Factors affecting customers intention to use sredit card

Specifically, the relationships among six factors – attitude towards using credit card, perceived financial cost, social influence, perceived credibility, information about credit card,

International School of Business

Mai Viet Dung

FACTORS AFFECTING CUSTOMER’S INTENTION

TO USE CREDIT CARD Evidence from Vietnam

MASTER OF BUSINESS (Honours)

Ho Chi Minh City – Year 2014

Mai Viet Dung

FACTORS AFFECTING CUSTOMER’S INTENTION

TO USE CREDIT CARD Evidence from Vietnam

DEDICATION

To my loving family and friends who support me a lot in my life, study, and work

ACKNOWLEDGEMENTS

Composing this master thesis is a long journey with many unexpected ups and downs; thanks to my great family, good friends, colleagues, and resourceful supervisor, I have accomplished this goal I am blessed beyond all measures, and I just want to say thank you

I wish to extend special thanks to my supervisor, Dr Tran Phuong Thao, for all your time, advice, comments, and encouragement I could not have even imagined how I would have completed this thesis without your support Also, I would like to thank Dr Nguyen Dinh Tho, Dr Nguyen Thi Mai Trang, and Dr Dinh Thai Hoang, who all provide me initial foundation of research design as well as data analysis To the ISB research committee, I am thankful for your time, comments, and kind words that helped me through this process

To my friends at Master of Business program – International School of Business, thank you for your friendship, your laughter, and all the time we have together It made the life of a business post graduate a pleasure

Finally, to my parents and sister, thank you for teaching me the importance and value

of education You are the most supportive force of all; I am grateful to you for your constant support, love, encouragement, faith, and belief in me

ABSTRACT

Vietnam’s credit card payment market has become one of the most rapidly growing markets in emerging world; however, there is a paucity of studies about behavioral intention

in the context of credit card and especially in Vietnam The Theory of Reasoned Action (TRA) was used as the foundational model in order to develop a modified model reflecting intention to use credit card in the thesis Specifically, the relationships among six factors – attitude towards using credit card, perceived financial cost, social influence, perceived credibility, information about credit card, and materialism – and customer’s intention to use credit card were examined Results suggest that attitude towards using credit card, social influence, and information about credit card are important determinants to predict Vietnamese bank customer’s intention to use credit card

Key words: credit card, intention to use, TRA, Vietnam

CHAPTER 2 - LITERATURE REVIEW, HYPOTHESES

2.4 Perceived financial cost and customer’s intention to use credit card 13

2.7 Information about credit card and customer’s intention to use credit card 16

3.1 Research process 21

CHAPTER 5 – CONCLUSION, IMPLICATIONS, AND FURTHER STUDIES 44

Page

Figure 2.1: The Theory of Reasoned Action 9

Figure 2.2: The Theory of Planned Behavior 10

Figure 2.3: Conceptual Model 19

Figure 3.1: Research process 22

LIST OF TABLES

Page

Table 3.1: Scale Items 24

Table 4.1: Profile of respondents 30

Table 4.2: Total Cronbach’s alpha 32

Table 4.3: Cronbach’s alpha, SCR, AVE for each variable 32

Table 4.4: Total variance explained 35

Table 4.5: Rotated Component Matrix 36

Table 4.6: Summarized Factor analysis 37

Table 4.7: Bivariate Correlation 38

Table 4.8: Regression Analysis Model 40

Table 4.9: Hypotheses results 42

ABBREVIATIONS

ATT: Attitude towards using credit card AVE: Average variance extracted EDC: Electronic data capture EFA: Exploratory factor analysis

INF: Information about credit card INT: Customer’s intention to use credit card

PC: Perceived credibility PFC: Perceived financial cost POS: Point-of-sale

SCR: Scale composite reliability

SPSS: Statistical package for social sciences

TPB: Theory of planned behavior

VIF: Variance inflation factors

CHAPTER 1 - INTRODUCTION

1.1 Background of study

Payment represents both cash and non-cash financial transactions In cash payment, cash moves directly from the buyers’ bank to the sellers’ bank through face-to-face exchange in the market; whereas, in non-cash payment, payment information flows from the buyer to the seller through commercial banks (Sumanjeet, 2009) Non-cash payment can be made by means of credit transfers, cheques, cards, direct debits, e-money, mobile payment (Andries & Martin, 2004; Dimov, 2011; Capgemini, 2014)

