UNIVERSITI TUN HUSSEIN ONN MALAYSIA

STATUS CONFIRMATION FOR UNDERGRADUATE PROJECT REPORT

THE ADOPTION OF CASHLESS TECHNOLOGY AMONG CONSUMERS

IN MALAYSIA

ACADEMIC SESSION: 2017/2018

I, NURUL ALIYA BINTI ZULKIPLY agree to allow this Undergraduate Project Report to be kept

at the Library under the following terms:

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THE ADOPTION OF CASHLESS TECHNOLOGY AMONG CONSUMERS IN

MALAYSIA

NURUL ALIYA BINTI ZULKIPLY

A thesis submitted in

Fulfilment of the requirement for the award of the

Bachelor of Technology Management with Honours

Faculty of Technology Management and Business

Universiti Tun Hussein Onn Malaysia

JANUARY 2018

ii

I hereby declare that the work in this project report is my own except for quotations

and summaries which have been duly acknowledged

Student : ………………………………………………….

NURUL ALIYA BINTI ZULKIPLY

Date : ………………………………………………….

Supervisor : ………………………………………………….

DR SHAFIE BIN MOHAMED ZABRI

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DEDICATION

To my beloved family members,

Thank you for tolerating with me and always being with me

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ACKOWLEDGEMENT

First of all, I would like to express my special thanks of gratitude to my

respectable supervisor, Dr. Shafie Bin Mohamed Zabri for his endless support,

encouragement and guidance during the research work.

I would also like to extend my appreciation to the respondents which have

given me full cooperation in completing the questionnaires. Furthermore, I would

like to express my warm thanks to those who were directly or indirectly involved

within the process of completing this research.

Last but not the least, I sincerely thank to my beloved family members and friends for

their continuous support in all form, both physically and mentally which has resulted

in the completion of my research.

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ABSTRACT

Cashless technology society does not mean the total absence of cash but it is a financial

environment that minimizes the use of physical cash by providing alternative channels

for making payments. In Malaysia, cashless transaction is still in infancy stage in 2016.

The objective of this study is to identify the drivers of cashless society among

consumer in Malaysia. This study uses the foresight process which include the

STEEPV analysis to identify the driver of cashless society technology. This study also

guided by the objectives of identifying the factors that influencing the use of cashless

payment technology, as well as the level adoption of cashless payment system among

Malaysian consumers. These objectives will be achieved through quantitative research

approach with the aid of survey questionnaires that were distributed to consumers in

Malaysia. Out of 346 respondents surveyed, a total of 152 responses were received,

reflecting a 44% of response rate. The understanding of these research objectives was

guided by relevant theories of technology adoptions such as Technology Acceptance

Model (TAM). Data collected will be quantitatively analyzed measuring the objectives

using a developed questionnaire. The findings of this study indicated that the level

adoption of cashless technology is medium and the PEOU and PU influenced the

adoption of cashless with high mean scores. These findings shed new knowledge and

understanding regarding the adoption of cashless technology among consumers in

Malaysia.

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ABSTRAK

Masyarakat teknologi tanpa tunai tidak bermaksud jumlah wang tunai yang tidak ada

tetapi ia adalah persekitaran kewangan yang meminimumkan penggunaan wang tunai

secara tunai dengan menyediakan saluran alternatif untuk membuat pembayaran. Di

Malaysia, urusniaga tanpa tunai masih di tahap awal pada tahun 2016. Objektif kajian

ini adalah untuk mengenal pasti pemacu masyarakat tanpa tunai di kalangan pengguna

di Malaysia. Kajian ini menggunakan proses berpandangan jauh yang termasuk

analisis STEEPV untuk mengenal pasti pemandu teknologi masyarakat tanpa tunai.

