Consumer’s and merchant’s confidence in internet payments

Performing payment transactions over the Internet is becoming increasingly important. Whenever one interacts with others, he or she faces the problem of uncertainty because in interacting with others, one makes him or herself vulnerable, i.e. one can be betrayed. Thus, perceived risk and confidence are of fundamental importance in electronic payment transactions. A higher risk leads to greater hesitance about entering into a business relationship with a high degree of uncertainty; and therefore, to an increased need for confidence. This paper has two objectives. First, it aims to introduce and test a theoretical model that predicts consumer and merchant acceptance of the Internet payment solution by explaining the complex set of relationships among the key factors influencing confidence in electronic payment transactions. Second, the paper attempts to shed light on the complex interrelationship among confidence, control and perceived risk. An empirical study was conducted to test the proposed model using data from consumers and merchants in Slovenia. The results show how perceived risk dimensions and post-transaction control influence consumer’s and merchant’s confidence in electronic payment transactions, and the impact of confidence on the adoption of mass-market on-line payment solutions