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The Perception of E-Payment Systems Compared to Cash on Delivery in Kingdom of Saudi Arabia (KSA): A Model Propositions

Karim Garrouch*

Department of Business Administration Saudi Electronic University Riyadh, Saudi Arabia

*Corresponding Author:
Karim Garrouch
Department of Business Administration Saudi Electronic University Riyadh,
Saudi Arabia
Tel : 966 504251011

Received: 29-11-2019, Manuscript No. JIBC -19-5142; Editor assigned: 04-12-2019, Pre QC No. JIBC -19-5142 (PQ); Reviewed: 18-12-2019, QC No. JIBC -19-5142; Revision: 25-08-2022, QI No. JIBC -19-5142; Manuscript No JIBC -19-5142 (R); Published: 19-09-2022

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Following the promising growth of e-payment systems in KSA, this study aims to examine the factors affecting the e-payment perception, specifically benefits, self-efficacy, Islamic Sharia Congruence and perceived e-shopping value.

The general originality of this model is that it does not focus on e-payment use as an innovation, since it does not use the classical models of the adoption of innovation. Indeed, the results show that other variables than those of TAM or UTAT can explain the attitudes and perceptions of the e-payment compared to cash on delivery. Mainly the new integrated variables are the perceived value of e-shopping and the congruence with Islamic Sharia.

A questionnaire were distributed via an online survey. A structural model is tested and most of the hypothesized paths are accepted. Managerial implications are deducted from the results and future research avenues are proposed.


Perceived Value, E-payment, Islamic Sharia Congruence, Benefits


The development of the payment using electronic tools (e-payment) have been enhanced by the advancement in the technology of information so that goods and services can be exchanged without needing physical cash (Yokumah, et al., 2017).

E-payments generate many managerial benefits to governments, organizations and economies. Actually, they allow lower transaction costs for governments and banking organizations. They facilitate e-commerce enhancing, in turn, trade in local and international levels (Yokumah et al., 2017, Gholami et al., 2010; Ho and Wu, 2009). Moreover, e-payment systems is a factor that lowers the costs of money in circulation leading to noteworthy economic gains (Yokumah et al., 2017). However, people have various reservations regarding the use of the online payment system (Tella, 2012). This may explain the fact that most of the e-retailers are giving many options of payment to the customers, including Cash on delivery and other electronic payment tools, like debit card or money transfers through e-banking like the “Sadad” e-banking payment service in KSA.

Although the importance of e-payment, little research have been focusing on the factors explaining the attitude regarding its use or the perception of e-payment comparatively to cash on delivery. Thus, the research question is: what are the factors explaining the perception the e-payment compared to the classical payment method? Indeed, following the promising growth of e-payment systems in the Kingdom of Saudi Arabia, this study aims to verify factors affecting the e-payment comparative perception, particularly e-payment benefits, self-efficacy, Islamic Sharia congruence and e-shopping value.

The general originality of this model is that it does not focus on e-payment as an innovation, since it does not use the classical models of the adoption of innovation. Indeed, the results show that other variables, than those of Technology Acceptance Model (Davis, 1989) or UTAT (Venkatesh et al., 2003), can explain the perceptions of the e-payment comparatively to cash payment. More specifically, the originality of this research stems from the use of a comparative measure of the perception of the e-payment and the introduction of new exogenous variables: perceived Value and the congruence of e-payment systems with the Islamic Sharia.The non-use of the technology acceptance models is justified by two reasons: first they have been used and verified in the context of e-payment (Teoh et al., 2014, Roy and Sinha 2010). Thus, this research needed to focus on new variables explaining the e-payment. Second, this study focuses on the comparative perception of e-payment as a measure that conveys the final decision of the customer after the e-shopping experience. Actually, after the purchase decision, the e-shopper, will have to choose a payment method. This step consists simply of choosing between, e-payment and cash on delivery. This decision is mainly related to a rational behaviour of choice rather than the general idea of a new technology acceptance. Therefore, the theory supporting the conceptual model is the C-A-B (Cognition-Attitude-Behaviour) approach of Fischbein and Ajzen (1975). It is an information-processing approach considering purchase decisions as one of key outcomes.

The cognition variables are the e-payment benefits, the e-shopping value, the congruence of e-payment with Islamic Sharia and the self-efficacy. These variable will be tested as factors explaining the attitude toward e-payment, which has been measured by Teoh et al. (2014) under the name of perception toward e-payment. Indeed, their measure included items measuring the preference of e-payment compared to cash payment in terms of cognition and intentions. The behavioural part is not included in the model but proposed as a future research.


