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Master´s Thesis


August, 2016

Title of Thesis

Master´s Thesis

at Frankfurt School of Finance & Management

Supervised by

First Supervisor's Name

Second Supervisor's Name

Submitted by

Your Full Official Name

Master of Science in Finance 1421 or Master of Science in Management 1421

or Master of Arts in International Business 1421

Matriculation Number




City, Month Year


Abstract 2

Introduction 3

Problem Statement 4

Justification 6

Research Objective 6

Research Problem 6

1. The future of the market - Mobil payment 7

1.1. Concept, definition, components and benefits 10

1.2.Definition of Mobile Payments 13

1.3.Characteristics of Mobile Payments 14

1.4 Procedures and mobile payment technology 16

2. Identification of world markets where mobile payments are applied and to what extent 19

3. Mobile Payment Impact on Financial Services 22

3.1.New entrants to the market are large players making bold corporate moves 23

3.2.Disintermediation: Leveraging information over focused on cross-selling 24

3.3.Data ownership 25

3.4 Regulation 26

3.5.New sources of revenue: a macroeconomic approach 26

4. Comparison between different markets in the presence of the mobile payment 28

5. The Republic of Macedonia and mobile payment 30

- Legal frameworks, opportunities and challenges 30

5.1.The challenges of e-commerce in the Republic of Macedonia 32

5.2.Legislation and legal safeguards in e-business in the country 33

Legal provisions in e-business in the country 33

5.3.Measures to improve the situation in e-business 36

5.4.MobyPay, mobile payment via postpaid account on T-Mobile in Macedonia 38

6. Purposes and methods of research 39

6.1.Theoretical Framework 39

6.2.Research Question 40

7. Discussion and conclusion 42

7.1.Connecting assumptions to conclusions 59

7.2.Recommendations for future research 60

Conclution 62

Statement of Certification 64

Appendix 1 65

List of tables

Table 1 Percentage participation of respondents according to different characteristics 43

Table 2 Тehnological and Behavioral characteristics of m-payment users according gender 46

Table 3 Тehnological and Behavioral characteristics of m-payment users according age 48

Table 4 Тehnological and Behavioral characteristics of m-payment users according occupation 50

Table 5 Тehnological and Behavioral characteristics of m-payment users according married status 52

Table 6 Тehnological and Behavioral characteristics of m-payment users according to knowledge of computers 53

Table 7 Тehnological and Behavioral characteristics of m-payment users according to use of mobile phones 55

Table 8 Technological and Behavioral characteristics of m-payment users according to traveling habits 57

Table 9 Technological and Behavioral characteristics of m-payment users according to living in foreign country 59


I would like to thank to my family, friends and all the personal of the Frankfurt school of finance and management, especially my professor and mentor ______________________.


The usage for transactions with mobile money is steadily growing across the world with the potential to revolutionize the economy based on cash where it wont be needed enymore in the futuew. With the largely increased use of services for mobile money and number of business use cases designed each day, it is imperative to make a research about the mobile payment especially from the aspect of the perceptions of the consumers in a small country in transition in comparison from a country where the mobile payment is present since earlier times and is already something what the people know, recognize and use in regular basis.

 This research, therefore examines the mobile payment as a phenomenon in the new age, something that is a step for the future of the money, the transactions and the whole financial system in general . The study also discusses the mobile money users' perception about the security of the uses of the mobile payment which are available to them.

Keywords: mobile payment; m-payment; e-cash.


 The area that have become very popular recently is mobile payments and, as their search volume index on Google Trends shows. In the past years the trend of mobile payment is increasing.  Mobile payments are a service that has yet to see widespread usage, but this usage is expected  to grow significantly in the future. This growth has been predicted before.

This thesis is focused on the use of mobile payments. It has long been touted as a technology that will be widely deployed on mobile phones and the chance for adoption of mobile payments. Therefore, it is no surprise that a significant effort has been put into studying its possible applications on a mobile phone, as well as its security properties, vulnerabilities and countermeasures.

Traditionally there were five types of payment systems, each with their own advantages and disadvantages like checking transfer, cash and credit cards, stored value and balance of accumulation. The web has introduced new requirements for these systems in the form of P2P (people to people) payments, B2B (Business To Business) payments and micropayments.

