therefore, H6 is accepted.

MPA was hypothesized to have a significant positive effect on merchants

adoption of mobile payments (H7). The empirical evidence of the study
indicated that MPA is the most powerful factor in affecting merchants’ adoption
of mobile payment with a path coefficient of 0.552 and a p-value > 0.05 (or t-
value <1.96), thereby supporting the Hypothesis H8. This suggests that the
effect of customers’ attitudes to adopt mobile payments is statistically
significant. Therefore, H7 is accepted.
Merchants perceived cost refers to cost which the merchants actually pay for
the deployment of the system. MPC was hypothesized to have a negative
effect on mobile payment adoption. The empirical evidence of the study does
indicate that MPC affects mobile payment adoption with a path coefficient of
0.542 and a p-value > 0.05 (or t-value <1.96). Therefore, H8 is accepted.

Conclusion
To achieve our research goal, an intensive literature review was done and a
conceptual research model was employed that consists of eight latent
variables adopted from ÖRS (2018). The study mainly focused on the effect
of the following factors on merchants’ adoption of mobile payments:
perceived ease of use, usefulness, relative advantage, compatibility, trust,
perceived risk, attitude, and cost, of Mobile payment service. The structural
model presents how much of the variable is explained by the underlying
factors of mobile payment adoption. In the inner variables attitude is modeled
as a function of MPRA, MPCM, MPEU, MPT, and MPU. These variables
explained 61.8 percent of the variance in AT as the R2 value or coefficient of
determination stood at 0.618. This implies that 39.2 percent of the variance in
MPA is explained by other factors not included in the model. MRA, MPEU,
MPU, and MCT are found to be positively and significantly affecting
merchants’ attitudes to adopt mobile payment.MPA and MPC as well
significantly affecting merchants’ attitudes to adopt mobile payment.

This result implies that for mobile payment technology to be adopted by

merchants, they should perceive it as a useful and quick way of selling
Journal of Business and Administrative Studies (2022), Vol. 14, No. 1

compared with the traditional sales, they should believe that mobile payments
are easy to use, understandable and can become skillful at using it, they
should also ensure that the cost of mobile payment service is reasonable and
affordable. Therefore, it can be concluded that merchants can adopt mobile
banking services when the value and benefit of mobile payment are evident.
On the contrary, MPCM is not significantly affecting merchants’ attitudes to
adopt mobile payment. This result indicates that for mobile payment to be
adopted by merchants compatibility doesn’t affect existing work practices and
the extent to which the payment system “fits” with their current work process.
Overall, the result of this study is indeed helpful to the banking industry,
microfinance, and other mobile payment system providers in Ethiopia and will
be used as the springboard for other researchers for future work in the area.

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