Electronic Payment is defined as “the transfer of an electronic value of payment from a payer to payee through an e-payment mechanism which allows customers to remotely access and manage their bank accounts and transactions, executed through an electronic network” (Teoh et al., 2014, p.467). It includes many types, classified on the basis of the transaction environment and payment method, such as electronic checks, electronic cash and online credit card payment (Gholami et al., 2010).

The main methods of payment for individual users in Saudi Arabia include the cash on delivery payment or the electronic methods: Financial Cards and the SADAD system.

SADAD platform streamlines online payments not only for business but also for government and learning institutions. It operates on the Internet-based electronic system to permit money transfers in different accounts for various businesses corporates and financial institutions. Alotaibi and Asutay (2015) affirm that SADAD has gained trust among the population due to its proven track record on e-government services. In KSA, financial Cards involve the use of credit, pre-paid and charge cards as means of payment.

The general attitude toward an innovation is considered as a major determinant of using that innovation (Davis, 1989). Indeed, the perception of e-payment has been found as a significant factor explaining the acceptance of e-payment (Teoh et al., 2014). The attitude toward e-payment has been measured in previous researches using the perception of the comparison between electronic payment methods and traditional ones (Teoh et al., 2014). This study focuses on the positive perception regarding e-payment in a comparative way, specifically the perception that e-payment use is more favourable than cash on delivery.

Perceived e-shopping value

This concept is defined as the overall assessment of the utility of a product or a ratio between what is received and what is given (Zeithaml, 1988, Woodruff, 1997). Customers may use it as a goal related to relationship exchange in online commerce (Wu et al., 2014).

This variable is different from the e-payment usefulness concept because it focuses on the perceived value of the whole shopping experiences while the second is about the usefulness of e-payment in the final stage of the e-shopping experience. The value exchanged between the payer and the payee through any e-payment transaction by using any e-payment system could affect the consumers’ perception toward the e-payment system (Venkatesh et al., 2012). The options of payment that provided by any online service based on the value that required from the consumers.

Online shopping value is verified as a factor explaining loyalty to online retailers (Chiu et al. 2014; Fang et al., 2016). Logically, the more the perceived value of the shopping experience is high the more the consumer is prone to finish the transaction and to take the risk of using electronic payment. Thus,H1-The perceived value has a positive impact on the perception of e-payment.

Congruence with Islamic Sharia

In order to comply with Islamic rules, banks need to install financial products which are based on Islamic principles (Jamshidi and Hussin, 2016). The most important principal related to the congruence of the financial tools to the Islamic sharia is the usury called ‘Riba’. It is “an unjustified increment in borrowing or lending money paid in kind or money above the amount of loan as a condition imposed by a lender’ (Jamshidi and Hussin, 2016, p.898). In Muslim countries, the financial card symbolizes the wealth status of an individual possessing it, which leaded Islamic banks in few countries to issue a Islamic Credit Cards as an alternative to the conventional ones (Jamshidi and Hussin, 2016).

Johan (2018) argues that the credit cards charging an interest rate are not complying with Islamic rules. In Saudi Arabia some behaviours in the e-shopping situation are explained by the nature of the Saudi society which is described as a conservative society framed within the Arabic culture and Islamic compliance (Al-Ghaith et al., 2010).

H2- The congruence of using e-payment with Islamic Sharia has a positive impact on the perception of e-payment


The self-efficacy concept denotes the judgment of one's ability to accomplish a given task, such as using a new technology (Ozturk et al., 2016). It is also presented as a set of judgments of one’s “capabilities to organize and execute courses of action required to attain designated types of performances” (Alalwan et al., 2016, p.695).

Marketing studies suggested that the perception of one’s own aptitudes to complete a task increases the chances to accomplish it effectively (Teoh et al., 2014).

Self-efficacy has been tested as a determinant of customer trust toward mobile banking (Zhou, 2012) and e-banking (Alalwan et al. 2016). Specifically, the perception of one’s aptitude to use e-payment successfully has been verified as a factors explaining e-payment perceptions (Teoh et al., 2014).

H3- Self-efficacy has a positive impact on the perception of e-payment.

E-payment benefits

The use of e-payment methods incur indirect cost for customers (mainly debit card fees or money transfer fees). It has also many benefits: It reduces the cash carrying risks like robbery and theft (Gholami et al., 2010) and provides a high level of convenience by having an increased level of flexibility and universality as well as an unlimited access (Lee, 2009).Benefits have been presented as a determinant driver of the acceptance of e-payment methods (Chou et al., 2004). This variable can be viewed as an operationalization of the usefulness concept. The special element about it is that it is more focused on the actual and specific advantages of the e-payment tool, while most of the usefulness measures are quite general. The user of e-payment tools can benefit from the low cost related to online transactions (Teoh et al. 2014). Indeed, most if not all the commercial websites, charge extra fees for using cash on delivery. This cost is avoided if a credit card or Sadad systems are used. Consequently the following hypothesis is proposed: H4-E-payment benefits have a positive impact on the perception of e-payment.

