The Study of The Effectiveness of Cashless Payment Method in The Philippine Supermarket Through Consumer Satisfaction
The Study of The Effectiveness of Cashless Payment Method in The Philippine Supermarket Through Consumer Satisfaction
The Study of The Effectiveness of Cashless Payment Method in The Philippine Supermarket Through Consumer Satisfaction
Emmanuel J. Dotong
Lyceum of the Philippines University - Manila
Abstract
Cashless payment method has been an alternative transaction in the retail industry. The
objective of the study was to determine the level of satisfaction, main advantage, usage, and
preference of consumers in using cashless payment method in the selected supermarkets in Metro
Manila. In addition, it aimed to provide a comparative and correlational analysis of variables to
determine their significant differences and relationships. The researcher used a self – administered
survey questionnaire and gathered the data through mall – intercept inside the three (3) selected
supermarkets. The researcher used quantitative method as a research design utilizing descriptive
statistics.
The findings revealed that consumers are satisfied in using cashless payment methods in
the supermarket in terms of cashless security, cashless convenience, and sales promotion. Based
on the consumer perception, greater security is the main advantage of cashless transaction having
the gift card/ check as the most used and most preferred cashless payment method. Study showed
that there is a significant difference between the security satisfaction of male respondents to that
of female respondence as well as the age groups for millennials vs gen x in terms of sales
promotion satisfaction. In addition, findings suggest that the correlation among the consumer
satisfaction variables (cashless security, cashless convenience, and sales promotion) has positive
significance to the overall consumer satisfaction.
In a business to consumer (B2C) transactions, there are two (2) ways or modes a consumer
can use to pay for their bills: the cash payment and the cashless payment method. A cash payment
method is the conventional way of paying your bills wherein a consumer is using an actual money
or cash to create a transaction in exchange for goods or services. On the other hand, cashless
payment or cashless transaction is an alternative way of paying your bills in the supermarket. The
use of the alternative method which is the non – cash transactions continue to grow due to emerging
technological advancement. In the study of World Payment Report as cited by Yu (2017), the
global cashless transaction volumes grew over 11.2% reaching US$ 433.1 Billion from year 2014
– 2015. In the Philippines, the usage of cashless payment also rose for the past decades. Cashless
payment is one of the options that consumers used in purchasing goods in the grocery or
supermarket. While people are getting comfortable with cashless payments, some technical issues
are holding back many consumers from embracing the newer platforms. These can be found on
several studies that using cashless payment as a method for a transaction has several disadvantages.
Some of the studies, on the other hand, propose that there are more advantages in using cashless
payment as a method in lieu of using cash. Waiting for the serpentine queues at any cashpoint or
ATMs in malls is really time consuming and deteriorates the concept of accessibility and
convenience. With a limited time to purchase and cash in hand, most people are rushing to cashless
transactions.
Having a cashless transaction in an economy does not necessarily mean shortage of cash
rather it indicates a culture of people settling transactions digitally. In a modern economy, money
moves electronically, hence, the spread of digital payment culture along with the expansion of
infrastructure facilities is needed to achieve the goal of business. (Ramya, Sivaskthi, & Nandhini,
2017) One of the most common cashless transactions in the Philippines is found in retail industry.
This is evident to the country because it has the three (3) of the biggest mall in the world.
(Touropia.com, 2017) Shopping is one of the necessary activities for consumers as they need to
satisfy their physiological needs such as food and clothing. More often than not, this activity helps
consumers to walk around shops or stores, relax, and have fun in looking for something they want
or need. However, shopping can also irritate consumer especially if they are not satisfied with their
experience.
In business, the most important thing is to meet or exceed customers’ expectation if not
earning a profit. One of the challenges the retail industry experience is the long queuing and slow
transactions in their cashier area. In fact, up until year 2013, all retail financial transactions in the
Philippines are being done using cash payment method, creating inefficiencies and leakages in the
country’s economy, as cited by the central bank of the country. (Montecillo, 2013) For a couple of
decades in the retail industry, the introduction of department stores, supermarkets, and regional
malls among others were all revolutionary. However, (Peyton, 2012) argues that the development
of the industry through innovation of their products and services is slow if not constant. Sometime
in the three years of last recession, the retail industry innovations have been focused on the new
smartphone and tablet devices that are facilitating a whole new way of shopping. With this regard,
one of the innovations of the retail sector is the cashless payment transaction for the supermarket
and other retail establishments.
