Online Payment and Consumers’ Attitude towards Risk reduction strategies in a cash based economy

  • Ofunre Chukwudi Iriobe Redeemer's University, Ede Osun state
Keywords: Online Shopping, Money Back Guarantee, Electronic Word of Mouth, Informational Influence, Pay on Delivery, Customers’ attitude towards electronic payment


Online payment for goods has grown globally; unfortunately, the advancement in technology has not lowered the level of perceived risk felt by customers who pay for products online. The adoption of online payment in Nigeria is still low hence, consumers are given options considered less risky to use. Many online vendors have adopted different risk reducing strategies to help curb the perceive risk felt by customers when paying online. The effect of these risk reducing factors have not been adequately investigated in Nigeria especially, given that online vendors in Nigeria accommodate buying online and paying cash. Using a sample of 170 young people in Nigeria, an ordered logistic regression was used to test the relationship between various risk-reducing strategies such as Money Back Guarantee (MBG), Electronic Word of Mouth (EWOM), Informational Influence (IIF) and Pay on Delivery (POD) in Nigeria and customers’ attitude towards electronic payment (CAT). We found that MBG, EWM and POD have significant positive influence on (CAT) while IIf exhibited a significant negative influence. The various risk reduction strategies employed by the study contributes a significant 12% to the variation of customers’ attitude towards electronic payment. We concluded that risk reduction strategies have a significant positive impact on customers’ attitude towards electronic payment in Nigeria. Hence, we recommend that online vendors should encourage more interpersonal online interaction among users, they should also provide more money back guarantees and pay-on-delivery offers to consumers to simulate and hasten their movement from traditional payment methods to online payment methods.


Akaah, I. P., &Korgaonkar, P. K., 1988. A conjoint investigation of the relative importance of risk relievers in direct marketing. Journal of Advertising Research. 28(4), 38-44.

Avgerou, C. (2008). Information systems in developing countries: a critical research review. Journal of information Technology, 23(3), 133-146.

Bart, Y., Shankar, V., Sultan, F., & Urban, G. L. (2005). Are the drivers and role of online trust the same for all web sites and consumers? A large-scale exploratory empirical study. Journal of marketing, 69(4), 133-152.

Bauer, R. A. (1960). Consumer behavior as risk taking.In Cox, D. (Ed.), Risk taking and information handling in consumer behaviour (pp. 389–398).Cambridge, MA: Harvard University Press

Bhatnagar, A., Misra, S. and Rao, H. R. (2000) “On risk, convenience and internet shopping behavior, association for computing machinery,” Communications of the ACM. (43)11, 98-105.

Burns, W. J., Peters, E., &Slovic, P. (2012). Risk Perception and the Economic Crisis: A Longitudinal Study of the Trajectory of Perceived Risk. Risk Analysis, 32(4), 659–677.

Cemberci, M., EmreCivelek, M., &Sözer, E. G. (2013). The determinants of intention to shop online and effects of brand equity on e-store patronage. Journal of Global Strategic Management, 13, 125–145.

Cheng, A. Y., N. R. Ab Hamid, and E. H. Cheng 2011. “Risk Perception of the E-Payment Systems: A Young Adult Perspective.” In Proceedings of the 10th WSEAS International Conference on Artificial Intelligence, Knowledge Engineering and Data Bases, 121–127. Kuala Lumpur: World Scientific and Engineering Academy and Society.

Datta, P. (2011). A preliminary study of ecommerce adoption in developing countries.Information Systems Journal, 21(1), 3–32.

Ejiofor, V. E., &Rasaki, J. O. (2012). Realising the Benefits and Challenges of Cashless Economy in Nigeria: IT Perspective. International Journal of Advances in Computer Science and Technology, 1(1) Available Online at

Ellison, N.B., Steinfield, C. & Lampe, C. (2007) The benefits of Facebook ‘friends’: social capital and college students’ use of online social network sites. Journal of Computer-Mediated Communication, 12(4). Available online at: http://jcmc.indiana. edu/vol12/issue4/ellison.html (accessed on 13 November 2017).

Forsythe, S. M., & Shi, B., 2003. Consumer patronage and risk perceptions in internet shopping.Journal of Business Research. 56(11), 867-875.

Hassan, M., Kunz, M. B., Pearson, W., & Mohamed, F. (2006).Conceptualization and measurement of perceived risk in online shopping.Marketing. 16(1), 138–147.Retrieved from Risk/Conceptualization and Measurement of Perceived Risk in Online Shopping.pdf

Hamid, N.R. & Cheng, A.Y. (2013), A risk perception analysis on the use of electronic payment systems by young adult, Information science and applications, 10 (1), 26-35.

Heeks, R. (2002). Information systems and developing countries: Failure, success, and local improvisations. The information society, 18(2), 101-112.