The research model is displayed in the following Figure 1.

JIBC -Research

Figure 1: Research Model.

Materials and Methods

This study adopts a quantitative methodology using a survey. All the chosen variables have been measured and used by previous studies. This choice is justified by the deductive approach and the explanatory nature of the study. The questionnaire have been created in a website specialized in questionnaire forms creation. A pre-test has been done on 10 students and 2 marketing researchers in order to make sure the items are well understood. After corrections, the survey link have been sent to the sample.

Sample choice

Master students have spread the survey link to professional’s and MBA student’s social media groups asking them to spread it out to their non-students networks. This convenience sampling procedure resulted in 220, of which we extracted 185 valid observations. The final sample included 64 female subjects (34%) and 121 male respondents (66%). The eliminated observations had one of two reasons: a big number of missing data or the individual have no income. Most of those who have been eliminated are female subjects, which contributed to the absence of gender equilibrium in the sample. Regarding the Saudi context, this non equal structure of the sample may correspond more to the economic situation, since the percentage of working woman is far lower 50%. Actually, the Wold Bank Group statistics of 2018 show that only 16% of the labour force in KSA are women.The majority of the sample belong to the age category between 21 and 40 (81.1%) while 12.4 % are aged between 41 and 50. Most of the subjects have an income ranged from 5000 to 20000 Saudi Riyals (53.1%) and below 5000 SR (26%). Only 5.9 % of the sample have an income more than 30000 S.R.


The items of the survey instrument were taken from the literature. Benefits were measured through the scale of Davis (1989) adapted by Teoh et al. (2013), self-efficacy was measured by the scale of Luarn and Lin (2005). The perception of the e-payment systems were adapted from the work of Teoh et al. (2013). Regarding the perceived value of payment we used the scale of Venkatesh, et al., (2012). Concerning the congruence with Islamic Sharia, Two items were used to measure the perception of this congruence. The first states that nothing in the e-payment systems is against Islamic Sharia. The second uses an inversed statement, according to which the credit cards are not to be used because of the Reba (interest) which is forbidden in Islamic rules. For all the items, a five-point Likert scale have been used.All the scales have been going through two steps to validate their reliability and validity. The first aims to verify the dimensionality and the reliability of the scale using principal component analyses and reliability assessment using Cronbach’s Alpha. This choice is justified by the fact that the dimensionality of the variables and the communalities of items have to be checked before testing the measurement model. Actually, the first test of the measurement model before the exploratory analysis showed that some issues have to be resolved. The second step uses Amos outputs to confirm the validity of the measurement model.

Results and Discussion

Measurement model

Factorial Analyses have been used to check the dimensionality and reliability of the measures. This factorial analysis led to the elimination of two items belonging to the perception of e-payment because of their low communality extraction. Their elimination improved the reliability of the final structure with a Cronbach Alpha value (CA) changing from 0.339 to 0.70). The structure of the perceived value measure remained one-dimensional and the reliability was acceptable (CA=0.864). All the resulting items and their respective indicators are displayed in Table 1.

E-payment benefits 71.43% 0.795  
B1-saves my time and cost for using an e-payment system     0.842
B2- E-payment system is convenient for me     0.899
B3- The billing and transaction process are accurately handled     0.791
Self-efficacy 76.45% 0.692  
SI1-I will only use an e-payment system if I heard it before     0.874
SI3-I will use an e-payment system when my friends introduce it to me     0.874
E-pay perception 76.97% 0.692  
An e-payment system is better than traditional payment channels     0.877
E-payment system is much more efficient than traditional payment channels     0.877
CIS 77.86% 0.71  
isc1- I think nothing in the e-payment systems is against Islamic Sharia     0.882
isc2- I don’t use Credit cards because it is Reba and is forbidden in Islamic law     0.882
E-shopping value 79.22% 0.86  
V1-When I shop online I pay for products offered having a good value for the money     0.88
V2-The price that I pay for the product online is worthwhile     0.894
V3-When I shop online, I would consider the product to be a good buy     0.896

Table 1: Results of the factorial analysis.