Non-cash payment method brings benefits not only for banks but also for customers and merchants Going cashless cuts the security cost and cash handling cost dramatically (Coyle-Camp, 1994) It also makes the economy more efficient and yields a meaningful boost to the economic growth through a multitude of factors including transaction efficiencies, consumers’ access to credit and their confidence in the payment system (Proquest, 2013) Thus, this type of payment has been developed so far As indicated by Capgemini (2014), total global non-cash volume is expected to reach 365.6 billion transactions during the year 2013; in which, card payment is the primary driver of non-cash transactions growth Among card payment method, two major types of card are debit card and credit card issued by commercial banks They are issued under an umbrella brand by financial institutions that are members of a bankcard association, i.e Visa, Mastercard, or

by individual institutions (Foscht, Maloles, Swoboda, & Chia, 2010) Borzekowski and Kiser (2007) indicated that debit cards appear to serve primarily as a substitute for cash and cheques; credit cards are very often used to extend payment

Debit cards allow the cardholder to receive cash and monitor account activity at an automated teller machine (ATM), as well as pay for goods and services A debit card transaction involves the automatic withdrawal of funds from the cardholder’s demand deposit bank account It means that the customer must have the funds in his/her account before a purchase transaction is consummated, and he/she cannot spend more than the money in his/her account (Foscht et al., 2010)

Credit card was first issued in USA by the Western Union in 1914, then it has been the most popular and advanced means of payment and settlement (Bai & Chen, 2013; Kaynak, Kucukemiroglu, & Ozmen, 1995) Credit card payment is the preferred payment method to purchase goods and services abroad due to factors such as convenience, security, and costs, accounting for 74% of all non-cash payments transactions worldwide (Capgemini, 2014) It

is referred as the mean of payment that involves the concept of buying first and paying later (Amin, 2012a) It allows for purchases against a pre-approved line of credit; the account holder has the choice of whether to pay off the entire balance without interest or opt for monthly installments with the balance serving as revolving credit with interest (Euromonitor International, 2010; Foscht et al., 2010) Furthermore, it is also easier to obtain credit card than applying for personal loan, which requires the applicant to comply with more formalities like providing guarantors or collaterals (Ahmed, Ismail, Sadiq Sohail, Tabsh, & Alias, 2010) In other words, credit card is a credit certificate issued by banks and non-bank financial institutions to users so as to be used both as a convenient payment medium in place of cash and cheques and as a means of obtaining short-term revolving credit (Abdul- Muhmin & Umar, 2007; Bai & Chen, 2013)

In the literature, scholars are interested in doing research on credit card, especially its pattern usage and customer’s intention to use credit card (e.g Abdul-Muhmin & Umar, 2007; Ahmed et al., 2010; Amin, 2007, 2012a, 2012b; Chan, 1997; Delener & Katzenstein, 1994; Erdem, 2008; Gan, 2008; Jamshidi, 2012; Johnson, 2007; Khare, Khare, & Singh, 2012) Various studies have examined the adoption of credit cards payment and other non-cash payments like internet banking and mobile banking based on foundational theories of behavioral psychology such as Theory of Reasoned Action (TRA), Theory of Planned Behavior (TPB), and The Technology Acceptance Model (TAM) (e.g Ahmed et al., 2010; Al-Smadi, 2012; Amin, 2007, 2008, 2012a, 2012b; Amin & Ramayah, 2010; Chong et al., 2010; Lin & Nguyen, 2011; Luarn & Lin, 2005; Pikkarainen, Pikkarainen, Karjaluoto, & Pahnila, 2004) They extend those theories and include additional variables and constructs

to explain custumer’s behavior in specific contexts Some factors affecting custumer’s intention to use credit card payment or other non-cash payments are examined such as:

attitude towards behavior (Amin, 2012a), subjective norm (Amin, 2012a; Celik, 2011), perceived usefulness, perceived ease of use (Celik, 2011); perceived risk (Őzkan, Bindusara, & Hackney, 2010; Thakur & Srivastava, 2014); security, trust, perceived advantage (Őzkan, Bindusara, & Hackney, 2010); perceived credibility, the amount of information about card, perceived expressiveness (Amin, 2007, 2008); perceived financial cost (Amin, 2012a); adoption readiness, personal innovativeness (Thakur & Srivastava, 2014); bank’s policies (Teoh, Chong, & Yong, 2013); lifestyle (Khare, Khare, & Singh, 2012); materialism (Pinto et al., as cited in Limbu, Huhmann, & Xu, 2012; Norvilitis et al.,

as cited in Limbu et al., 2012; Nga, Yong, & Sellappan, 2011); personal characteristics (Foscht et al., 2010; Khare et al., 2012); demographics (Khare et al., 2012; Teoh et al., 2013); etc

