Abstract

Humans are faced with technological developments that can have life-changing social impacts. The presence of technology in society is now inevitable, such as mobile money for all activities in daily life. A quantitative approach is used to find innovation characteristics as a determinant of the technology adoption process through the Innovations Diffusion Theory (IDT) method. This study describes the voluntary adoption of mobile money, in contrast to adoption due to regulation. The adoption process in IDT states that individual decisions are determined by the main predictor, namely the characteristics of the innovation. This quantitative survey takes LinkAja respondents as mobile money users. Data processing using SEM with LISREL 8.70. Relative Advantage, Compatibility, Trialability, and Observability positively influence the adoption of mobile money. Trialability does not have a positive influence on the adoption process. The importance of the five innovative characteristics in influencing the adoption process and implications for researchers and practitioners. IDT can be used to predict how the process of adoption of mobile money effectively. It needs socialization by providing basic knowledge that can build understanding.

Keywords: relative advantage; compatibility; complexity; trialability; observability; mobile money

Introduction

The significant change in various countries is the ability of cellular phonesï¿½ ability to function financially with mobile payments (Aker et al., 2020; Chatterjee, 2014). Cellular phones now have extended functions as electronic money. Mobile operator electronic money is called e-money MNO (Mobile Network Operator) or mobile money. The growth of mobile phones worldwide, including many developing countries, has driven financial infrastructure to provide dynamics and transform innovation in the financial sector (Shrier et al., 2016).

The advantages of this new payment method are in terms of mobility, convenience, cost-effectiveness, and location of services. Mobile money is analyzed to have become an essential part of payment transactions in the financial industry, although it is still in the process of growth (Adaba & Ayoung, 2017). Banking does have a core business as a financial institution. Another institution than Banks, the e-money business model is a new thing. Managing e-money for MNO applying technology and working in the financial services business is a complex ecosystem. The company invests in providing future returns as one of the pillars of growth (Islam et al., 2018). Mobile money is a convergence between telecommunications infrastructure and microfinance (Nan et al., 2021).

The evolution of the global e-money network platform has occurred in almost all countries and can reduce the occurrence of cash transactions. This is supported by the more effortless penetration of cellular phones in the community (Cobla & Osei-Assibey, 2018). In 2014 Bank Indonesia officially announced the National Non-Cash Movement (GNTT) or Less Cash Society. The government is interested in the success of GNTT; this campaign aims to increase public awareness, business, and government institutions to use non-cash payment facilities in conducting financial transactions. Electronic money transaction is easy, safe, and efficient. Bank Indonesia calls it electronification (Indonesia, 2014).

This study describes the process of accepting innovations resulting from mobile money technology through the characteristics innovation of IDT (Innovation Diffusion Theory). The innovation adoption process IDT states that individual decisions are determined by the main predictor, namely the characteristics of the innovation (Rogers, 2003). Various studies have shown that using cell phones and their convergence with the internet is a fascinating research object. However, there has not been much research on cellular phones with the extension of electronic money function. Electronic money or digital money is seen as a substitute for conventional forms of money in the future (Adaba & Ayoung, 2017; Bukari & Koomson, 2020; Camera, 2017; Gichuki & Mulu-Mutuku, 2018). Research proves that cell phones have several characteristics that make them suitable for payment purposes. Humans have cell phones and carry them with them, making payment methods easily accessible at any time. Compared to computers, cellular phones are more personal and natural, facilitating payment methods by placing personal data. The ability to access mobile network coverage makes a provided solution to the challenge of financial exclusion (Gonzalez-Cortes et al., 2017; Malinga & Maiga, 2020; Reiting et al., 2020; Tyler, 2015).

