Impact of customer perception towards electronic payment methods on customer engagement with SME sector in Sri Lanka

Abstract

This research is carried out to examine the impact of customer perception towards electronic payment methods on customer engagement with small and medium size enterprises (SMEs) sector of Sri Lanka. With the Physical limitation brought up by the COVID-19 pandemic, the need for electronic contactless payment intensified. Electronic payment methods are an alternative to bypass the weakness of traditional payment methods and will eventually Replace paper-based money in future. Comparing customer usage of Electronic Payment System (EPS) in Sri Lankan with Developed countries, the usage in Sri Lanka is insignificant. SMEs are moving towards EPS and offering Digital solutions to their customers coinciding with Digital Transformation and e-commerce. These enterprises need to identify barriers to implementing proper operational procedures, required infrastructure, equipment and security protocols and trends in information technology that impact their sales and performance. Additionally, businesses should identify the perception factors that influence customer engagement with their businesses with digital payment methods and identify the short coming of physical cash, the customers are trying to mitigate. With the limited literature resources on factors impacting customers perception towards using e-payment with SME, there is no general agreement nor understanding on what perception factors towards e-payment influence their engagement. This study examines different types of EPS, customer perception towards them and how the perception factors identified affect the customer engagement with SMEs through identifying the relationship between trust, benefits, subjective norm, Security and ease of use on the engagement operational elements; customer retention and satisfaction, repurchase and positive word of mouth. To analyze the relationship of identified perception and engagement factors within the Sri Lankan SME sector, Quantitative research was carried out gathering data via an online questioner from a sample of the population. General consumers with knowledge, facilities and will power of making digital transactions was considered as the population for the study accounting for 36% of the general consumers in Sri Lanka. The study revealed that only Trust, Benefits and Ease of use as the significant factors affecting the Customer engagement with SME, through e-payments. Firms thus should focus on improving the Trust, benefits and ease of use of e-payment systems to increase the customer engagement with their business. Based on the data analysis the research has suggested areas where businesses and E-payment system providers can improve to provide the customers with better service offering.