Paul & Friday (2012) defined cashless transactions as an economic setting wherein goods
and services are transacted without using of cash. These means that a consumer can create a
transaction without using actual money in exchange for goods or services through cashless
payment such as checks, credit and debit card, e-cash, bitcoin, gift card, and checks among other
methods. With the opportunity to increase the consumer loyalty of the retail sector, the cashless
method was introduced in different supermarkets. For the past few years, different companies such
as telcos, banks, fintech startups, financial services, and offline-to-online (O2O) firms have rolled
out their e-wallets in the Philippines tailor fit mostly for the country’s unbanked population of 72.9
million or 69 per cent of 105.7 million Filipinos. (Noda, 2018)
In terms of cash security, some of the developed countries and poorer communities have
places where “cash crimes,” such as mugging, rubbing, and holdups are most ubiquitous. (Armey,
Lipow, & Webb, 2014) With this regard, the industrialized process in developed countries in terms
of electronic financial transactions could prove to be an innovative and transformative way of
transacting in different business sectors in a developing country to avoid such crimes. While the
phrase “Cash is King” has always been the rule of thumb in transactions, the innovation towards
transactions says otherwise.
According to Armey (2014), using cashless payment has numerous advantages. Unlike
traditional cash transaction, cashless payments discourage robbery and other cash-related crimes.”
Due to the liquidity and transactional anonymity of cash, consumers carrying cash are vulnerable
to street crime. Adopting cashless payments can even decrease robbery crime percentage in the
area, minimize the potential threat of robbery, kidnapping, monetary fraud, and others. Gao (2000)
also added that in e-cash, one of the types of cashless transaction, has several advantages such as
reducing transaction process time, process cost, and cash distribution costs among others. The
elimination of charges in the transaction can help not just the retail sector but also for the
convenience of the consumers. In addition, the cashless payment particularly the digital payments
go well beyond convenience. The Digital payments or e – payment improves consumer spending
and economic development not just in the developed countries but also for developing countries.
(Aguirre, 2017).
Furthermore, Kasavana (2016) emphasized that “cash payments have eluded a significant
segment of the self-service industry” not to mention that most consumers that are driven by reward
programs and convenience have shifted from cash to cashless payments. Despite the several
advantages of the cashless payment in the supermarket, it is undeniable that there are also some
disadvantages in the said method.
Thomas (2010) describes card payments as “emotionally more inert than cash” payment.
When having a transaction using card-based payment in supermarkets, customers are mandated to
swipe their cards in a terminal; a device used for swiping the card for the transaction. This process
could affect the queuing in the supermarket making the customers feeling satisfied or unsatisfied.
Moreover, the mode of payment does not only affect how much is spent but also the type of
purchase the customer buys. He also emphasized that the credit card payment, one of the cashless
mode of payment increases the incidence of unhealthy, unplanned, and indulgent food purchases.
However, (Bagchi & Block, 2011) argued that cash payment increases the food purchase of the
customers because impulsive buying of food purchases provides an instant affective fix to the pain
caused by parting with cash.
The inconsistent findings suggest that mode of payment is one of the factors that affect not
only on physical dimensions but also in terms of the emotional and mental aspect the consumer
experiences. One of the problems the consumer encounters is the security of cashless payments in
the supermarket, which is the card fraud. Recently, the European Central Bank (ECB) reported
that the value of card fraud increased by 14.8% in 2012. (European Central Bank, 2014) However,
in the United States, the Better than Cash Alliance and the Cashless Battlefield shows that the US
government agencies are highly satisfied with the efficiency and effectiveness of e – payment
technologies as a medium of payment to improve the public safety in a skeptic and dangerous
places. (Armey, Lipow, & Webb, 2014)
In the Philippines, the cashless transactions have incrementally increased because of the
trends nowadays in terms of e-commerce in the millennial generation. Due to this, the Bangko
Sentral ng Pilipinas (BSP), the Central Bank of the Philippines initiated a program in partnership
with the private corporation and government agencies to further evolve the cashless payment
solutions. (Nair, 2016) Despite the efforts of the government, the prevailing preference for cash
over cashless transactions particularly the electronic payments in the Philippines does not reflect
the country’s reputation as one of the world’s leaders in the creation of innovative applications for
the use of electronic platforms. (Montecillo, 2013) For this reason, the researchers aimed to
determine the level of satisfaction, main advantage, usage, and preference of consumers in using
cashless payment method in the selected supermarkets in Metro Manila. In addition, it aimed to
provide a comparative and correlational analysis of variables to determine their significant
differences and relationships.
Research Methodology
Quantitative method in a form of descriptive research was used as the research design to
describe the effectiveness of cashless payment through consumer satisfaction. A self –
administered survey questionnaire was used as a research instrument to gather the four hundred
(400) respondents as a sample population that was computed through the G power software. In
terms of data gathering procedure, respondents are determined through purposive sampling using
mall – intercept in the selected supermarkets. The researchers employed a desk review of existing
journals, reports, and relevant case studies for the research and performed basic statistical analysis
in all the data gathered.