Regarding the use of cell phones, a study explains that since adolescence, humans cannot be separated from cell phones as the primary means of communication with family and friends (Garris et al., 2017; Nishad & Rana, 2016). Other studies confirm that children and adolescents use cell phones as the primary device in communicating (Kopeckï¿½ et al., 2021). Then cellular phones were studied to impact increasing spending (Bwana & Nooseli, 2014), and cell phone use was studied to increase productivity (Wahla & Awan, 2014). Cell phones as a lifestyle can combine several services at once and enter digital economies through products and services (Teece, 2017). In the digital era, people often take their smartphones with them to enjoy some daily routines (Mombeuil & Uhde, 2021). Cellular phones are helpful as a device for conducting economic transactions by connecting sellers and buyers so that consumers can easily find the desired product through a cell phone (Pollifroni, 2014). The development of cellular technology is continuous and has now entered the 5G era with various new capabilities (Huertas Celdrï¿½n et al., 2019; Shaik et al., 2019; Thompson et al., 2014).

This research contributes to the voluntary adoption of technology by the public for electronic money managed by non-banking institutions. In Indonesia, there is a combination of electronic money license holders between Banks and Non-Bank Institutions, making various choices for the public to choose the type of e-money (Bank Indonesia, n.d.). Although the community has adopted cellular phones with multiple advantages, individuals still consider adopting or rejecting mobile money. Bank Indonesia as a regulator issued this mobile money license to 4 cellular operators in 2016 (Bank Indonesia, 2016), but only T-Cash, transformed into LinkAja, still exists in 2021 (CNN Indonesia, n.d.; XL Axiata, 2020). In this study, the character of innovation is used to analyze the process of adopting mobile money voluntarily (Voluntary), which is part of modern life in the digital era.

IDT consist of five significant innovation characteristics: relative advantage, compatibility, complexity, and trialability, and observability (Rogers, 2003). Rogers describes Relative Advantage as how innovation is perceived as better than the previous idea. This construct is one of the best predictors of adopting an innovation. Compatibility is the degree to which an innovation is perceived to be consistent with the adopterï¿½s existing values, past experiences, and potential needs. Complexity is how the innovation is perceived as relatively difficult to understand and use. Trialability is the degree to which an innovation can be tried on a limited basis. The more it can be tested, the faster the innovation can be absorbed. Observability is an innovation characteristic that can be observed. The easier it is for individuals to see the results of an innovation, the easier it will be to adopt it. These characteristics explain the adoption of innovations and the decision-making process of mobile money.

Research Methods

The research objective is how innovation characteristics become a determining factor in adopting mobile money. This study uses a survey method to collect data to test the research model. Researchers took samples using purposive sampling, namely by determining a survey sample of mobile money users and at least having a length of stay for six months.

This study uses SEM as a statistical analysis method to see the effect of a causal relationship between the independent and dependent variables to explain the observed correlation by making a causal relationship between variables. This research uses a representative sample SEM analysis technique and data processing using SEM with LISREL 8.70.

The conceptual model used to solve a problem is usually formed within the research framework using the scientific method and shows the relationship between the variables in the analysis. The independent variables used in this research are Relative Advantage, Compatibility, Complexity, Trialability, Observability, and the independent variable is Adoption.

Figure 1

Conceptual Research Model

Based on the framework, the hypotheses can be defined as below.

Relative Advantage

Research consistently finds that the perception of Relative Advantage affects adoption. Several IDT studies show that users feel that the Relative Advantage is higher, so users will feel they are at a higher level of benefit from a system. This relative advantage is the main predictor for the mobile money adoption process.

H1: Relative Advantages influence the Adoption of mobile money

Compatibility

Research has shown that previous experience with similar technologies is associated with perceived ease of using technological innovations.

H2: Compatibility influences the adoption of mobile money

Complexity

Empirical studies provide evidence that Complexity has a significant negative impact on interest in using.

H3: Complexity influences the adoption of mobile money

Trialability

When an innovation can be tested on a limited basis to know the use of a system, individuals will improve their performance

H4: Complexity influences the adoption of mobile money

Observability

If others can observe innovation results, this will influence what individuals feel to improve their performance

H5: Observability influences the adoption of mobile money

All measures were assessed via a four-point Likert type scale ranging from ï¿½strongly disagreeï¿½ (1) to ï¿½strongly agreeï¿½ (4) as follows.

