Holmes Institute: Afterpay Payment Tool Consumer Perception Report

This report, prepared for a Management 31 course at Holmes Institute, examines consumer perception of Afterpay, a popular 'buy now, pay later' (BNPL) payment service in Australia. The research investigates how consumers, particularly millennials, view Afterpay and its impact on their purchasing behavior. The study explores the factors influencing payment method choices, including safety, efficiency, and convenience, as well as the potential for increased financial stress among users. The report includes a literature review on payment systems, electronic payments, and consumer behavior, along with a detailed methodology, findings from a quantitative analysis, and discussions on the research's significance, limitations, and ethical considerations. The study aims to understand whether Afterpay simplifies or negatively influences consumer spending habits, offering valuable insights into the evolving landscape of digital payments and consumer financial behavior. The report includes the background of the study, research questions, literature review, methodology, data analysis, findings, significance, limitations, and ethical considerations.

Running head: MANAGEMENT
Management
Name of the Student
Name of the University
Author Note

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Abstract
In this report the purpose of the common people of Australia, on the Afterpay payment service
has been evaluated. In this era of technology, the earnings and spending of individuals are
getting reimangined each and every day with the help of technological advancement in payment
methods. Majority of the payment services in Australia provides the service users with both
prepaid and post paid option; the popularity of Afterpay, a post payment service has got raised to
a great extent currently. While some off the researchers are of the perspective that post payment
systems like Afterpay is beneficial for the mentioned organization, a good number of
psychologists are of the perspective that the mentioned system is imposing adverse effect on the
consumers purchasing behaviour. In order to evaluate the perspective of the consumers a
distributed quantitative analysis has been performed. Samples were provided with questionaries
in order to collect data from the result off the study, it has been found that Majority of the
millennial prefer the Afterpay payment service over any other online payment methods.
However, cash on delivery is still found to be one of the mostly used payment methods by
millennial.

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Table of Contents
Introduction......................................................................................................................................2
Research question............................................................................................................................5
Literature review..............................................................................................................................5
Methodology..................................................................................................................................17
Research Philosophy..................................................................................................................17
Research Design........................................................................................................................18
Research Approach....................................................................................................................19
Data collection method..............................................................................................................19
Sampling....................................................................................................................................20
Data analysis method.................................................................................................................21
Findings of the research.................................................................................................................21
Significance of the research paper.................................................................................................33
Limitations and delimitation..........................................................................................................33
Ethical consideration.....................................................................................................................34
References......................................................................................................................................35

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Research topic: people perception towards afterpay as a payment tool
Introduction
Tremendous growth in the usage of the internet as well as mobile phones has been
evidenced all over the world on the last decade. The earnings and spending of individuals are
getting reimangined each and every day with the help of technological advancement in payment
methods (Roozbahani, Hojjati and Azad 2015). In this era of technology, consumers are highly
concerned with the types as well as levels of payment methods that are being adopted by the
business operators. Therefore business owners have to keep up with the constant improvements
in order to avoid the risk of losing their consumers to the competitors. When it comes to the
millennium consumers, their chief and basic criteria of selecting payment methods include safety
and efficiency of the payment systems (Marinkovic and Kalinic 2017). A well functioning
system possesses the potential to stimulate the desire of the consumers to purchase services,
goods or assets from various business sectors. The costs of making payment differ on the basis of
the amount of transaction along with the payment tool used. In Australia, the internet penetration
rate is nearly 100 percent an approximately 70 percent of the population owns smartphones
(Cagliano, De Marco and Rafele 2017). Therefore, it can be understood that non cash payments
accounts for majority of the value of payments in the economy of Australia. As per the data
obtained from a survey conducted in the year 2027, non cash payments that are worth around
242 billion dollars were made in each of the business days that is almost 14 percent of the annual
GDP of the nation. More than 70 percent of the value of noncash transactions gets accounted for
by a limited number of high value payments that is made through the real time gross settlement
system of Australia (Liébana-Cabanillas, Herrera and Guillén 2016).

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Majority of the value of these payment methods are associated with the settlement of
foreign exchange along with the securities market transactions. One of the major payment
methods in Australia includes the Buy Now, Pay Later (BNPL) digital service that allows the
users to buy products both online as well as offline immediately and pay the purchase in
instalments within a limited period. Another payment service that has gained popularity in the
nation includes Paypal that makes almost 28 percent of the online payment of the nation (Chan et
al. 2017). Apart from the two mentioned payment methods, a good number of pre and post paid
services are available in Australia. Thus a huge competition exists between the existing payment
service providing organizations in the nation.
While majority of the mentioned payment services provides the service users with both
prepaid and post paid option, the popularity of Afterpay, a post payment service has got raised to
a great extent currently. The afterpay service has been launched in the year 2015, and within a
limited period of time the service as proved to be a revelation in Australia with approximately
2.32 million people using the service for transaction (Aswani et al. 2018). The chief attraction of
the mentioned service includes After Pay payment service provides the consumer with the
opportunity to buy whatever product or service they want and enables them to make the payment
in four instalments paid fortnightly. The target consumer of the after pay service includes the
millenniums. The service is available at more than 10,000 shops throughout Australia and New
Zealand. While the mentioned service has drastically increased the sales of the organizations,
according to researchers this service has the potential to contribute towards increased financial
stress amongst the shoppers. Over the past few years, the mode of payment has been of great
concern to a large number of consumers especially the youngsters of the current generation.
Most of the young generation is fully focused on trending activities such as after pay method as