1.2 Research problem

Owing to the utilities of credit card payment as well as economic and customer behavioral changes, credit card payment has been grown quickly for decades The most significant changes are occurring in emerging world, driven by rapid urbanization, a growing middle class as well as younger population (Rau, 2013) However, most of academic researches on credit card are about actual behavior in developed and western countries, some are from Asia countries; there is a paucity of studies about behavioral intention in the context of credit card and especially in Vietnamese market Due to legal, structural, cultural, geographical, and socio-economic differences among countries, variances in practices may have an effect on credit card behavioral intention

Vietnam is a developing country, and its card payment market has become one of the most rapidly growing markets in the world, increasing at an annual rate of 37% between

2008 and 2012 (Rau, 2013) To date, the Vietnam’s card payment network has accepted most popular card brands in the world, including Visa, MasterCard, American Express, JCB, Diners Club, CUP and DiscoverCard This is partly supported by the Vietnamese government project titled Development of Non-cash Payment in Vietnam, Period 2006-

2010 with vision 2020 or Project 291, approved by the Prime Minister in December 2006 The document emphasises the promotion of non-cash payment for the replacement of cash,

ensuring the safety, convenience and efficiency of payment systems and non-cash payment instruments; striving to reduce the ratio of cash to total payment instruments to around 15%

by 2020 (Le & Lim, 2008)

Credit card has been introduced in Vietnam since 1996, but credit card usage still deals with limitations In many economically developed countries, credit card ownership is so widespread among customers that penetration rates are approaching 100 percent (Abdul-Muhmin & Umar, 2007); however, there are only 2.43 million credit cards issued in Vietnam (State Bank of Vietnam, 2014b) while the population of Vietnam is expected to reach 90 million at the end of the year 2013 (Tuoitrenews, 2012) This means one credit card per 37 persons, whereas the corresponding figure for Europe is one for 10 persons, and for the USA is one credit card for every 4 persons (Kaynak & Harcar, 2001) Additionally, the number of credit cards is too small in comparison to the total of 46,762,997 personal bank accounts (State Bank of Vietnam, 2014c) Therefore, Vietnam has a huge potential for credit cards expansion

Moreover, cash payment is still “king” in Vietnam while credit cards have become a major system for payment in many developing countries of the world (Watkins, 2000) The reason is that payment by cash is the most “transparent” form of payment with consumers having a good awareness of the real value of funds being used (Raghubir & Srivastava, as cited in Kamleitner & Erki, 2013) Many consumers who possess bank cards still prefer to use cash in purchase due to the Vietnamese cash-oriented payment culture A number of consumers are unaccustomed to using cards and even unaware that cards could be used to make purchases (Euromonitor International, 2010) A majority of card transactions are cash withdrawals (Le & Lim, 2008); card transactions registered retail value growth of only 18%

in 2010 despite the increasing presence of point-of-sale (POS) terminals in many modern retail outlets (Euromonitor International, 2010) These bring out a paradox between the growth of credit cards and the card payment use

Since becoming an official member of World Trade Organization in January 2007 (World Trade Organization, 2007), the Vietnamese government has loosened a number of protective measures for domestic commerce as well as banking financial fields There are

over 150 banks and credit institutions fairly competing in Vietnam these days (State Bank of Vietnam, 2014a) Customers no longer just bank with one institution but are increasingly using a number of banks at the same time and have thus become “multi-banked” (Baumann, Elliott, & Burton, 2012) Hence, banks are developing banking products and services, especially modern ones like credit card, so as to struggle for a bigger share in such a potential market As a result, customers have a wide range of choices of credit card from different issuers with specific features The ultimate success of credit card payment in Vietnam is still depending on customers’ perception and whether they are willing to use credit card, as well as how banks understand customer insight in launching their credit cards and related services As such, there is a need to examine the factors determining Vietnamese bank customer’s intention to use credit card

1.3 Research objective and research questions

The research objective is to investigate critical factors affecting Vietnamese bank customer’s intention to use credit card To achieve this goal, it extends the applicability of the foundational theories about behavioral psychology in a credit card context More specifically, based on previous researches and Vietnamese context, six factors are taken into account, namely: attitude towards using credit card, perceived financial cost, social influence, perceived credibility, information about credit card, and materialism The research questions are as follows:

Question 1: Do attitude towards using credit card, perceived financial cost, social influence, perceived credibility, information about credit card, and materialism statistically affect customer’s intention to use credit card?