Online and mobile payment systems are typically either adaptations of traditional offline payment solutions or entirely new solutions, and they usually take one of these forms: digital cash, online stored value systems, digital credit accounts, digital accumulating balance payment systems  and digital checks. According to S. Shen. In his Competitive landscape: Mobile payment vendors, worldwide mobile payment services will continue to grow faster in developing markets because there are less alternatives and regions exist where it can be the only way people have access to financial services and are doing payments, with the next trend traing to capture the large population  which are not using banks on these markets. In developed markets users are much more worried about security so they usually start by using features such as text alerts and balance checking, after wich thay may progress to bill payment, before moving on to P2P payments. Some vendors will merge, while at the same time new players will appear offering specialized and even custom solutions, since payment systems have to obey local laws and market characteristics, and so the same solution cannot be applied everywhere. Regulators are expected to make their appearance but will probably settle on middle ground, opting not to stifle the development of these services.

In some markets, regulators have given banks the central role in mobile payments and banking and this impedes growth of markets, favoring vendors with bank-grade solutions against telecom  solutions of grade.

PayPal has been the leader in Mobile payments but its leadership is dependent on others, since it does not control the financial networks where the payments go through and does not control the devices the consumers are using or the data networks where the transactions occur. Today, the companies that control them are looking to enter the market as well.

 Basically electronic working practices is a relatively new phenomenon in economic science. Since its appearance until today this area has permanent and dynamical development and it becomes imperative not only in international business and domestic business relations but also an integral segment of everyday life. This issue offers excellent opportunities for the development of emerging economies, but also for small companies, because it brings in an equal position with major corporations. On the other hand enables the individual to monitor technological development lines and through information technology and the Internet to be involved in global developments.

The main objective of the paper is to provide opportunities for learning, understanding and mastering the theoretical and practical knowledge in the field of electronic working practices that is mobile payments as its main component.

Problem Statement

With the development of information and communication technologies, now is achievable to locate diferent services so near to the users accepting different ways, which help them to manage transactions. While E-commerce is mainly about buying and selling,  mobile commerce, widely mentioned as M-commerce, is expected to be largely data-driven. Of course, the growing number of mobile phone users as target group, the tendency to reduce costs of transactions and the concern of the players on the market for improvement relations with customers represent an enormous potential for mobile commerce as a new level of electronic commerce. In extension, for using applications based on wireless effectively in M-commerce environment,it is needed better understanding of the factors who are influencing successful adoption (Wang and Liao, 2007). For an example of the necessary of the mobile support services is mobile payment (M-payment) services, which would give common payment solutions for mobile servicesIt has already been soothsaid that M-payment will become a prosperous mobile accommodation for the reason that in integration to the desideratum support accommodations, the magnification of M-commerce relies vitally on efficacious payment solutions provided by M-payment accommodations and vice versa (Constance, 2001; Lee and Benbasat, 2004). The M-payment accommodations have different stakeholders, which are Banks and credit card companies, Mobile operators, Handset suppliers, Merchants and Mobile phone users. As mobile phone users are one of the consequential stakeholders, it is consequential to endeavor to investigate on them. This is because of the inadequate utilizer acceptance, which has long been an impediment to the prosperous adoption of any incipient system. It is a fact that, at present there is an dubiousness as to whether the adoption and utilization of M-payment technologies will prevail as expected. Ergo, it is consequential to consider what factors drive users to adopt incipient M-payment system or habit them for doing so.

Even so, IT adoption has been researched by academics for more than decades and many theories endeavor to expound IT adoption in different domains, there are still several critical components cognate to IT adoption that has not yet been exhaustively investigated. First, among studies that fixate on technology adoption, only a diminutive percentage is allegiant to the adoption and utilization of M-payment as a system but they customarily study the adoption of a special organization. Second, there is a desideratum to validate subsisting theories in different contexts. The majority of IT adoption research fixates on the technologically developed world, mostly because the majority of research and academic institutions are located in developed countries and not developing countries as Macedonia.

Hence, the objective of this work is to provide utilizable guidelines for researchers and developers of E-commerce applications to better understand the paramount factors of Mpayment, which could be influential on its adoption by users in Macedonia as a developing country that transpire for the first time in Macedonia.