To identify the degree of satisfaction of the customers in a cashless payment method, the
researchers conducted a survey on customer perceptions and experience on the relevant topics
according to the pre-set questionnaire. The respondents’ demographic profile such as gender, age,
and profession, and cashless payment attributes were the variables included in the pre-set
questionnaire for profiling. The questionnaire was validated through a pre-test given to thirty (30)
selected customers who frequently buys in the selected supermarket to identify the flaws of the
survey questionnaire. Moreover, final questionnaire was also validated by industry practitioner for
further improvement. The locale of the study was in Metro Manila in three (3) selected
supermarkets which will not be named for confidentiality and privacy purposes.
The sample population was determined through Slovin’s formula and was gathered through
purposive sampling using mall – intercept. The responses to the questionnaire were collected from
January to March 2017 and distributed to 400 customers in selected supermarkets located in Metro
Manila. The MS Excel software was used as a tool for tabulation of raw data while the IBM SPSS
Software was used to test the hypothesis.
Statistical Treatment of Data
The researcher used basic statistical treatment to determine the level of satisfaction and
effectiveness of cashless payment method to the consumers. Mean was used by the researchers to
determine the level of satisfaction of the respondents in terms of cashless security, cashless
convenience, and cashless rewards. The result gathered in the survey questionnaire was analyzed
through its frequency distribution, range, percentage, and through ranking. In addition, the
researchers utilized the Likert scale to identify the range and interpretation of each result. The
descriptive equivalent used for the study was computed based on the recommended 5-point scale
range which is 1.00 – 1.80 as Strongly Disagree (Very Dissatisfied), 1.81 – 2.60 as Disagree
(Dissatisfied), 2.61 – 3.40 as Neutral, 3.41 – 4.20 as Agree (Satisfied) and 4.21 – 5.00 as Strongly
Agree (Very Satisfied) For the comparative and correlation of variables, the researcher used T test
Independent means, Analysis of variance (ANOVA) for identifying the significant differences
between consumer satisfaction and demographic profile of the respondents. Chi – square method
was use for the correlation of nominal data and Pearson R. for the correlation of consumer
satisfaction.
Objectives and Hypothesis
The objective of the study was to determine the level of satisfaction, main advantage,
usage, and preference of consumers in using cashless payment method in the selected supermarkets
in Metro Manila. In addition, it aimed to provide a comparative and correlation of variable to
identify the significant differences and relationship among the different variables.
In pursuance of the above objectives, the following hypotheses were formulated for
testing:
H01: There is no significant relationship among the cashless security, cashless convenience, and
sales promotion to consumer satisfaction
H02: There is no significant difference between consumer satisfaction and the gender of the
respondents
H03: There is no significant difference between consumer satisfaction and the age group of the
respondents
H04: There is no significant difference between consumer satisfaction and the employment status
of the respondents
H05: There is no significant difference between consumer satisfaction and the visited supermarket
of the respondents
H06: There is no significant relationship among the main advantages in using cashless payment to
the level of satisfaction of consumers
H06: There is no significant relationship between the mode of payment to the level of satisfaction
of consumers
Results and Discussion
Table 1 shows that the gender of the respondents is almost divided equally with a 50.75%
male and 49.25% female which composed of 400 respondents. Majority of the respondents’ age
are ranging from 25 years old and below and 26-35 years old with 46.50% for the former and
36.75% for the latter age group. Most of the respondents are working in the private sector that
composed of 44.50% of the population. Majority of the respondents are gathered from
Supermarket C having 43.25% of the total respondents.
Analyzing the correlation of the variables, results shows that there is a significant
relationship among the consumer satisfaction variables and consumer satisfaction. With r-value of
.493, there is a Moderate Positive Significant Correlation between Security Satisfaction and
Convenience. With r-value of .365, there is a Low Positive Significant Correlation between
Security Satisfaction and Sales Promotion. With r-value of .274, there is a Low Positive Significant
Correlation between Convenience and Sales Promotion. Hence, the null hypothesis rejected.
Based on the statistical analysis, the null hypothesis is rejected. Table 4 suggest that there
is a significant difference between the respondents within 26 – 35 years old and 36 – 45 years old
in terms of sales promotion satisfaction with p – value of 0.003. According to the definition of
Millennial Marketing in the report of Fromm (2016), people that are born from 1979 to 1995 are
part Millennial generation while people born from 1964 – 1978 are part Gen X generation. The
generation gap of the two (2) age groups have different preference, personality, and behavior
among others. Hence, the difference between the satisfaction of the 2 groups varies due to
generation preference in terms of sales promotion.