Huang, W., Schrank, H., & Dubinsky, A. J. (2004).Effect of brand name on consumers’ risk perceptions of online shopping.Journal of Consumer Behaviour, 4(1), 40–50.

Leeraphong, A., &Mardjo, A. (2013). Trust and Risk in Purchase Intention through Online Social Network: A Focus Group Study of Facebook in Thailand. Journal of Economics, Business and Management, 1(4), 314–318.

Lenhart, A. (2009) Adults and social network websites. Available online at: (accessed on 15 February


Liebermann, Y. and Paroush, J. (1982), ``Economic aspects of diffusion processes’’, Journal of Economics and Business, 34, 95-100

Liebermann Y. and Stashevsky S., (2002).Perceived risks as barriers to internet and e-commerce usage. Qualitative Market Research, 5(4), 291-300,

Liaw, G. O. U., Zhu, Z. W. E., & Lee, Y. A. O. (2005). The Effects of Risk Reduction Strategies on Consumers’ Risk Perceptions and Online Purchase Intention. Pan-Pacific Management Review. 8(1), 1-37

Karoubi, B., Chenavaz, R., & Paraschiv, C. (2016). Consumers’ perceived risk and hold and use of payment instruments. Applied Economics, 48(14), 1317-1329.

Kollmann, T., Kuckertz, A., & Kayser, I. (2012).Cannibalization or synergy?Consumers' channel selection in online–offline multichannel systems. Journal of Retailing and Consumer Services, 19(2), 186-194.

Kwahk, K.-Y., & Ge, X. (2012). The Effects of Social Media on E-Commerce: A Perspective of Social Impact Theory. 2012 45th Hawaii International Conference on System Sciences, 1814–1823.

Mangold, W.G. & Faulds, D.J. (2009) Social media: the new hybrid element of the promotion mix. Business Horizons, 52(4), 357–365.

Organisation for Economic Co-operation and Development (1999).The Economic and Social Impact of E-commerce.Available at, accessed on Nov. 14, 2015.

Papagiannidis, S., & Westland, J. C. (2014). The moderating role of income on consumers’ preferences and usage for online and offline payment methods. Electronic Commerce Research, 14(2), 189-213.

March, J. G., (1978). Bounded rationality, ambiguity, and the engineering of choice, Bell Journal of Economics, 9, 587-608.

Ming‐Yen Teoh, W., Choy Chong, S., Lin, B., & Wei Chua, J. (2013). Factors affecting consumers’ perception of electronic payment: an empirical analysis. Internet Research, 23(4), 465–485.

Mitchell, V. W., & McGoldrick, P. J. (1996). Consumer's risk-reduction strategies: a review and synthesis. International Review of Retail, Distribution and Consumer Research, 6(1), 1-33.

Molla, A., &Heeks, R. (2007).Exploring e-commerce benefits for businesses in a developing country. Information Society, 23(2), 95–108.

Nwankwo, O., &Eze, O. R. (2012). Electronic Payment in Cashless Economy of Nigeria: Problems and Prospect. Journal of Management Research, 5(1), 138–151.

Salam, A. F., Rao, H. R., &Pegels, C. C. (2003). Consumer-perceived risk in e-commerce transactions. Communications of the ACM, 46(12), 325.

Soopramanien, D. (2011). Conflicting attitudes and scepticism towards online shopping: The role of experience. International Journal of Consumer Studies, 35(3), 338–347.

Sun, T. (2011). The roles of trust and experience in consumer confidence in conducting e-commerce: A cross-cultural comparison between France and Germany. International Journal of Consumer Studies, 35(3), 330–337.

Vos, A., Marinagi, C., Trivellas, P., Eberhagen, N., Skourlas, C., & Giannakopoulos, G. (2014).Risk Reduction Strategies in Online Shopping: E-trust Perspective.Procedia - Social and Behavioral Sciences, 147, 418–423.

Zilberman, D., Jin, Y., Zilberman, D., &Heiman, A. (2014). Fit Risk : Secondhand Market versus Money-back Guarantee. University of California at Berkeley.

Yaqub, J. O. (2013). The Cashless Policy in Nigeria : Prospects and Challenges Department of Economics Department of Economics Department of Economics, 3(3), 200–212.

Yong-Hui Li and Jing-Wen Huang (2009) Applying Theory of Perceived Risk and Technology Acceptance Model in the Online. World Academy of Science, Engineering and Technology, 53(1), 919-925

Yoo, C. W., Kim, Y. J., & Sanders, G. L. (2015).The impact of interactivity of electronic word of mouth systems and E-Quality on decision support in the context of the e-marketplace.Information and Management, 52(4), 496–505.

Yu, H. C., Hsi, K. H., & Kuo, P. J. (2002). Electronic payment systems: an analysis and comparison of types. Technology in Society, 24(3), 331-347.