Question 2: If yes, to what extent how do these factors affect customer’s intention to use credit card?

1.4 Scope of research

The study is conducted in Ho Chi Minh City which is the largest city and a bustling, dynamic and industrious center in Vietnam Most of banking institutions in Vietnam have established and developed their own products and services in this city

The data collection is based on administered questionnaire towards individual customer of commercial banks The questionnaire is designed to capture custormer’s view

on six constructs: attitude towards using credit card, perceived financial cost, social influence, perceived credibility, information about credit card, and materialism, together with their intention to use credit card

The timeframe of conducting was arranged from the middle of July to the end of August in 2014

1.5 Research significance

Because consumers now have more options for payment, including cash, cheques, debit cards, credit cards, they not only make product choice decision, but also choose which payment mode to use in purchasing process Factors influencing these payment mode decisions are of interest to financial institutions, retailers and policy makers (Abdul-Muhmin, 2010)

The study is expected to enhance understanding of factors affecting customer’s intention to use credit card with evidence from Vietnam This contributes to existing academic knowledge about customer behavioral psychology, especially in credit card context The results of this research assist in increasing credit card research in not only Vietnam but also emerging economies, and thus promote more debates about this issue

In terms of empirical values, the study will be useful for credit cards issuers, mainly banks, to form suitable marketing strategy in competitive banking industry of Vietnam in order to attract more customers, as well as government policy makers in their effort on boosting non-cash payments in Vietnam Thus, it may support, to some extent, for the development of the banking industry in Vietnam in the future

1.6 Structure of the thesis

The thesis is structured into five chapters as follows:

Chapter 1 gives out background of credit card payment, problems related to Vietnam’s credit card market, and research objectives as well

Chapter 2 discusses the formulation of research model based on extensive review of the literature

Chapter 3 renders a discussion on research designing, sampling, and measurements of constructs in research model

Chapter 4 conveys results of analyzing the collected data, concentrating on testing hypotheses proposed in Chapter 2

Chapter 5 provides roundup and discussion on the findings of research as well as research limitations and propositions for future work

CHAPTER 2 - LITERATURE REVIEW, HYPOTHESES

AND CONCEPTUAL MODEL

This chapter discusses a thorough review of foundational theories and prior studies on customer’s behavioral intention, proposes hypotheses about the relationship between six constructs and the customer’s intention to use credit card, and then develops a conceptual model

2.1 Foundational theories

Two most powerful tools to test behavioral intention are Theory of Reasoned Action (TRA) and Theory of Planned Behavior (TPB) They have been applied in researches about behavioral intention in banking context so far (e.g Al-Smadi, 2012; Amin, 2007, 2008, 2012a, 2012b; Amin & Ramayah, 2010; Chong et al., 2010; Hansen & Solgaard, 2004; Kaynak & Harcar, 2001; Teoh et al., 2013)

2.1.1 Theory of Reasoned Action (TRA)

TRA is introduced by Fishbein and Ajzen in 1975 to establish relationships between beliefs, attitudes, intentions and behaviors (Taib, Ramayah, & Razak, 2008) The theory suggests that the immediate antecedent of a behavior is the intention to perform the behavior

in question TRA specifies two conceptually independent determinants of intention, namely: attitude towards behavior, and subjective norm (Ajzen & Madden, 1986) Attitude towards behavior is referred to the positive or negative feelings an individual has on a particular behavior It is a function of one’s salient belief about performing the behavior and an evaluation of the outcomes resulting from the behavior Subjective norm refers to the social pressure an individual has on whether to complete behavior or not This is a person’s belief that the salient referent thinks he/she should or should not perform the behavior (Chang, 1998)

According to TRA, the more favorable attitude towards performing a behavior which a person is holding, the higher intention he/she will perform it Additionally, a person who perceives more social pressure to perform a behavior will highly intend to perform it than a person with lower one

Figure 2.1: The Theory of Reasoned Action

(Source: Fishbein & Ajzen, 1975)