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the purchasing tool across the world. While post payment services like Afterpay is imposing
positive impact on the sales of retail stores, it has the potential to impose negative impact on the
purchasing power of the consumers (Khalilzadeh, Ozturk and Bilgihan 2017). It has been found
that approximately 30 percent of the total users of Afterpay have missed the AfterPay payment
more than once. Considering the fact that majority of the purchases from Afterpay is made by
millenniums, in a survey, 65 percent of the participant stated that the fact they don’t have to pay
instantly for a particular product or the service enhanced their desire to buy the product which
they would not normally purchase. It has been seen that most purchased products that are being
purchased by the consumers using the after pay service includes luxury items. Majority of the
millenniums are found to be using this service for buying clothing.
According to psychologist, post payment services like AfterPay is deteriorating the
purchasing attitude of the teenagers as well as the millennium by enhancing their tendency to
purchase products on debts. While a good number of the Australian population is fine with the
concept of buying things in instalment since they believe that people who are opting for such a
option possess a steady income flow for meeting whatever payment they are obliged to,
according to several individuals, long term use of majority of the payment services can lead to a
scenario where people will lose track of the commitment or will get over burdened (Pei et al.
2015). Thus it has become really crucial for the organization to understand the perception of the
consumers about the Afterpay payment service. The chief purpose of this research study is to
indentify how the common people of Australia feels about Afterpay as a payment service tool.
The research paper will analyse if the consumers thinks that the Afterpay service has made their
life easier or have imposed negative impact on their purchasing behaviour.

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Research question
The chief aim of the research is to explore the perception of the individual towards afterpay as a
payment tool.
The chief objectives of this study are as follows:
a) To explore the customer behaviors over time
b) To explore the customer behavior theory and its application on the after pay methods
When it comes to the research questions of the paper, it is as follows:
a) What is consumer behaviour theory?
b) How does consumer behaviour theory affect market sales?
c) What is the effect of digital payments methods on consumer behaviours?
d) What are the effects of the After-play payments methods on consumer behaviours?
Literature review
After pay Payment tool
A payment system can be defined as a kind of system that is used for the settling the financial
transactions by transferring monetary value. The tool used for payment has been designed for
facilitating the acceptance of electronic payment for the purpose of online transactions. With the
emergence of technological development, online payment tools are gaining more and more
popularity (Kolinjivadi et al.2015). The chief reason behind this is the enhancement of internet
for both banking and shopping purposes by the consumers, especially the millennial. Amongst

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the various online pay services available in Australia, the one that has attract the consumers to a
great level within a limited amount of time is the After pay payment service (Ab Hamid and
Cheng 2019). The mentioned payment service accepts both credits as well as debits and allows
the consumers to make any payment latter within a stipulated amount of time. The Afterpay
payment service was founded in Australia in the year 2015 and is currently used by more than 3
million users. According to Ab Hamid and Cheng (2019), the mentioned payment service is
currently one of the most used payment services available in Australia. In the year 2017, the
Afterpay group had merged with the After Touch group and this decision of the organization has
led to be the leader of the “buy now pay latter’ industry (Ab Hamid and Cheng 2019). Apart
from Australia, The Afterpay Touch group currently operates in United States, Australia and
New Zealand. The mentioned payment service is found to allow the retailers to offer the
consumers with the facility to buy any products on instalment which they are supposed to be paid
within 4 instalments. Additionally, the consumers are charged with no extra interest for the
instalment. However, in case a consumer fails to make the payment they are supposed to make
within the stipulated time, they needs to pay a penalty amount of 10 dollars as their first missed
payment penalty. Another obstacle of shopping or banking through the Afterpay payment service
includes the service can be used only by individuals who are above 18 years old (Imran et al.
2019).
Electronic payment
The term electronic payment is referred to the process of making payment for services or
goods through internet. An electronic payment includes any kind of non cash payment that does
not include a paper check. A good number of electronic payment methods are available in
Australia that includes credit cards, debit cards as well as Automated Clearing House Network.

