Trust And Risk In E-commerce Adoption In South Africa

Lack of Trust Impacting E-commerce Adoption

Rapid success and huge developments in communication and computer technologies have helped in the rapid increase of mobile commerce or e-commerce. The expectations for the e-commerce sector to flourish are challenging in developing nations where access to computer-based internet is low. This can be said for South Africa as well due to their population lacking the knowledge of the European or American style of cable and communications infrastructure. Only about a section of the population enjoys fixed telephone lines, and consequently, computer-based home internet access is not very common. However, almost 90% of the population in the country uses smartphones (Arakpogun et al., 2020). Other developing African nations have a similar ratio of mobile use to fixed telephone communications, and market researchers have estimated that much of the continent can dive straight into a large-scale adoption of e-commerce instead of investing in developing a  substantial e-commerce penetration. Owing to the presence of South Africa’s sophisticated telecommunication technology, smartphone users have experienced the emergence of new and exciting online services, including video telephone, mobile banking, location-based services, and online media services, along with others. However, the South African population has been lethargic in adopting these services.

Lack of trust among the users has been observed to be an important aspect impacting the uptake of e-commerce services. Trust is an important factor in situations that most people perceive as a risk, and e-commerce divulges consumers to potential risks and vulnerabilities (Carstens, Ungerer & Human, 2019). For example, consumers in the country are often unaware of the vendors responsible for delivering the product or service and hence the trust that comes from building a relationship is absent. In other instances, many e-commerce retailers have been exposed for their unethical conduct by the media. Additional complexities of technologies sometimes expose the users to risks such as fraudulent activities, illegal content, viruses, spam and cyber-crime. South Africa has been trying to curb these risks by offering the users legal protection; however, the confidence of the people in law enforcement is not very high.

Trust is a context-dependent and complex construct perceived through different variables, which are institution-based trust, vendor trust, systems trust and temperament of trust. Institution-based trust is based on the truster’s belief in a particular situation because of certain structures being in place. It is related to regulations, laws and institutions. The Independent Communications Authority of South Africa (ICASA) is the principal telecommunications industry regulator and plays the role of dealing with user complaints (Shava, 2021). Electronic Communications and Transactions (ECT) is the law that provides protection to the users. However, despite such strict laws, only a handful of websites in South Africa are in complete compliance with the ECT Act and its regulations. Vendor trust is the belief of the customers in the vendors and the fulfilment of their transactional duties in uncertain and risky situations. Systems trust is referred to as trust in the technology, and the evaluation of the trustworthiness of technology is a result of profound expertise. Mobile operators are of the opinion that the security of monetary transactions is safer through mobile phones than traditional debit or credit card transactions. The users, however, do not share the sentiment, and for them, payment security is of primary concern (Makhitha & Ngobeni, 2021). The temperament of trust is the belief associated with the consumer’s proneness to depend and rely on the vendors. This is a unique attribute that is unique for each customer. It is a rational evaluation of reliability and morality and involves decision-making on the customer’s part that is impacted by societal norms.

Types of Trust and Risk Models in E-commerce

Trust is relevant in uncertain and risky situations when there requires a decision to be made involving risks. According to Carstens, Ungerer & Human (2019), trust always involves risk since trusting essentially translates to being vulnerable to the trustee. In e-commerce, researchers have observed that an increased degree of trust reduces the perception of uncertainty and risks of the trustee and impacts their behaviour and willingness to buy or availing the services or products. It is not a risk but trust, perceived by consumers in cases of low-risk purchases like ringtone downloads or movie downloads influencing the customer’s decision to participate in e-commerce purchase. However, during high-involvement purchases, risks become highlighted and more prominent and trust acts as a secondary part in reducing the risk rather than influencing the customer’s purchase decision.

Three types of trust and risk models have been identified by Gefen et al. (2003), which are the mediating relationship, moderating relationship and threshold relationship. The mediating relationship involves trust being hypothesized into impacting perceived risks, which in turn impacts behaviours. The presence of trust reduces risks and increases the chances of participation in e-commerce. Thus, mediating relationships convey a straightforward, causal relationship between risk and trust.

The moderating relationship implies that the impact of trust on consumer behaviour varies depending upon the degree of risk, that is, whether it is a high or a low-risk situation. Trust being high, risk will make less impact on consumer behaviour. In high-risk situations, like in mobile banking, trust shared by the truster and trustee becomes higher than in low-risk situations.

The threshold approach considers risk and trust as two separate perceptions. Higher the perception of risk that the trust, the lower the chances of e-commerce engagement of the truster. This model is based on the decision-making process of the truster, where the truster assesses every situation and risks pertaining to them before purchasing.

A combination of the Innovation Diffusion Theory (Rogers, 1995) and the Technology Acceptance Model (Davis, 1989) has been adopted to create a model for e-commerce trust developed by Joubert and Van Belle (2013).

Source: Joubert and Van Belle (2013)

Conclusion

People of South Africa have a positive inclination toward mobile service, as observed by the rapid penetration of smartphones technology. The consumer protection authorities make it easier and encourage the use and adoption of e-services. The research has explored the relevance of trust and perceived risks among the South African consumer base and the relationship between trust and risk in adopting e-commerce. The trust model has been borrowed from previous research to explore the different variables. The study has established the relationship between trust and perceived risk and the variables that associate them with each other.

References

Arakpogun, E. O., Elsahn, Z., Nyuur, R. B., & Olan, F. (2020). Threading the needle of the digital divide in Africa: The barriers and mitigations of infrastructure sharing. Technological Forecasting and Social Change, 161, 120263. https://www.sciencedirect.com/science/article/pii/S0040162520310891

Carstens, M., Ungerer, M., & Human, G. (2019). Perceived Risk, Trust and Familiarity of Online MultiSided Pure-Play Platforms Selling Physical Offerings in an Emerging Market. Southern African Business Review, 23(1). https://www.ajol.info/index.php/sabr/article/view/191155

Davis, F. D. (1989). Perceived usefulness, perceived ease of use, and user acceptance of information technology. MIS quarterly, 319-340. https://www.researchgate.net/profile/Michel-Sylvie/publication/344247975_Mobile_Money_decryptage_d’une_succes_story_africaine/links/61603646ae47db4e57a80a60/Mobile-Money-decryptage-dune-succes-story-africaine.pdf

Gefen, D., Rao, V. S., & Tractinsky, N. (2003, January). The Conceptualization of Trust, Risk and Their Relationship in Electronic Commerce: The Need for Clarifications. In HICSS (p. 192). https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.122.4421&rep=rep1&type=pdf

Joubert, J., & Van Belle, J. (2013). The role of trust and risk in mobile commerce adoption within South Africa. International Journal of Business, Humanities and Technology, 3(2), 27-38. https://www.ijbhtnet.com/journals/Vol_3_No_2_February_2013/3.pdf

Makhitha, K. M., & Ngobeni, K. M. (2021). The impact of risk factors on South African consumers’ attitude towards online shopping. Acta Commercii-Independent Research Journal in the Management Sciences, 21(1), 922. https://www.scielo.org.za/pdf/acom/v21n1/15.pdf

Rogers Everett, M. (1995). Diffusion of innovations. New York, 12. https://teddykw2.files.wordpress.com/2012/07/everett-m-rogers-diffusion-of-innovations.pdf

Shava, H. (2021). Service Quality and Customer Satisfaction Experience among South African Mobile Telecommunications Consumers. Eurasian Journal of Business and Management, 9(3), 217-232. https://www.researchgate.net/profile/Herring-Shava/publication.

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