TRA model has been applied in different contexts According to Amin (2012b), various academic works have employed the TRA model into their studies because of three reasons Firstly, the theory is well suited for the purpose of examining and predicting a particular behavior Secondly, it has been praised for its flexibility to be applied into different contexts of research like online stock trading, knowledge sharing, banking, and the marketing area Thirdly, the TRA can be used to measure behavioral intention and actual of

a particular situations, systems or even products

2.1.2 Theory of Planned Behavior (TPB)

The TRA is questioned because it assumes that all human behaviors are volitional and rational (Chang, 1998) It means that an individual has full control over his/her behavior though not all behaviors are fully volitional or fully controlled by consumers due to various factors Therefore, TPB extends from TRA by incorporating an additional construct, namely perceived behavior control, to account for situations in which an individual lacks substantial control over the targeted behavior (Ajzen, 1991) According to TPB, an individual’s behavior can be explained by his/her behavioral intention, which is jointly influenced by attitude, subjective norms and perceived behavioral control In which, besides retaining attitude and subjective norms of TRA, perceived behavioral control refers to an individual’s perceptions of the presence or absence of the requisite resources or opportunities necessary for performing a behavior (Ajzen & Madden, 1986)

Behavior Intention

Actual Behavior

2.2 Customer’s intention to use credit card

Behavioral intention is defined as a person’s intention to perform various behaviors (Fishbein & Ajzen, 1975) The construct originally developed in the TRA is widely used in subsequent models related to customer’s intention The TRA suggests that behavioral intention is a direct predictor of actual behavior In this context, the construct refers to customer’s intention to use credit card

Customers have different motives for holding credit card Some hold credit card for its convenience as a payment instrument, while others hold it as a mean of obtaining revolving credit to finance consumption (Abdul-Muhmin & Umar, 2007) Measuring intention will give acceptable indication of customer’s behavior In general, prior studies on credit intention are mainly about the issue of credit card default, attitude towards debt and the use

of credit card (Amin, 2012b)

Erdem (2008) studied the probability of credit card default and the usage intention in Turkey, then noted that credit card use positively impacts on personal finance, yet led to the negative impacts such as divorcing, bankruptcy, committing suicide and killing of family members Especially, the number of children, level of education, subjective norm, perceived behavioral control and attitude towards the behavior are important predictors for the behavioral intention This study provides important evidence about the need to control credit card debt

Behavior

Perceived Behavioral

Control (Control beliefs x

Influence of Control beliefs)

Figure 2.2: The Theory of Planned Behavior

(Source: Ajzen, 1991)

A study carried out in Turkey by Kaynak and Harcar (2001) to examine consumer’s attitude and intention towards credit card ownership and usage finds that knowledge structure, beliefs, likes and dislikes as well as attitude of owner influence its usage Age is

an influential predictor in determining the ownership of a credit card Barker and Sekerkaya (1992) also find that the middle age group is the most likely to hold and use credit cards Kinsey (as cited in Delener & Kazenstein, 1994) examines the relative importance of various household characteristics in determining the number of credit card accounts per household, then finds that having a positive attitude towards credit is one of the most important variables determining the probability of having one or more credit card accounts Abdul-Muhmin and Umar (2007) examine the effect of demographics and attitude towards debt on credit card ownership and usage in Saudi Arabia They find out that females are more likely to possess credit cards than males, card usage tends to be selective, attitude towards debt is a significant determinant of card ownership but not to usage behavior In addition, Davies and Lea (1995) examine the students’ attitude towards debt in the UK and find that the income level and the amount of debt are positively correlated Martell and Fitts (as cited in Delener & Kazenstein, 1994) claim that married individuals with high income who maintain a number of different bank accounts are more likely to be bank credit card users Khare et al (2012) also states that credit card ownership is dependent on increase in income and compulsive buying behavior Gan, Maysami, and Koh (2008) find that the number of credit cards is significantly influenced by income and gender as well as perception about credit card

Mansor and Che-Mat (2009) investigate the impact of demographic factors on Islamic credit card usage in Malaysia The study findings are: income is an influential predictor for the use of Islamic credit cards among the existing users, individuals who have lower and middle income tend to use credit cards because of its safety and convenience features Kaynak and Harcar (2001), and Kinsey (as cited in Delener & Kazenstein, 1994) observes that as income increases so does the number of credit card accounts Khare et al (2012) reports that younger people are more likely to use credit card while older people are comfortable with cash payment, and men are more likely to have credit cards than women