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Majority of the organizations provides the consumers with a good range of transaction options so
that they can pay for their purchase (Iberahim et al. 2016). Almost all the system of transaction,
the e-payment system is gaining high popularity and thank to its efficiency, convenience as well
as timeliness. Given its popularity, the mentioned payment system is largely embraced a well as
adopted continuously in the financial system inn both developing as well as developed countries.
In this era of information as well as communication technology, the operations have completely
changed the life of individuals (Gao and Waechter 2017). The digital technology is imposing
immense positive impact on the evolutionary development in finance. With the emergence of e-
payment, people are getting more and more inclined towards the current trend of cashless
transaction.
After the concept of cashless transaction is introduced, the payment methods used
globally is gradually changing from hard cash transaction to electronic forms which is not only
fast but is also more competitive in nature. The global annual non cash transactions are
facilitated by both mobile payment as well as e-payment (Chen et al. 2016). With emerging time,
the importance of e-payment in business is increasing over time since it is considered by both the
retailers as well as the shoppers to be both convenient as well as secure way of conducting
financial transaction.
Speed and efficiency
The speed of transactions in electronic payment services are meant for new technologies and for
satisfying the expectation as well as the requirements of the consumers (Drechsler et al. 2016).
The electronic payment is also quite efficient since it performs the best operation at each stage of
the process of payment.

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Trust and Security
The e-payment system is known as the service that I used by individuals for transaction
of money with the help of using cash for purchasing product or services. the mention service is
popularly known as online payment system. The payment gate away as well as the payment
providers offers highly effective security along with tools that are antifraud for ensuring that the
transactions are highly reliable in nature. The challenges that are faced by the electronic payment
services mainly include concerns associated with privacy as well as information security.
Usually, the consumers as well as the commercial settings are known to have high trust on the
online payment system due to the efficient provision of the services as well as easy access to the
payment infrastructure (Safa and Von Solms 2016). Ehen it comes to the security in payment
system it generally includes information that is either personal or national and is confidential.
Since confidential information are needed while making e-payment, lack of security has the
potential to become a major obstacle between the consumers and the e-payment providing
organizations. In order to ensure data security, e-payment service providing organizations like
After pay involve methodology, practice as well as technology (Fletcher 2016). Therefore it can
be understood that electronic payment stools requires having all kinds of security features since
trust can be considered to be the mostly needed thing in order to ensure acceptance in clients.
Satisfaction of the consumers
The perception of the customers associated with digital payment is found to be highly
positive, thanks to numerous benefits associated with the same. According to Gafeeva, Hoelzl
and Roschk (2017), e-payment services that provides adequate information to the consumer and
are highly transparent in nature are found to have gained higher level of consumer satisfaction

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compared to the organizations that ensures confidentiality of their operation. The consumer
satisfaction gets affected by lower quality of information along with lower user interface quality.
In order to satisfy the requirements of the consumers, the information requires to be up to date
while offering the consumers with product or service. The information provided by the e-
payment organizations like After pay needs to be sufficient enough for helping the consumers to
make effective choices and to be user friendly. For this reason, it can be said that information
satisfaction will be affecting the behaviour of the customer purchase decision. The customers
with higher internet experience are supposed to be utilising the web channels for gathering the
item data. (Gao and Waechter 2017), According to Herbst-Murphy (2015), consumer
satisfaction can be considered as one of the most effective factor that determines the success rate
and enhancement in consumer base for a organization. recent studies have chiefly focused on
consumer satisfaction since this factor has imposed have impose impact on the behaviour of the
consumer while purchasing product a well as on their purchasing intentions.
The consumer satisfaction can also be een as an emotional and cognitive reaction that focuses on
the expectation of the consumers as well as their experience at a certain time It is known to
measure the perspective of the consumer on the service provided by an organization in terms of
quality of the product and serves provided by the same (Khan 2018). The consumers adopt a
technology when they find it quite easy for understanding along with finding it quite easy to
implement. The perceived usefulness is known to have a positive impact on the behavioural
intention for using the mobile banking.
Influencing the consumer behaviour

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The electronic payment system is known to influence the consumer behaviour. The
shopping posses a paradigm shifts that takes place due to a technological influence. In this study,
the consumer behaviour of individuals along with the experiences or the ideas to satisfy the
requirements as well as the impacts of the processes on the consumers along with the society
(Aswani et al., 2018). This study aims to state the changes in the consumer behaviour as the
result of the electronic payment system. Individuals spend a good amount of time on shopping in
online sites and refer to by online products. There prevail a good number of changes when it
comes to modes of selection. According to researchers, convenience of shopping has been found
to be playing one of the most crucial roles for consumers while making decisions for online
shopping paying methods.
Cost
According to Omair (2014), online shopping procedures results in lower price payment for
products purchased by consumers compared to that of the traditional practices of payment.
Consumers are found to be charged higher for similar products when they shop offline.
Considering the fact that cost is a highly crucial parameter when it comes to the process of
consumer choice. The consumers possess the potential to research for a huge number of time for
going through the products along with evaluating the information of non process attributes. The
consumers associated with the e-market is supposed to have greater information about the
services as well as the products (Liébana-Cabanillas, Herrera and Guillén 2016), The annual non
cash transaction gets facilitate with the help of mobile payment as well as epayments. The
process of E-payment is considered to be one of the crucial mechanisms that is used by the
individuals along with the organizations as a secure as well as a convenient way of making the
payments over the internet. The system of electronic payment is found to have attracted a huge