Table 1

Questionnaire Design Summary

Variables	Questions Design
Relative Advantage	1. Seeing the benefits of mobile money made me want to use it. 2. Mobile money has advantages that other e-money does not have 3. When compared to other forms of e-money, mobile money provides more benefits
Compatibility	1. Using mobile money services according to my lifestyle 2. Using the mobile money service according to my payment activities 3. I believe that mobile money services are compatible with cell phone technology
Complexity	1. I have no difficulty in getting mobile money information 2. I have no difficulty activating the mobile money service 3. I have no difficulty in understanding how to use mobile money 4. I have no difficulty in making mobile money transactions
Trialability	1. I had the opportunity to try mobile money before deciding to use it 2. I have the opportunity to try mobile money with enough time 3. There is a mobile money service that I can try 4. I have the opportunity to try various functions of the mobile money service
Observability	1. Easy for me observing how other people use mobile money services 2. I have no trouble explaining to other people how to use mobile money services 3. I am aware that there are advertisements for mobile money services
Adoption	1. How many times have you used mobile money in the last 6 months? 2. How often do you use mobile money? 3. How often do you top up mobile money?

Result and Discussions

A. Results

Characteristics of respondents include gender, age, and duration of adopting mobile money. The table below shows that most of the respondents are female, 147 people or 73.5 percent, and male respondents are 53 people or 26.5 percent. Based on age group, the most respondents were the age group 17-36 years (Y Generation) as many as 187 people or 93.50 percent, followed by the age group up to 37-52 years (X Generation) as many as seven respondents or 3.50 percent, and the age group under 17 years (Z Generation) as many as six respondents or 3.00 percent. The largest group of mobile money users is from the Millennials generation. The following is an explanation of the characteristics of the respondents.

Table 2

Respondent Demographic

Demographic Characteristic		Frequency	Percentage
Gender	Man	53	26.5%
Gender	Woman	147	73.5%
Length of stay	6-12 month	112	56.0%
	1-2 years	77	38.5%
	> 2 years	11	5.5%
Age	≤ 16 years	6	3.00%
	17-36 years	187	93.50%
	>36 years	7	3.50%

This research found that Relative Advantage, Compatibility, Trialability, and Observability positively influence the adoption of mobile money, and Trialability does not have a positive influence on the adoption process of mobile money. The statistical hypothesis testing results are as below.

Diagram

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Figure 2

T-statistic

Diagram

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Figure 3

Standardized Loading Factor

Table 3

Statistical Hypothesis

Hypothesis	Parameter	Statistical Hypothesis		SLF	T-stat	Summary
Hypothesis	Parameter	H₀	H₁	SLF	T-stat	Summary
1	γ₁	γ₁=0 Relative Advantage does not have a positive effect on the Adoption of mobile money	γ₁>0 Relative Advantage has a positive influence on the Adoption of mobile money	0.13	4.46	Significant
2	γ₂	γ₂=0 Compatibility does not have a positive influence on the Adoption of mobile money	γ₂>0 Compatibility has a positive influence on the Adoption of mobile money.	0.25	7.36	Significant
3	γ₃	γ₃=0 Complexity does not have a negative effect on the Adoption of mobile money	γ₃<0 Complexity has a negative influence on the Adoption of mobile money	0.23	7.73	Significant
4	γ4	γ₄=0 Trialability does not have a positive effect on the Adoption of mobile money	γ₄>0 Trialability has a positive influence on the Adoption of mobile money	-0.04	-1.33	Not Significant
5	γ₅	γ₅=0 Observability does not have a positive influence on the adoption of mobile money	γ₅>0 Observability has a positive influence on the adoption of mobile money	0.07	2.41	Significant

B. Discussion

Effect of Relative Advantage on Adoption. The results in the hypothesis test table show a loading value of 0.13 and a t-stat of 4.46. The t-count value is greater than 5% alpha t-table, which is 1.96, meaning that Relative Advantage has a significant influence on the adoption of mobile money use. Seeing the benefits of mobile money, comparing it with other forms of electronic money, and the various advantages of mobile money become an attraction for users. Seeing the benefits of mobile money, comparing it with other forms of electronic money, and the various advantages of mobile money are attractive for users. This is similar to research conducted on e-commerce adoption among small medium enterprises (Sin et al., 2016), big data adoption, and We Chat Pay as electronic money (Mombeuil & Uhde, 2021).

