Lottery Payment Cards: A Study of Mental Accounting

• DOI: http://doi.org/10.1002/isaf.1369
• Author: Ann Shawing Yang
• Date: 01 July 2015
• Published date: 01 July 2015

LOTTERY PAYMENT CARDS: A STUDY OF MENTAL

ACCOUNTING

ANN SHAWING YANG*

Institute of International Management, National Cheng Kung University, Tainan701, Taiwan ROC

SUMMARY

This study analyses the difficulties of using stored-value cards for noncash payment adoption and payment framing

behaviour development. This study applies the Rasch model via mental accounting theory to identify unobservable

and latent difficulties in adopting noncash payment instruments for lottery participation. Anonymity, a reduction in

cash carrying, and convenient purchases have discouraged noncash paymentadoptions. However, consumers prefer

stored-value cards because they are easy to carry and reduce payment time and long waits. Consumers also develop

payment framing behaviour difficulties from crediting up to the maximum stored value and fear of insufficient

cash, with preferences for period purchases. Lower income significantly discourages noncash payment adoption

and payment framing behaviour development, whereas being of a youngerage causes significant payment framing

difficulties. Regional variations differ in convenience, anonymity, stored value, balance checking, and indirect do-

nations. The moderating effect between income and age also positively significantly influences noncash payment

adoption and payment framing behaviour. Copyright © 2015 John Wiley & Sons, Ltd.

Keywords: lottery; moderating effect; noncash payment adoption; payment framing behaviour; Rasch measuremen

1. INTRODUCTION

Recent technological advances in noncash payment instruments have providednew payment options for

consumers and merchants at the point of sale (Humphrey, 2010). Although noncash payment cards pro-

vide payment convenience and cost savings for consumers (Schuh & Stavins, 2010; Simon et al., 2010),

noncash payment cards reduce interchange fees and increase business activities for merchants (Bolt &

Humphrey, 2007; Zinman, 2009). As more businesses introduce and accept noncash payment cards,

greater merchant scale economies could be achieved for competitiveness (Bolt & Humphrey, 2007).

However, successful use of noncash payment card remainslimited to specific transactions, primarily com-

prising transportation ticket purchasesfor public transit systems; that is, bus, metro, and railway (Pelletier

et al., 2011). Such utilization is also used for the surrounding station merchants, including restaurants,

grocery stores, and beauty shops, with increased business activities (Páez et al., 2011). Thus, extended

use of noncash payment cards in various businesses is yet to be explored for potential acceptance and

utilization. The motivation is to identify potential introduction and acceptance of noncash payment card

in other industries, such as national lottery ticket purchases. This industry is characterized by small pay-

ment amount per lottery ticket purchase, lottery game commodity, and convenient nationwide locations.

Despite the benefits of noncash payment related to cost reduction and increased convenience, the re-

placement of noncash payments for cash remains critically difficult. Extant literature primarily focuses

on adoption intentions and actual usage via transaction data and user surveys for noncash payment

review (Humphrey et al., 1996, 2000; Hancock and Humphrey, 1998; Snellman et al., 2001; Shy &

Tarkka, 2002; Amromin & Chakravorti, 2009; Schuh & Stavins, 2010). The convenience of noncash

* Correspondence to: Ann Shawing Yang, Institute of International Management, National Cheng KungUniversity, Tainan 701,

Taiwan ROC. E-mail: annsyang@mail.ncku.edu.tw

Copyright © 2015 John Wiley & Sons, Ltd.

INTELLIGENT SYSTEMS IN ACCOUNTING, FINANCE AND MANAGEMENT

Intell. Sys. Acc. Fin. Mgmt. 22, 201–226 (2015)

Published online 2 June 2015 in Wiley Online Library (wileyonlinelibrary.com)DOI: 10.1002/isaf.1369

payment cards may dominate the successful adoption of payment cards (Humphrey, 2010). However,

latent or unobservable difficulties stemming from psychological judgments on cash and noncash

payments that cause preliminary obstacles in adopting noncash payment instruments are sparsely

discussed. In this study, I examine the hidden difficulties in adopting noncash payment instruments

via mental accounting theory. The Rasch model is applied to analyse the difficulties of noncash pay-

ment adoption to forecast technology diffusion and saving behaviour, as well as to examine the possible

social impact and changes. Self-reported data from holders of cash and of noncash payment instruments

in Taiwan are used. The Rasch model is a unidimensional measurement scale that measures raw data

based on respondent ability and task difficulty as well as provides reliable and valid results for a small

sample size (Jackson et al., 2002; Moral et al., 2006).

It is determined that consumers prefer stored-value cards and adopt saving behaviour because of

anonymity, reduced cash carrying, convenience, maximum stored values, periodic purchases, and the

absence of fear of insufficient cash at point of sale. However, stored-value cards are perceived as diffi-

cult to carry and incapable of reducing payment and wait times. The difficulties of using stored-value

cards with respect to saving features include the inability to increase indirect donation, crediting small

prize amounts, and using a card without an expiration date.

Having lower income significantly discourages noncash payment adoption and saving behaviour devel-

opment, whereas being of younger a ge significantly causesdifficulties in the lat ter. However, gender, marital

status, education, and older age indicate negligible difficulties related to noncash paymentadoption and sav-

ing behaviour development.Regional variations result in significant difficulties with stored values, anonym-

ity, balance checking, and indirect donation tasks. Consumers in northern regions find stored-value cards

most convenient but prefer name registration, whereas those in southern regions prefer adjusted savings

via stored-value cards but are unable to store the maximumvalue and make indirect donations. The northern

region is represented by the capital city, Taipei, where government agencies and over 50% of service indus-

tries are located, which typically employ office workers. By contrast, the southern region is represented by

manufacturing industries, which typically employ factory labourers (Yen et al., 2009). Consumer socio-

demographic backgrounds and consumption patterns, therefore, show a distinct regional difference.

Results from this empirical study contribute to comprehending unobservable obstacles that cause

difficulties in noncash payment decisions. Our findings provide solutions for customizing noncash

payments for individual users and minimizing difficulties in adopting noncash payments.

The paper is organized as follows: Section 2 presents related literature on the use of noncash pay-

ment, development of noncash payment in Taiwan, mental accounting theor y, and the national welfare

lottery operations in Taiwan. Section 3 presents the Rasch model, methods, and procedures. Section 4

provides the results of the study. Section 5 presents a summary and conclusions.

2. LITERATURE REVIEW

Noncash payment acceptance and adoption for consumers is often related to demographic backgrounds

(Carow & Staten, 1999; Stanghellini, 2003; Borzekowski et al., 2008; Schuh & Stavins, 2010) and spe-

cific features, such as convenience and cost saving (Amromin & Chakravorti, 2009; Bolt et al., 2010).

Consumers may also accept and adopt noncash payment under the influence of payment framing

(Thaler, 1985, 1999) as a form of mental accounting, in which the psychological stage and changes to-

ward monetary values may develop. Therefore, several research hypotheses are developed accordingly,

focusing on demographic background, features of noncash payment instruments, and mental account-

ing with payment framing effects.

202 A. S. YANG

Copyright © 2015 John Wiley & Sons, Ltd. Intell. Sys. Acc. Fin. Mgmt., 22, 201–226 (2015)

DOI: 10.1002/isaf