Kajian ini juga berpandukan kepada objektif mengenal pasti faktor-faktor yang

mempengaruhi penggunaan teknologi pembayaran tanpa tunai, serta tahap

penggunaan sistem pembayaran tanpa tunai di kalangan pengguna Malaysia. Objektif

ini akan dicapai melalui pendekatan penyelidikan kuantitatif dengan bantuan soal

selidik tinjauan yang diedarkan kepada pengguna di Malaysia. Daripada 346

responden yang ditinjau, sejumlah 152 respon diterima, mencerminkan 44% daripada

kadar tindak balas. Pemahaman objektif penyelidikan ini dipandu oleh teori-teori yang

berkaitan dengan adopsi teknologi seperti Model Penerimaan Teknologi (TAM). Data

yang dikumpul akan dianalisis secara kuantitatif mengukur objektif menggunakan soal

selidik yang dibangunkan. Penemuan kajian ini menunjukkan bahawa tahap

penggunaan teknologi tanpa tunai adalah sederhana dan PEOU dan PU mempengaruhi

penggunaan tanpa tunai dengan skor min yang tinggi. Penemuan ini menimbulkan

pengetahuan dan pemahaman baru mengenai penerapan teknologi tanpa tunai di

kalangan pengguna di Malaysia..

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TABLE OF CONTENT

TITLE i

DECLARATION ii

DEDICATION iii

ACKNOWLEDGEMENT iv

ABSTRACT v

ABSTRAK vi

TABLE OF CONTENT vii

LIST OF TABLES xi

LIST OF FIGURES xii

LIST OF APPENDICES xiii

LIST OF SYMBOLS AND ABBREVIATIONS xiv

CHAPTER 1 INTRODUCTION 1

1.0 Introduction 1

1.1 Research Background 1

1.2 Problem Statement 2

1.3 Research Question 3

1.4 Research Objectives 4

1.5 Significance of Study 4

1.6 Research Scope 5

1.7 Outline of Thesis 5

1.8 Conclusion 6

CHAPTER 2 LITERATURE REVIEW

2.0 Introduction 7

2.1 Research Design 7

2.2 Research Flow Chart 8

2.3 Research Instrument 9

2.3.1 Questionnaire 9

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2.3.1.1 Part A 10

2.3.1.2 Part B 10

2.3.1.3 Part C 10

2.4 Data Analysis 11

2.5 Data Collection 12

2.5.1 Primary Data 12

2.5.2 Secondary Data 12

2.6 Research Sampling 13

2.7 Conclusion 13

CHAPTER 3 RESEARCH METHODOLOGY

3.0 Introduction 14

3.1 Payment System in Malaysia 14

3.1.1 Large Value Payment System 15

3.1.2 Retail Payment System 15

3.2 Cashless Transaction 16

3.2.1 Level of Adoption of

Cashless Technology in Malaysian Consumers 17

3.2.2 Factors influencing the adoption of

Cashless Transactions 17

3.3 Technology Acceptance Model (TAM) 19

3.4 Cashless Society 21

3.4.1 Benefit of Cashless Society 21

3.4.2 Challenges of Cashless Society 22

3.5 STEEPV Analysis 23

CHAPTER 4 ANALYSIS AND DISCUSSION

4.0 Introduction 31

4.1 Quantitative Data Analysis 31

4.2 Survey Pre-test Procedure 32

4.3 Reliability Analysis 32

4.3.1 Pilot Test 33

4.3.2 Actual Study 34

4.4 Respondent Demographic Characteristic Analysis 34

4.4.1 Age 36

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4.4.2 Gender 37

4.4.3 Race 38

4.4.4 Education 39

4.4.5 Monthly Income 40

4.4.6 Employment Status 41

4.4.7 Knowledge of Cashless Payment 42

4.5 Descriptive Analysis 43

4.6 First Objective 43

4.7 Second Objective 44

4.7.1 Level of Adoption of Cashless

Technology among Malaysian Consumer 44

4.8 Third Objective 46

4.8.1 Factors That Influencing the

Use of Cashless Payment Technology among

Consumers in Malaysia 46

4.8.1.1 Analysis Based on

Technology Acceptance Model (TAM) 46

4.8.1.2. Perceived Ease of Use (PEOU) 46

4.8.1.3 Perceived Usefulness (PU) 47

4.9 Conclusion 49

CHAPTER 5 CONCLUSION AND RECOMMENDATION

5.0 Introduction 50

5.1 Discussion of the Findings 50

5.1.1 Second Objective 50

5.1.2 Third Objective 52

5.2 Summary of Research 53

5.3 Limitation of Study 54

5.3.1 Sample Size 55

5.3.2 Respondents Experience 55

5.3.3 Lack of cooperation 55

5.4 Further Research 56

5.5 Conclusion 57

5.6 Recommendation 57

REFERENCES 58

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APPENDIX 64

VITAE 78

xi

LIST OF TABLES

2.1 Parts of Questionnaires 9

2.2 Description of Likert Scale 10

2.3 Data Analysis 11

3.1 Factors influencing the adoption of cashless transactions 18

3.2 Overall STEEPV Findings 23

3.3 Frequencies of STEEPV 29

3.4 Summary of STEEPV Factors 30

4.1 Cronbach's Alpha classification 33

4.2 Reliability Statistics for 10 Respondents 33

4.3 Reliability Statistics for 152 Respondents 34