Effect of Compatibility on Adoption. The results in the hypothesis test table show a loading value of 0.25 and a t-stat of 7.36. The t-count value is greater than 5% alpha t-table, which is 1.96, meaning that Compatibility has a significant influence on the adoption of mobile money use. Using mobile money services according to lifestyle, supporting payment activities, and being compatible with mobile phone technology are important factors for users to accept mobile money. Other research shows compatibility plays an important role in the process of adopting the use of mobile applications (Min et al., 2019) and adoption of management accounting innovation (Ax & Greve, 2017).

Effect of Complexity on Adoption. The results in the hypothesis test table show a loading value of 0.23 and a t-stat of 7.73. The t-count value is greater than 5% alpha t-table, which is 1.96, meaning that Complexity has a significant influence on the adoption of mobile money use. If people don't have complexity in getting cellular money information, it's easy to activate cellular money services, understand how to use cellular money, and have no difficulty in making mobile money transactions, the adoption process will go well. Complexity is an important factor in other studies in the adoption process (Poutanen et al., 2016).

Effect of Trialability on Adoption. The results in the hypothesis test table show a loading value of -0.04 and a t-stat of -1.33. The t-count value is smaller than 5% alpha t-table, which is 1.96, meaning that Trialability does not have a significant effect on the adoption of mobile money usage. The opportunity to try before deciding to use it with sufficient time, being able to try various existing functions is not a determining factor in the process of adopting mobile money. In this research, trialability has no significant role in increasing the adoption rate. However, other studies related to trialability are one of the success factors for successful adoption (Ali et al., 2019; Changchun et al., 2017).

Effect of Observability on Adoption. The results in the hypothesis test table show a loading value of 0.07 and a t-stat of 2.42. The t-stat value is greater than 5% alpha t-table, which is 1.96, meaning that Observability has a significant influence on the adoption of mobile money use. Observe how other people use mobile money services, then be able to explain to others how to use mobile money services, and knowing that marketing communications program, then observability is one of the determining factors of the mobile money process. In computer-related research, observability is a key determinant of successful adoption (Hayes et al., 2015) and observability plays an important role in technology adoption intention (Tsai et al., 2021).

Conclusion

IDT is still used by various fields of science to explain the process of adopting innovations, such as research in the Health domain, Pharmacy domain, Energy domain, computer domain, Health domain, Transportation domain, and Communication domain. Rogers suggests using five innovation attributes, Relative Advantage, Compatibility, Complexity, Trialability, and Observability, to describe the occurrence of innovation. Innovation Diffusion theory has been characterized by many trends in scientific reasoning. In this research, four characteristics of relative advantage, complexity, compatibility, and observability shape users understandings on mobile money adoption decisions.

Mobile money is an extension of cellular phone services beyond basic connectivity. Additional server-based electronic money services through mobile applications cannot be tested first, like other application services. The mobile money application is indeed different from other mobile applications, usually there is free service for a certain period before the customer uses it. Mobile money and payment technology are potential areas for the future. The growth of mobile phones around the world, including in several developing countries, has driven financial infrastructure to provide dynamics and transform innovation in the financial sector. Payment technology are potential areas for the future.

This study specifically analyzes Indonesians who have characteristics as Asians who are open to the development of digital technology. Data shows that cellular phone penetration exceeds the total population, more than 355 million subscribers and Indonesia is the fifth most internet engaged country in the world. The paper simply proposes a conceptual framework for examining user adoption of mobile money in Indonesia. IDT can be used to predict how the process of adopting mobile money effectively through innovation characteristics. Future research can more specifically analyze various choices of electronic money transactions when customers are going to make transactions. Focus on consumer decisions making process in choosing variety of existing electronic money.

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Syntax Literate: Jurnal Ilmiah Indonesia

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