Statistics about M-payment increase motivation to perform research on this subject in order to understand why despite all the potentials, which are available for the M-payment in Macedonia, the number of users is still too small, whereas the number of Card banks and mobile phones users

These statistics show that most of the above 18 years old of Iranians who can have bank accounts have mobile phones.

Therefore, understanding the factors which influence the M-payment adoption by users is important and useful for both Banks and Users. In fact, considering such factors, banks can provide more attractive services to users, and users can use these services more and more.

Research Objective

This study aims at investigating the framework of M-payment adoption to find out what are the factors that affect Macedonian users' adoption of this new way of payment system, which allows payments with the mobile phone.

Research Problem

The main research problem tackled in this work consists in trying to answer the following


What are the importance factors that influence the adoption of M-payment services by Macedonian customers?

This research problem, will divided to the sub questions according to the framework which will proposed in the chapter three after the reviewing of the adoption theories.

In order to answer this question, we will need to have a close look to theories about the adoption of new information technologies. We will specially focus on adoption factors proposed by Mallat (2007) and Dahlberg and Öörni (2007). Hence, we will be dividing the question into the two following sub-questions:

RQ1: What is the impact of behavioral factors on the adoption of Mpayment services by Macedonian customers?

RQ2: What is the impact of technical factors on the adoption of M-payment services by Macedonian customers?

1. The future of the market - Mobil payment

Nineties of the last century are considered as a period when the international economic and political system completely reoriented towards global market access. The expansion of interregional production, free trade, growth and trade relationship between the countries and economies - all this led to an urgent need to re-design and reconfiguration of political, economic, institutional and legal systems from national to transnational in order to face these global phenomena.

Information and communication technologies (ICT) are thought-out one of the main driving forces of global economic transformation. Albeit ICT are those that can model the incipient world of a more comfortable setting, they at the same time could lead to incipient divisions between countries and regions. Especially it concerns all those who are not able to prioritize information resources as a model for transforming and thoroughly capitalizing on the development potential that is offered from the ICT.

As a result it can further aggravate existing problems, especially expand the social and economic adverse amplitudes and slow processes of regional cooperation as a result of the increasing inter and intra regional development gaps in building modern economies based on information and knowledge. ICT is increasingly seen as an efficient source of inclusion and cultural transformation, if properly be targeted.

As technological innovations are evaluated as the main dynamic factor for economic growth, drivers of economic growth and development can be not only large corporations, but also small and medium-sized enterprises if they are able to create, develop new technological solutions and hape the new products or services. According to the new modern theories for the economic growth, every technological innovation, especially in the developed countries are going to be more important factor than capital growth because technological advances have increased the quality, thereby significantly contributing to the growth of economic power.

Limiting the importance of globalization in economic terms, it is displayed as a widespread phenomenon and present in all spheres of social exchange. Globalization is a process that spread in depth and breadth, covering the international flow of goods, capital and information in a single, integrated global market.

A common feature of all forms and phenomena that shape the structure of the process of globalization are space, freedom of movement (people, goods, capital, services and information) and increased profits.

Different widespread phenomena create conditions of globalization and national economies. In terms of globalizational processes, the economy is unlikely to be national but secular standardized element in the economic system. This includes, in particular, liberalization of trade and finance, the emergence of new markets, new information and communication technologies and reduction of transport costs.

These global processes are coupled with international telephone traffic and Internet communication. Today, globalization and the Internet hyper competition give a new dimension to the market and operation. All three forces reinforce the pressure in order to reduce prices. The reasons should be sought in the growing interest in electronic commerce. The technologies of electronic commerce and emerging digital markets emerging, promise to bring certain fundamental, unique changes in trade. While these other technologies have influenced the transformation of the economic life of the twentieth century, the development of the Internet and other information technologies will shape the twenty-first century. The technology of electronic commerce allows commercial transactions to cross cultural and national boundaries far more convenient and cost-effectively than in traditional trade. As a result of these developments, the potential market size and vendors through electronic commerce is roughly equivalent to the size of the world population present on the Internet, over 2 billion people and this numbers are growing rapidly.

In today's business climate e-business may have an impact on every part of the organization of a company. Not only do e-business transform people, companies and industries, it goes on a much higher level; it affects the performance of national economies. Accessibility to business circles that were measured in years now is measured in days. The winners will be companies that will promptly engage in business technology.