4.4 Respondent Demographic Characteristic Analysis 35

4.5 Mean Score 43

4.6 The driver of Cashless Technology 45

4.7 Level of Cashless Technology Adoption 45

4.8 Average mean of Cashless Payment System Adoption 47

4.9 Perceived Ease of Use (PEOU) 47

4.10 Overall Perceived Ease of Use (PEOU) 48

4.11 Perceived Usefulness (PU) 48

4.12 Overall Perceived Usefulness (PU) 49

4.13 Average mean of PEOU and PU 53

5.1 Summary of Research Findings 54

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LIST OF FIGURES

2.1: Research Flow Chart 8

3.1: Payment System in Malaysia (Bank Negara Malaysia, 2017) 14

3.2: Technology Acceptance Model (TAM). 20

4.1: Pie Chart of Respondent by Age 36

4.2: Pie Chart of Respondent by Gender 37

4.3 Pie Chart of Respondents by Race. 38

4.4 Pie Chart of Respondents by Education. 39

4.5 Pie Chart of Respondents by Monthly Income. 40

4.6 Pie Chart of Respondents by Employment Status. 41

4.7 Pie Chart of Respondents by Knowledge of Cashless Payment 42

xiii

LIST OF APPENDICES

A Questionnaire survey form 64

B SPSS Results 72

xiv

LIST OF SYMBOLS AND ABBREVIATIONS

FPTP - Faculty of Technology Management and Business

MIGHT - Malaysian Industry-Government Group for High Technology

SPSS - Statistical Package for the Social Sciences

STEEPV - Social, Technology, Economy, Environment, Politic and Value

BNM Bank Negara Malaysia

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CHAPTER 1

INTRODUCTION

1.0 Introduction

The cashless society can be classified as a modern society that is moving

forward as replacing manual payments to cashless payment via plastic cards and

others. Many industries are starting to, or have already, put technology in place to

accommodate the growing trend towards smart mobile devices. The banking and

financial services industry has been exploring authentication of identity using bio-

metric verification for a number of years now and there are definite signs of a

gradual revolution in Western European markets. Through this too, it can

contribute to the development of a cashless society (Steve, 2006).

Malaysia is heading towards becoming a cashless society by 2050. According

to The Star (2017) Minister Khairy Jamaluddin said that Malaysian cannot run

away from how people will pay for things and how Malaysian will use cash and

make transactions in the future. The goal would be to reduce the physical

transactional element to payment so that it becomes easier for the user.

1.1 Research Background

A cashless society is a culture where no one uses cash where transactions being

made via direct transfers of monies from one account to another through mobile

banking and other electronic means. The cashless society envisioned refers to the

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widespread application of computer technology in the financial system (Suberu et

al., 2015). According to Akinola (2012), cashless society is defined as a

community in which all payments are made through electronic means. The

instruments of cashless society are e-payment, e-banking and e-money. According

to Mastura Ishak (2016), the rapid rise of the growth of technology throughout the

world is a phenomena where money is regarded as part of the technology.

Cashless transaction consist of payment without using any cash. According to

Okechukwu, Chukwudi, & Chuks (2016), in a cashless society, currency and notes

are converted into data which are transmitted through telephone lines and satellite

transporters. As cited in Okechukwu et al., (2016), defines a cashless system as a

system of payment where transactions are performed without using coins or

banknotes but credit cards or electronic transfer of funds.

In general, e-payment is part of cashless society. E-payments in the context of

e-commerce refers to online transactions are conducted via the Internet Junadi &

Sfenrianto, (2015). The e-payment systems consists of online credit card

transaction, electronic wallet (e-wallet), electronic cash (e-cash), online stored

value systems, digital accumulating balance systems, digital checking payment

systems and wireless payment systems as cited in Junadi & Sfenrianto (2015).