Typically, Amin (2012b) analyses the probability of Islamic credit card usage intention among Islamic bank customers and finds that financial recommendation, knowledge on credit card, age, marital status, religion and education level significantly affect the customer’s credit card usage intention

This study is to measure behavioral intention to use credit card among Vietnamese bank customers Some previous studies applied TRA with sufficient modification in this context (e.g Amin, 2007, 2008, 2012a) Thus, in order to better explain the intention to use credit card, this study modifies the original TRA model by including the behavioral intention, attitude and subjective norm, and adding some variables relevant to the Vietnamese credit card context Based on prior researches, four variables are considered as followed: perceived financial cost (e.g Amin, 2012b; Luarn & Lin, 2005), perceived credibility (e.g Wang, Wang, Lin, & Tang, 2003; Luarn & Lin, 2005; Amin, 2007, 2008), information about credit card (e.g Pikkarainen et al., 2004; Sharpe et al., 2012), and materialism (Limbu et al., 2012) All three original variables are renamed so as to fit the study context: behavioral intention is changed to customer’s intention to use credit card, attitude is changed to attitude towards using credit card, and subjective norm is change to social influence

2.3 Attitude and customer’s intention to use credit card

Attitude is defined as evaluative effect of individuals’ positive or negative feelings in a particular behavior performing (Fishbein & Ajzen, 1975) In other words, attitude is a subjective tendency to do something, expressed through the favorable or unfavorable evaluation of a given object (Eagly & Chaiken, 1993)

Attitude has been an important indicator that shape adoption intention of the system in different contexts (Jamshidi & Hussin, 2012) Typically, attitude has been modified in banking context through studies of Taib, Ramayah, and Razak (2008); Amin, Rahman, and Ramayah (2009); Amin, Rahman, Sondoh, and Hwa (2011) Taib et al (2008) point out the significant positive link between attitude and Islamic partnership home financing among postgraduate students in Malaysia Also, there is empirical evidence to suggest that attitude

is positively related to credit card usage intensity (Abdul-Min & Umar, 2007) Amin et al

(2011) claims attitude as a significant determinant of Islamic personal financing usage among Malaysian bank customers; especially, Amin (2012b) finds that attitude has strong influence over the behavioral intention to use Islamic credit card Meiden (as cited in Chan, 1997) insists that the greatest determinant of whether a cardholder is inactive or active is attitude A research by Kaynak and Harcar (2001) verifies the strong relationship between the ownership and positive attitude towards credit card

Vietnam is a developing country where credit card has been introduced for about two decades but not so popularly used The customer’s attitude towards using credit card has not been studied much in the country Based on the foundational theory and prior findings of researches in other developing countries like Malaysia, Turkey, and Saudi Arabia as mentioned above, attitude is expected to positively impact on Vietnamese bank customer’s intention to use credit card

Hypothesis 1: Attitude towards using credit card has a positive effect on customer’s intention to use

2.4 Perceived financial cost and customer’s intention to use credit card

Limited studies have been examined the importance of perceived financial cost Ramayah and Mohd-Suki (2006) find that price is not significantly related to the Internet banking acceptance Nevertheless, Luarn and Lin (2005); Mathieson, Peacock, and Chin (2001); and Amin (2012b) find that perceived financial cost is a significant antecedent affecting behavioral intention in the banking context Luarn and Lin (2005) identify that perceived financial cost has a negative effect on behavioral intention to use mobile banking Sripalawat, Thongmak, and Ngramyarn (2011) also support that perceived financial cost is a critical factor influencing consumer to adopt mobile banking Amin (2012b) points out that the greater the perceived financial cost, the likelihood that Islamic credit card is selected will be lower To handle such debates, it is worth doing further research about the relationship between perceived financial cost and behavioral intention

In this study, perceived financial cost refers to interest rate, annual fee, credit limit, penalty, monthly installment, and type of transaction (Amin, 2012b; Khalid, Butt, Murtazza,

& Khizar, 2013) A survey of Nielson Finance IPG (2011) states that “high fee is applied”

and “high interest rate” are two of barriers Vietnamese customers perceive when thinking about using credit card Thus, it is expected that the outcomes of prior studies could also be generalized into the Vietnam’s credit card context

Hypothesis 2: Perceived financial cost has a negative effect on customer’s intention to use credit card