Along with the integration, a lot of companies are going to face the challenge to go globally. The good thing about electronic business is that are opening new markets. In order to succeed in the global communications world, the companies in the today's world must first understand the opportunities which are presented to them today, in order to be ready to compete tomorrow. You have to understand the essence and application of Internet tools to be able to succeed in the competitive global environment.

The digitization impacts many everyday procedures. The growing influence of digital technology affects both shopping and payment practices, which provide the basis for mobile payments. The number of digital shoppers has been constantly increasing over the recent years. Simultaneously, the digitization influences payment practices and leads to a growing number of cashless transactions. As a result of the continuing digitization, the combination of electronic payment systems and mobile technology becomes possible and enables a new payment form called ‘mobile payments'. The specific properties of mobile phones, their wide distribution and their users' behavior characterize mobile phones as especially suitable for payment activities (Pousttchi, 2008). Despite the promising potential of mobile payments, practitioners and academics have observed that many of the previously introduced services have been discontinued (Dahlberg, Mallat, Ondrus, & Zmijewska, 2008). These circumstances call for a thorough analysis of the determinants affecting the dissemination of mobile payments.

The purpose of this chapter is twofold: First, to deliver a clear understanding of the fundamentals of mobile payments by reviewing the relevant literature; and second, to organize the identified factors in a model representing the mobile payments system. To point out what exactly is referred to when speaking of mobile payments, it is important to define and delimit mobile payments.  

1.1. Concept, definition, components and benefits

The improvement of information technology in the form of quicker access, cheaper use and sophisticated hardware combined with user interface made the web of very important medium for interaction and consumption. Consequently, the leading marketing practitioners and researchers specialized in branding, pointed to the need to develop a permanent branding desktop to serve online world. In this development, it is essential the use of mobile technology, especially mobile phone, which has a market with vast opportunities to use. In the future when the Internet and mobile technology will fully unite the possibilities of the market will be even greater.

The use of mobile devices in commerce and marketing is still at its height. Today the focus of many companies is focused on how brand assets can be developed using wireless devices such as cellular phones.

Currently, the mobile phone is the most widely used mobile device that provides access everywhere and at any time; it is estimated that it is used by billion people worldwide.

M-commerce is a radically different direction away from  traditional ways of trade at the time offers, sells and distributes digital products and customer service through a mobile device.

According to the academic definition, m-commerce is every transaction, together with the transfer of ownership or rights to utilize goods and accommodations, which is initiated and/or consummated by utilizing mobile access to computer-mediated networks.

You may view m-commerce as any type of electronic commerce where the buying and selling of products services are conducted through any wireless network, for example a mobile phone, personal digital assistants (PDA), smart (SMART) telephones and/or other portable devices. However, the m-commerce consumers are not obliged to connect via computer with defined location. This makes m-commerce more dynamic and simpler. With its inherent characteristic which include presence, personalization, flexibility, etc., this kind of e-commerce can be classified in the next generation of B2C models.

The widespread acceptance of wireless and mobile networks, devices (headsets, PDA, etc.). These new technologies make mobile computing realistic means that when using a wireless computer they provide access in real time to information, applications and tools that until now were available only from static computer. Mobile commerce (m-commerce) corresponds to the management of e-commerce as opposed to wire devices or portable devices, including additional cards. This model by some authors is called m-commerce (m-business).

There is a reason for the great interest in the issue of mobile commerce. These   can   allowe users to make transactions from anywhere. It is predicted that mobile devices will quickly take PCs as superiors household Internet access, creating a global market for more than 500 million subscribers.

Mobile technology has become an integral part of life (Becker, 2007; Schierz at al., 2010). MP technology further tracks and widens opportunities for customers; it combines existing payment methods with mobile technology and increases the effectiveness of payments by lowering transaction costs compared on the traditional payment methods. For an MP, the only thing consumers need is a mobile device with an Internet connection. The main difference between MPs and other forms of payment is that MPs use mobile devices as a crucial part of the process (Shin, 2010; Henkel, 2002).