The major cashless instruments in use in Malaysia are credit cards, internet

banking and IBG. Also in use, but of lesser importance, are charge cards and debit

cards (Basir, 2009). Olusola et al., (2013), suggested that the increased use of

cashless payment systems could lead to a cashless society.

This research is conducted mainly in examining the adoption of cashless

technology usage toward building cashless society among consumers in Malaysia.

As the rate of cashless transaction usage in Malaysia is still low and minimal.

1.2 Problem Statement

Before 1st January 2017, Malaysian are reminded to change their ATM Card into

PIN-enable card which eliminate signature payment system for better security

transactions. These activities are set in conjunction with the government’s

3

Economic Transformation Programme and Bank Negara Malaysia’s (BNM) vision

to transform Malaysia into a cashless society. Malaysian government’s push and

urge to reduce cash transactions as cashless transaction contributes concern to the

growth of Malaysia economy. The new policy by Bank Negara Malaysia (BNM)

on cashless system come with the objective of reducing robbery, high cost of

processing cash, revenue leakages, inefficient treasury management, promoting

economic development through financial intermediation, among others.

Though electronic revolution has commenced in Malaysia a long ago, but

Internet banking is still in its infancy stage (Haque, Tarofder, Rahman, & Raquib,

2009). Moreover, the exposure of internet banking adoption in Malaysia is

relatively lower and very little research has been done to understand the key

adoption determinants (Haque et al., 2009).

According to The Economic Transformation Programme (2013), Malaysia

remains largely a cash-based society, with 91per cent of transactions completed

using cash. The usage of cheques, e-money, credit card and Internet banking

meanwhile only account for 1.3 per cent, 4.7 per cent, 1.8 per cent and 0.6 per cent

of transactions respectively. Cashless technology adoption among consumer are

not at par with our Southern neighbors, Singapore. According to Mastura Ishak

(2016), cashless transaction in Malaysia is still in infancy. Singapore for example,

registered a 61% cashless transactions in 2016 compared to Malaysia with a mere

1% usage.

1.3 Research Question

This study is undertaken to achieve the following objectives:

1. What are the drivers of cashless technology?

2. What are the level of adoption of cashless technology among Malaysian

consumer?

3. What are the factors that influence the use of cashless payment technology

among consumers in Malaysia?

4

1.4 Research Objectives

The following research questions were also established:

1. To identify the drivers of cashless technology.

2. To identify the level of adoption of cashless technology among Malaysian

consumer.

3. To investigate the factors that influence the use of cashless payment

technology among consumers in Malaysia.

1.5 Significance of Study

The use of cashless society is crucial to facilitate a more efficient to improve the

payment system. This study is important to get the drives that give impact to the

public. Other than that, this research also offers better understanding on the

implementation of cashless society technology in Malaysia. It can also provide

benefits and contribute to:

I. The consumer

Consumer will have a better understanding about the impact of cashless

society and gain new knowledge regarding the adoption of cashless society

in Malaysia.

II. The government

The government can come with a different idea to attract people in using

cashless transaction. It also help to formulate plans, programs and

strategies geared in order to attract more consumer towards the

improvement of building cashless society in Malaysia. It also beneficial to

banks and the government for use in the design and realization of banking

services that are appropriate to the needs of consumers and can indirectly

promote the cashless society in Malaysia.

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III. Researchers

Future researchers may be able to conduct more in-depth researches based

on the data collected and avoid errors that might occur as this research is

considered a small scaled research. Besides, this study can be a reference

on cashless society in Malaysia for researchers in the future.

1.6 Research Scope

The research focused on determining the drivers of cashless technology as well as

the future trends of cashless society, level of adoption and factors influencing the

adoption of cashless society. Research conducted among consumers in Johor,

Malaysia.

1.7 Outline of Thesis

Chapter 1: Introduction

This chapter describes the introduction of relevant research. Research discussed in

detail followed by a statement of the problem. This was followed by the research

questions, research objectives, significance of the research is to give support to this

study. In this study also describes the elements that are important in the study.

Chapter 2: Literature Review

Chapter two discusses the literature review. The literature review is to gather

important information regarding the research topic through the previous studies.

