Digital Payment Systems and User Adoption: The Mediating Role of Transaction Security and Perceived Fairness

Abstract

The rapid advancement of financial technologies has significantly transformed the global payment landscape. Digital payment systems have emerged as essential tools for facilitating financial transactions, enabling users to perform payments, transfers, purchases, and other financial activities through electronic platforms. The increasing adoption of smartphones, internet connectivity, and fintech innovations has accelerated the growth of digital payment services worldwide. Despite their convenience and efficiency, user adoption of digital payment systems remains influenced by several technological and psychological factors. Among these factors, transaction security and perceived fairness have gained considerable attention because users are often concerned about privacy, fraud, unauthorized access, hidden charges, and equitable treatment during financial transactions. Consequently, understanding the mechanisms through which digital payment systems influence user adoption has become increasingly important.

This study investigates the relationship between digital payment systems and user adoption while examining the mediating roles of transaction security and perceived fairness. Drawing upon Technology Acceptance Theory, Trust Theory, and Equity Theory, the study proposes that effective digital payment systems enhance user adoption directly and indirectly by improving transaction security and perceived fairness. A quantitative research design was employed, and data were collected from users of mobile banking applications, digital wallets, online payment platforms, and electronic commerce payment systems. Data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) through SmartPLS 4.

The findings reveal that digital payment systems significantly influence transaction security, perceived fairness, and user adoption. Transaction security positively affects perceived fairness and user adoption, while perceived fairness also demonstrates a significant positive impact on user adoption. Furthermore, mediation analysis confirms that transaction security and perceived fairness partially mediate the relationship between digital payment systems and user adoption. A significant sequential mediation effect is also identified.

The study contributes to financial technology and information systems literature by explaining the mechanisms through which digital payment systems promote user adoption. The findings provide practical implications for financial institutions, fintech companies, policymakers, and payment service providers seeking to enhance customer trust and encourage wider adoption of digital payment technologies.