ADOPTION OF PAYMENT SYSTEMS IN TEN COUNTRIES - A CUSE STUDY OF DIFFUSION OF INNOVATIONS

Donny Thomas Diju Daniel Manisha Das Itika Maharaja Udita Sood

Raunak Dutta Soumava Ghosh Indrajit Mitra

1 Introduction (Products ,Countries)

2 Literature Review (Diffusion of Innovation, S-curve)

3Market Research (Problem Definition, Approach to the problem, Research Design, Case Analysis)

4 Conclusion

5 Learning Outcomes

AGENDA

INTRODUCTION

Products are constantly evolving.

Companies are making innovations on previously developed models for easy adaptability by the market.

Here we talk about Payment system adoptions from a list of countries during 1988-96.

THE PAYMENT SYSTEMS ARE :

A Cheque is a document that orders a payment of money from a bank account.

A Credit Card is a payment card issued to users

as a system of payment. It allows the cardholder to

pay for goods and services based on the holder's

promise to pay for them .

ATM is a computerized telecommunications

device that enables the clients of a financial

institution to perform financial transactions

without the need for a cashier, human clerk or

bank teller

A Bank Card is a plastic card issued by a bank to

its clients that may perform one or more of the

following services:

• ATM card

• Debit card

• Credit card

THE PAYMENT SYSTEMS ARE :

COUNTRIES STUDIED:

Belgium Canada France Italy The

Netherlands Portugal Spain USA Sweden Switzerland

LITERATURE REVIEW

Diffusion of Innovations:

Theory that explains how, why and at what rate new ideas and technology spread through cultures.

2 stages: Diffusion Process and Adoption Process

Diffusion Process: Concerned with how innovation spreads, i.e. how they are assimilated within the market.

Adoption Process: Consumers engage in extensive information search.

Diffusion of Innovations

Diffusion Process

1.Innovation2. Channel of

communication3. Social system4. Time

Adoption Process

1.Awareness2. Interest

3.Evaluation4.Trial

5. Adoption/Rejec

tion

LITERATURE REVIEW

Rate of adoption – Sigmoid Curve(S curve)

With successive groups of consumers adopting the new technology (shown in blue), its market share (yellow) will eventually reach the saturation level.

LITERATURE REVIEW

Uncasing the data…

Management Decision Problem:

Understanding the rate of adoption of Smart cards among consumers. Marketing Research

Problem:

Effect of Adoption of a previous payment systems on new innovations.

Estimation of external and internal influences from the social aspects on the payment system.

PROBLEM DEFINITION

APPROACH TO THE PROBLEM

Objective: To understand the

rate of adoption of different payment systems with respect to the diffusion of innovation.

CASE HYPOTHESIS :

H1: The speed of adoption of a recent payment innovation will be higher than that of past innovations.

H2: The internal influence (q) on the speed of adoption of payment systems is higher than the external influence(p)

H3: The innovation coefficients (p) regarding different innovative payment systems are positively correlated across countries.

H4: The level of adoption of the current system X at a time t is positively related to the speed of adoption of a new payment system Y introduced at a time t.

RESEARCH DESIGN

EXPLORATORY RESEARCH

Secondary Data Resources:

General Business Sources: Retail Banker International, Nederlandse Bank, MasterCard's, VISA.

Government Sources: Statistical Yearbooks, The Bank for international settlements.

Sample size :

100/country - Cheque 100/country - Credit cards 1000/country - ATM transactions

H1: The speed of adoption of a recent payment innovation will be higher than that of past innovations.

Thus, confirms Hypothesis 1

CASE ANALYSIS

CASE ANALYSIS

H2:The internal influence (q) on the speed of adoption of payment systems is higher than the external influence(p)

Thus, confirms Hypothesis 2

H3: The innovation coefficients (p) regarding different innovative payment systems are positively correlated across countries.

Thus, rejects Hypothesis 3

H4: The level of adoption of the current system X at a time t is positively related to the speed of adoption of a new payment system Y introduced at a time t.

Thus, confirms Hypothesis 4

Adoption of newly evolved payment systems is accepted quickly based on adoption rate of the predecessor.

Adoption process of payment system is mainly driven by internal influencer q (social learning).

The external influencer had less or no impact of the rate of adoption.

Marketing manager can develop strategies to develop adoption rate by practicing social learning through word of mouth, reference group & social media.

CONCLUSION

Dynamically continuous innovation

Product characteristics that influence diffusion

Relative Advantage -Smart card is relatively superior substitute than its predecessors.

Compatibility- Smart card brings in all the features in one card rather than carrying multiple ones.

Trialability- It should be developed for usage at public places.

LEARNING OUTCOMES

Social System

Social Learning-Internal influences (WOM , reference groups ) play an important role for rate of adoption in payment systems .

social constructivism-The theory of knowledge that best describes how people learn together, whether in person or online. When you engage with people, you build your own insight into what’s being discussed.

LEARNING OUTCOMES

THANK YOU