The first key term that should be explained is MP. There is no universal definition of an MP. The most generalizable and widely used definition for an MP is a separate way of electronically processed payments (Schierz at al., 2010) or “payng over a mobile device” (Zmijewska at al., 2004, p.270; Shin, 2010), in which this mobile device is the core differentiating characteristic of MPs compared to other types of payment. Some of the studies are focused on mobile phones (Zmijewska & Lawrence, 2006); other studies are including various mobile communication devices (Henkel, 2002). MPs is  the next step in the development of the electronic payment transactions (Mallat, 2007) and  it can be used for diferent types of payments; for exemple commuter trains, flight tickets, hotel rooms, and restaurants (Kim at al., 2010). Dahlberg at al. (2008) includes the usage of wireless and other communication technologies for defining  MPs. Another definition of MPs is that an MP is “any payment where is used  mobile device in order to initiate, activate, and/or attest a payment” (Karnouskos & Focus, 2004, p.44).

We consider MPs to be a type of payment transaction that occurs through an electronic procedure, during which the consumer uses mobile communication techniques along side with the mobile devices for initiation, authorization, or realization of a payment (Pousttchi, 2003).

 Since the early 2000s, mobile payments have caught the attention of academics and practitioners alike (Dahlberg et al., 2008). Scholars have investigated the involved actors and their issues from various perspectives (Au & Kauffman, 2008; Kemp, 2013; Lim, 2008), conceptualized the business models behind m-payments (Kreyer, Pousttchi, & Turowski, 2002; Pousttchi, 2008), examined different procedures and technologies (La Polla, Martinelli, & Sgandurra, 2013; Shaw, 2014; Toma, 2012), analyzed consumer acceptance (Schierz, Schilke, & Wirtz, 2010; Shaw, 2014), and studied factors for success and failure (Pousttchi, Schiessler, & Wiedemann, 2008; Teo, Fraunholz, & Unnithan, 2005; Van Der Heijden, 2002).

1.2.Definition of Mobile Payments

In general, mobile payments are defined as a subset of electronic commerce where at least one of the transaction partners uses mobile communication techniques (Kreyer et al., 2002).

However, it is possible to define the concept in more detail. Scholars agree that the central function of mobile payments is the transfer of monetary value, be it payments for goods, services or bills (Dahlberg et al., 2008; Henkel, 2001; Teo et al., 2005). Most definitions name mobile devices as a key feature and refer to cell phones (Henkel, 2001) and PDAs  (Dahlberg et al., 2008). A broader view including all mobile devices (as for instance presented by Pousttchi, 2008) is preferable, since the future leaves room for further innovations in the field of mobile devices. The relevant stages of the mobile payments process should include the initiation and authorization of the payment (Henkel, 2001), as well as the realization, i.e. the completion or confirmation of the payment (Au & Kauffman, 2008; Pousttchi, 2008). Several authors mention the technologies by which mobile payments can be realized, i.e. “wireless and other technologies for communication” (Dahlberg et al., 2008, p. 165) and “mobile communication techniques” (Pousttchi, 2008, p. 182). Eventually, the following working definition can be presented:

Mobile payments are payments for goods, services, or bills in which the payer uses a mobile device to initiate, authorize, or complete a payment by taking advantage of wireless and other mobile communication technologies.

At this point it is important to highlight, that this definition does not include solutions, where the payee, i.e. the merchant, uses a mobile device.

1.3.Characteristics of Mobile Payments

Despite the fact that mobile payments are a considerably new subject, scholars have expressed notable interest in mobile payments. Generally, mobile payments are suitable to pay for services access (e.g. tickets, parking fees or transport fares), and physical goods (Dahlberg et al., 2008, p. 165; Toma, 2012). Several payment scenarios and technologies allow realizing different solutions, each of which may focus on a distinctive business objective and thus involve different actors.

- Future trends

For the last couple of years, the financial sector has been under incrementing pressure in one of its core business segments: accounts and payments. The fast developments in applications and products are confronting the traditional banks with a lot of challenges. Because of the increased regulatory obligations and cost pressure mounting many banks are now in danger of becoming less innovative.The market for innovative mobile payments is still in a very early stage.

The choice of mobile payments is growing - consumers increasingly use this method of payment, and traders quickly accept it. The position of 88% of retailers for mobile payments is positive, and many of them as an advantage over the competition emphasize precisely the fact that it accepts mobile payments. This new trend proves research worldwide, Mastercard mobile payments study, which was conducted by the company "MasterCard" and the research agency "Prime Research." The results are based on the monitoring of more than 13 million comments on social media: "Twitter", "Facebook", on blogs and forums worldwide.

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