This chapter provides evidence includes definitions of important terms related to

the research done and a description of the studies that have been carried out.

6

Chapter 3: Research Methodology

Research methodology chapter gives a detailed explanation on the implementation

of the study as a whole and in stages to achieve the objectives and goals of the

study as outlined. It describes the methods used for data collection and data

analysis.

Chapter 4: Data Analysis and Discussion

This chapter explains how data derived from quantitative methods of analysis. The

data obtained were analyzed and presented in the form of content analysis. Data

are also described to facilitate the understanding of each findings.

Chapter 5: Conclusions and Recommendations

This chapter is the last chapter that discussed about the recommendation and

conclusion. This chapter also summarizes the objectives and conclude the overall

study.

1.7 Conclusion

First chapter describes briefly and an overview of the study to be carried out. The

goal of this study is to gain new knowledge about the adoption of cashless society

in Malaysia. This chapter also briefly describes the elements that will be used in

the study to provide an initial understanding regarding the study. Such information

includes the introduction, research background, problem statement, research

questions, research objectives, and significance of research

CHAPTER 2

RESEARCH METHODOLOGY

2.0 Introduction

This chapter discusses about the methodology that been conducted for this study. It

covers on the whole research process which is done to achieve the objectives. In this

research, the quantitative methods were used. Research methodology is the method

used as guidelines to collect information and data for the study. The key areas include;

research design, target population, sample of the study, data collection instruments,

procedures and data analysis as well as a flow of process for this study as shown in

Figure 2.1.

2.1 Research Design

Quantitative research methods were employed in this research in order to achieve the

objectives, which includes the usage of a questionnaire survey to collect quantitative

data.

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PHASE 1

Research Title

Problem Statement, Research Questions,

Research Objective, Significance of Study,

Scope of Study and Research Methodology

2.2 Research Flow Chart

Figure 2.1: Research Flow Chart

PHASE 3

Data collection

Primary data

Information collected through

questionnaires

(Consumers in Parit Raja, Batu

Pahat)

Secondary data

Literature Review

-Printed Material (Journals, Articles,

Newspapers and related resources)

-Electronic Media (Official Website)

PHASE 4

Data Analysis and Discussion

PHASE 5

Conclusion and suggestion

PHASE 2

Methodology

Quantitative methods

Quantitative methods

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2.3 Research Instrument

There are a number of research instruments to collect data specific studies. In this study

the chosen instrument is the questionnaire method. Selection of the instrument is

important to ensure that the data achieved the objectives of the study. Questionnaires

were selected for use in this study due to it convenience. Furthermore, questionnaire

also obtain accurate information on the study population. Through this method,

respondents answered questions that are related to the topics to be studied in this

research.

2.3.1 Questionnaire

The questionnaire consisted of three parts which is the respondent demographics,

followed by questions regarding the research objectives. The data collected used to

facilitate the process of analyzing data.

Table 2.1: Parts of Questionnaires

PARTS

ITEM TOTAL QUESTIONS

A Respondents demographic

characteristics 7

B

Level of adoption of cashless

technology among Malaysian

consumer.

10

C

Factors that influencing the use of

cashless payment technology among

Malaysian consumers

5

Table 2.2: Description of Likert Scale

17

Scale Description

1 Strongly Disagree

2 Disagree

3 Partially Disagree

4 Agree

5 Strongly Agree

Questionnaires were selected for use in this study because it is more convenient and

easy. Furthermore, it can obtain accurate information on the study population. Through

this method, respondents will answer questions that are related to the topics to be

studied in this research.

2.3.1.1 Part A: Respondents demographic characteristics

This section contains questions related to respondents' information such as full name,

age, sex, race, occupation, service groups, workplace and monthly income. This

information is to identify the characteristics of the respondents.

2.3.1.2 Part B: Level of adoption of cashless technology among Malaysian

consumer.

Part B contains questions to measure the level of adoption of cashless technology

among Malaysian consumer. These include whether the respondent is involved in the

use of cashless payment or not. Through this section, the information will be received

is about the level of adoption of cashless technology in Malaysia.

2.3.1.3 Part C: Factors that influencing the use of cashless payment

technology among Malaysian consumers.

Part C are questions about the factors that affect the use of the cashless technology

among consumers in Parit Raja. Consist of two factors, PEOU and PU.