Mobile Payments, Consumer Welfare and Firm Performance: Evidence From Supermarkets in Nairobi City County

Abstract

Expansion in ownership rates of mobile phones has laid the foundation for revolutionary technologies thereby generating a wide range of new business opportunities in its wake. The research issue is whether there are benefits that accrue to users and firms on account of mobile payments. On this premise, this study explores the linkage between mobile payments and consumer welfare, and the nexus between mobile payments and firm performance. The study formulated five specific objectives and a matching number of hypotheses to achieve the main objective of the study. In the realms of transaction cost theory, this study posits that firm activities impact consumer welfare. From the mobile payment’s perspective, the research suggests that availability of digital payments bolsters consumer welfare. Similarly, under the theoretical basis of stakeholder theory, the study argues that fulfillment of stakeholder interests positively influences firm’s performance. The study adopted positivistic research paradigm and descriptive research design. The study confirmed the moderating effects from consumer characteristics on the relationship between mobile payments and firm performance. The above study perspectives are strongly supported by the data. Using data collected from 289 supermarkets in Nairobi, the effects of mobile payments were investigated using econometric methods. The main finding is that, incidence of mobile payments positively and significantly correlates with consumer welfare and with firm performance. Mobile payments were found to enhance consumer surplus, a proxy for consumer welfare. Mobile payments were also found to be positively associated with firm performance. Consumer characteristics jointly did not have a moderating effect in the relationship between mobile payments and performance of firms. Ultimately, the study finds evidence for firms to adopt mobile payment systems, so as to boost their business fortunes. For greater efficacy, mobile payment providers should customize payment services to suit different consumer segments.