Exploring consumer perceived risk and trust for online payments: An empirical study in China's younger generation

The uncertainties of transaction handling and consumer perception toward risk have been identified as some of the major problems causing consumers' hesitance toward taking advantage of online payments. With the ever-growing implementation of trusting mechanisms for online payments, consumer confidence has greatly increased. This research explores the elements of perceived risk and trust - the two most vital factors influencing consumer behavior of online payment - in the relatively mature stage of China's online payment environment. It also analyzes and classifies perceived risks of different nature into two categories: systematic perceived risk and transactional perceived risk according to their different roles in affecting consumer trust. Specifically, we propose a conceptual model of trust and specific risk facets as well as two new constructs of comparison and evaluation, based on the framework of TRA, TPB, TAM and DTPB. The proposed model was empirically tested using data gathered from 870 respondents in Shanghai and Macao, China, most of whom belong to the younger generation. The results show that in the current stage of China's online payment, consumers have built up trust first as an antecedent of their perceived risks. Moreover, perceived total risk is negatively related to trust while perceived risks can be classified into two types: system dependent risk which is positively related to trust and transactional risk which is negatively related to trust. This article concludes with implications for academia and practitioners.