One of the items of the self-efficacy measure showed a bad contribution to its reliability. The item elimination made the final CA acceptable (0.692). The two-item structure of the Islamic congruence showed a good reliability (CA=0.712). The measurement model was verified using AMOS 24. Its adequation indices showed acceptable levels, as displayed in Table 2. GFI is superior to 0.9, RMSEA less than 0.05 and Normed χ2 (χ2/df) is less than 2. Construct reliability and validity tests (convergent, content and discriminant validity) have been applied. Content validity of the chosen constructs has been already acknowledged by previous studies, since all measurements are based on constructs that have been verified by other studies. Regarding reliability, we measured the composite scale reliability and Cronbach’s alpha (Fornell and Larcker, 1981). They ranged from 0.70 to 0.869. This is satisfying as per the standard of 0.7 (Hair et al., 1998). All loadings related to this study constructs show values exceeding the 0.7 threshold, which shows a satisfactory convergent validity of the measurement model.

Fit Indices Observed
Absolute Fit Indices    
Discrepancy (χ2) 50.848 -
P (χ2) 0.222 -
Df 44 -
GFI 0.959 >0.90
RMR 0.029 <0.10
RMSEA 0.029 0.05 to 0.08
Incremental             Fit Indices    
CFI 0.991 >0.90
IFI 0.991 >0.90
Parsimony Indices   More        possible weak
Normed χ22/df) 1.156 <5

Table 2: Adequation indices of the measurement model (AMOS–output).

Concerning the discriminant validity, it is measured at two levels: the items and the constructs. For the former, we tested all items cross-loadings by comparing the cross loading of each indicator with its respective construct to those with constructs. All items-constructs loadings showed higher values, which indicates the discriminant validity for items. For the latter (construct discriminant validity), results show that the AVE square root for all constructs are superior to the correlations between constructs (Fornell and Larcker, 1981). Thus, the model has a good discriminant validity (Table 3).

Indicators CR AVE Self- efficacy Value e-payment perception Islamic
Sharia Congruency
Self-efficacy 0.759 0.632 0.795        
EVAL(Value) 0.869 0.689 0.2 0.83      
PEP(e-payment perception) 0.7 0.539 0.452 0.243 0.734    
ISC(Islamic Sharia Congruency) 0.716 0.558 0.196 0.087 0.513 0.747  
EPB (Benefits) 0.81 0.59 0.441 0.258 0.727 0.264 0.768

Table 3: Reliability and validity Indicators.

Structural model

These results shown above allow us to move on to the structural model verification stage. Rather than testing the model with co-variances between all the variables, the structural model will is tested after including the hypothesized impacts. The structural model shows good indices, as displayed in Table 4. GFI is superior to 0.9, RMSEA less than 0.05 and Normed χ22/df) less than 2.

Fit Indices Observed
Absolute Fit Indices    
Discrepancy (χ2) 102.021 -
P (χ2) 0 -
Df 50 -
GFI 0.913 >0.90
RMR 0.084 <0.10
RMSEA 0.075 0.05 to 0.08
Incremental             Fit Indices    
CFI 0.933 >0.90
IFI 0.935 >0.90
Parsimony Indices   More        possible weak
Normed χ22/df) 2.04 <5

Table 4: Adequation indices of the structural model (AMOS–output).

The impact of perceived value on the perception of e-payment is non-significant (P=0.31). H1 is rejected.

This is not in line with the literature linking perceived value to behavioural intentions toward the e-retailer (Gan and Wang, 2017; Liu et al., 2015, Wu et al., 2014, Kleijnen et al. 2007). This gap is explained by the fact that e-payment is more linked to the banking system and the e-retailer’s website security (Teoh et al., 2014; Kuo et al., 2015). This result may also be explained by the fact that the e-payment benefits are not really counted in the perceived shopping value, since it would be considered as another step or rational complementing to shopping experience to finish it. In this case the perceived value will be the same whether the payment was electronic or cash. Thus, the use of concept using the perceived value of e-payment would give different result. This concept is partially represented in this study by the e-payment benefits.

The impact of Islamic sharia congruency on the perception of e-payment is significantly positive (Standardised Estimate (SE)=0.324, P=0.00). H2 is accepted. This is in line with the propositions of Al-Ghaith et al. (2010). Although the Saudi Banks are adapting their financial system and specifically the e-payment system to Islamic rules, this should be supported by spreading this information so that their customers will be convinced that their cards are indeed congruent to the sharia.