Demographics Variables Frequency Percent
Student 81 20.25
Employment Private Sector Employee 178 44.50
Status Public Sector Employee 92 23.00
Self – Employed 37 9.25
Others 12 3.00
Total 400 100.00
Based on the statistical analysis, the null hypothesis for table 5 is rejected. The findings
showed that there is a significant difference between the public sector employee to others
(unemployed) in terms of the sales promotion satisfaction. Hence, the null hypothesis is rejected.
Demographics Variables Frequency Percent
Visited Supermarket A 103 25.75
Supermarket Supermarket B 124 31.00
Supermarket C 173 43.25
Total 400 100.00
Based on the result, table shows that there is a significant difference among the different
supermarkets in terms of sales promotion satisfaction (Supermarket A versus Supermarket C with
p-value .002; Supermarket B versus Supermarket C with p-value .000) and cashless security
(Supermarket B versus Supermarket C with p-value 0.35) The said differences is evident due to
the differences of market segments of the supermarkets.
Frequency Percent Valid Cumulative Rank
Percent Percent
Valid Greater Security 221 55.3 55.3 74.5 1st
Time Saving 102 25.5 25.5 100.0 2nd
Cash Discounts 43 10.8 10.8 10.8 3rd
Ease of Use 34 8.5 8.5 19.3 4th
Total 400 100.0 100.0
The table 7 suggest that the greater security is the main advantage of using cashless
payment method for transactions in the supermarket followed by time saving and cash discounts.
According to (Rehman, Coughlan, & Halim, 2012) Secure transactions are the hall mark of any
cashless payment system. Customers are looking for more secure modes of settlement on day to
day business transactions which validates the main benefit of using cashless payment method in
the supermarkets.
Based on the results above, the gift card/check is the most used cashless payment methods
of the consumers followed by credit card and debit card. Gift Cards according to the Incentive Gift
Card Council (n.d.), explains that using gift card is a guilt – free spending. Consumers don’t feel
guilty treating themselves when using gift cards since it is specifically used to purchase a certain
goods. In addition, Eioba (2006) emphasized that consumers will pay less attention to sales and
they tend to spend more than what they have on the card. Retailers notice that consumers will
spend the whole amount on the card and have a small balance of $2 or $3 left on it. Chances are,
shoppers will never use the card again and this works to the retailer's advantage.
Variables Rank
Gift Card/ Check 1st
Credit Card 2nd
Stored Value Loyalty Card 3rd
Debit Card 4th
Mobile Wallet/ 5th
E-Wallet
Table 9: Most Preferred Cashless Payment by Consumers
Respondents were asked to rank their most preferred cashless payment method in the
supermarket: 1 as the most preferred and 5 as the least preferred. Table 5 shows that the most
preferred cashless payment method is still through gift card or gift check followed by credit card.
Although credit card was ranked 2nd in the study, NXGEN (2016) claims that credit cards are
becoming the most common payment method. Consumers who use credit card as cashless payment
spend more than if they were paying with cash. Stored value loyalty card placed 3rd as most
preferred transaction due to its trend and rewards. A stored value loyalty card is a reward card of
establishments that can be loaded and served as alternative cash. In the Philippines, there are no
data of Stored Value Loyalty Card in retail stores but rather a regular loyalty/reward card that
cannot be loaded. Furinto (2011) emphasized that loyalty cards attract consumers through the
rewards system in a form of real cash, bonus points, vouchers, and rebates among other rewards.
Conclusion and Recommendation
Based on the result, there is a significant difference between the sales promotion
satisfaction of millennial consumer to gen x consumer. Given this fact, supermarkets should create
sales promotion strategies based on their segmented target market. In addition, results claimed that
there is a significant difference between the public sector employee to unemployed consumers in
terms of sales promotion satisfaction. The said fact creates opportunity for future researchers to
determine the buying behavior of public sector employees in terms of using cashless payment
method. Cashless transactions nowadays, provides better transparency, scalability, and
accountability. Based on the respondent’s perception, the main advantage of cashless payment
method is the greater security while the most used cashless payment method is the gift card.
Moreover, the most preferred cashless payment method by the respondents is still gift card/check
followed by credit card. These means that the agencies providing gift card/check to consumers
should continue and improve their marketing strategy to maximize the usage of gift card/ check in
the Philippine supermarket. As noted in the study, it revealed that the 3rd most preferred cashless
payment method by consumers is stored value loyalty card. In the Philippine supermarket, the
players do not have any stored value loyalty cards programs in the status quo as compared to food
and beverage industry, hence, it is recommended to initiate and create a stored value loyalty card
programs in the supermarkets to further attract the current consumers to purchase store value
loyalty cards which can result to brand loyalty. In addition, the financial firms particularly the
banks should also create a move in developing a better promotional strategy in terms of credit card
rewards since credit card is the second most preferred cashless payment method in the
supermarkets.
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