E-payment benefits showed a significant impact on e-payment attitude (SE=0.618, P=0.00). H4 is accepted. This is in line with previous studies in Asia (Chou et al., 2004; Teoh et al. 2014). Actually using e-payment has interesting benefits that makes the use of e-payment preferred by customers. These benefits are also supported by e-retailer’s practices. Indeed, by paying online, customers will avoid the fees of the cash on delivery payment. Actually most of the e-retailer’s companies charge 13 SR on average for each deliver. This means that for a shopping experience leading to the purchase of two products belonging to two companies selling in the same e-retailing platform, the consumer will received two packages and pay 13 SR for each. When paying online, in this case, no extra charge will be invoiced. This benefits seems determinant in term of e-payment preference.

Self-efficacy has shown a positive impact on the perception of e-payment (P=0.015, S-E=0.181). H3 is accepted. This is validating researches dealing with the adoption of innovations or technology acceptance as variables influenced by the self-concept (Teoh et al, 2014, Ozturk et al., 2016). Indeed, the personal mastery of using e-payment in the retail website leads to the perception that e-payment is better than the cash on delivery.

The structural model is displayed in Figure 2 and a summary of the results regarding hypotheses are shown in Table 5.

JIBC -Structural

Figure 2: Structural Model.

Hypotheses B p Decision
H1- The perceived value has a positive impact on the perception of e-payment. - 0.31 rejected
H2- The congruence of using e-payment with Islamic Sharia has a
positive impact on the perception of e-payment
0.324 0 accepted
H3- Self-efficacy has a positive impact on the perception of epayment. 0.181 0.015 accepted
H4- E-payment benefits have a positive impact on the perception of
0.618, 0 accepted

Table 5: Hypothesis summary.


The aim of this study is to verify the factors affecting the e-payment attitude, specifically e-payment benefits, self-efficacy, Islamic Sharia congruence with the use of credit cards and Value.

The originality of this model is that it does not focus on e-payment use as an innovations, since it does not use the classical models of the adoption of innovation. Indeed, the results show that other variables than those of Technology Acceptance Model or UTAT can explain the attitudes and perceptions of the e-payment. The final model including all the variables showed good fitness indices.

The variables that showed a significant influence on the perception that the e-payment system is better that the cash payment, are the perceived benefits of the e-payment systems, the self-efficacy and the congruence with the Islamic sharia. The latter is a novelty of this study.

The theoretical implications of this study consist of progressing the marketing literature regarding e-payment in a particular context of a conservative country like Saudi Arabia, which is showing big growth in e-commerce adoption in general and specifically e-payment use. Two concepts are newly used as variables explaining e-payment attitude: congruence of e-payment to Islamic Sharia and the perceived value of e-shopping. The reason of integrating perceived value is to verify if the core variable explaining the shopping behaviour toward the e-retailer is a potential determinant of the choice of the payment method.

Regarding managerial implications, the results of this study show the salience of e-payment benefits, the congruence of the e-payment tool with Islamic Sharia and self-efficacy. The findings lead us to suggest that e-payment systems must prove themselves to be beneficial and Islamic rule abiding system in order to gain larger market share compared to cash on delivery. Moreover, the bank companies may improve to rate of using the e-payment system solutions by communicating about two main information: principal benefits and the absence of interest fees, which is the only factor related to the compliance with Islamic Sharia. The e-retailers may also contribute by outlining the benefits of using e-payment in the payment page.

Self-efficacy is a significant determinant of e-payment preference which warrants more consideration from managers and programmers. An idea is to find an easy way to educate consumers while processing one of the banking services and to show the efficacy of the consumer when the service is accomplished, which will enhance confidence.

This research results reject the impact of the impact of e-shopping perceived value. This is explained by the absence of link between e-payment benefits and shopping benefits, which are a part of the perceived value equation as per the definition of Zeithaml (1988). In addition, the e-payment step may be perceived as another step complementing but still different- the shopping experience. In this case the perceived value will be the same whether the payment was electronic or cash. Not taking account of this idea is one of the limitations of this study. Thus, the use of concept of the e-payment perceived value in future researches would give different results. This concept is partially represented in this study by the e-payment benefits.

Another limitation to this study is the absence of a behavioural variable, giving more managerial implications to the results. Behavioural intentions toward e-payment, continuance or loyalty are amongst the possible variables that may have been included. Thus we suggest to expand the model in a future research by integrating one of these variables.

Future researches may improve the model by integrating the perceived value of e-payment. Such a variable is not assessed through a psychometric scale, yet. Therefore, a second future research proposition is to create a new scale for that concept. Another variable that need to be included in the model is the perceived e- payment security. That is a limit which can be overcome by integrating it in a more comprehensive model in future researches. Finally, it is recommended to improve the explanatory power of the model by integrating moderating variables such as religiosity, familiarity with e-payment tools and familiarity with e-shopping.