2.5 Social influence and customer’s intention to use credit card

Social influence as used in this study refers to subjective norm or normative pressure

It is defined as the degree to which an individual perceives how important other people nearby believe he/she should perform an activity (Thakur & Srivastava, 2014) In other words, social influence suggests that behavior is instigated by one’s desire to act as how others act or think one should act (Chen et al., as cited in Taherdoost, Masrom, & Ismail, 2009)

Social influence may come from family members, relatives, friends, classmates and colleagues, especially in a collective society (Liao & Shi, 2009) Results of previous studies have been mixed Chau and Hu (2001) and Lewis et al (2003) find subjective norm to have

no direct impact on intention to use information technology In contrast, Venkatesh and Davis (2000), Teo and Pok (2003) report a significant relationship between subjective norm and behavioral intention Taib et al (2008) also find social influence to be valid constructs

in explaining an individual’s acceptance of Islamic financing products Amin et al (2011) point out that the clients’ social influence is a significant antecedent of the intention to use Islamic personal financing Specifically, a study of Amin (2012a) with the purpose to explain intention to use the Islamic credit card in Malaysia insists the idea that subjective norm is significantly positive to customer intention

In this research, customers using credit card may be perceived by their friends and workers as being more up-to-date with purchasing trend, smarter, or more successful To some extent, Vietnam is a collective society and Vietnamese customers are easily affected

co-by crowd psychology They are likely to sound out relatives, friends, and other surrounding people so as to gain advice and experience before making a decision Besides, they tend to follow the current trends which others do so as not to be isolated Since credit card is a

common payment instrument in the world and it has been launched in Vietnam with good growth over years, it is expected that social influence positively impacts on Vietnamese bank customer’s intention to use credit card

Hypothesis 3: Social influence has a positive effect on customer’s intention to use credit card

2.6 Perceived credibility and customer’s intention to use credit card

Customers are increasingly concerned by security and privacy issues (KPMG, 2009) Sathye (1999) finds that security and privacy concerns are identified as the biggest obstacles

to the adoption of online banking in Australia There’s a fact that many customers are unwilling to give private information like credit card information over telephone or Internet (Pikkarainen et al., 2004) According to Gerrard and Cunningham (2003), customers worry that banks may share customer profiles with other companies and use their information to sell additional products Customers tend to increase purchases once they perceive that their credit card numbers and other sensitive information are safe

Wang et al (2003) define perceived credibility as the extent to which a person believes that the use of internet banking will have no security or privacy threats Their finding is that perceived credibility has a significant positive effect on people’s usage intention Nevertheless, Pikkarainen et al (2004) gives out a contrary result that perceived credibility

is statistically non-significant Lin, Wang, Yang, and Sekarini (2013) share the same finding that perceived credibility is not significantly correlated with intention to use credit card Luarn and Lin (2005), conversely, point out a positive causality exists between perceived credibility and one’s intention to use mobile banking Amin (2007, 2008) also reports a significant association between perceived credibility and intention to use mobile phone credit card

In Vietnam, some cases of credit card fraud have recently been detected by the banks and government Most cases are implemented by foreigners with high technology tricks They cause serious damage and loss to the victims as well as influence the customers’ confidence about safety and security in using credit card Hence, the growth of credit card will be negatively affected

As such, perceived credibility is expected to positively impact on Vietnamese bank customer’s intention to use credit card

Hypothesis 4: Perceived credibility has a positive effect on customer’s intention to use credit card

2.7 Information about credit card and customer’s intention to use credit card

Information refers to the data whose form and content are appropriate for a particular use (Alter, as cited in Amin et al., 2009) The amount of information is very important in adoption (Lin et al., 2013) Howard and Moore (1982), Sharpe, Yao, and Liao (2012) believe that consumers must be aware of new products or service prior to the adoption Sathye (1999) claims that low awareness of online banking is a major factor causing customer to ignore online banking Pikkarainen et al (2004) find information possessed by bank customers to be positively correlated with intention to use online banking Gan, Maysami, and Koh (2008) find that people's lack of information affects adoption and usage

of credit cards However, Nasri (2011) argues that the amount of information a customer has about online banking does not have a significant effect on behavioral intention In the context of credit card, Amin (2007, 2008) claims that the amount of information about mobile phone credit cards positively affect Malaysian customer’s usage intention; the amount of information on mobile credit card has the higher ability to predict and explain the intention to adopt the system This is consistent with a study of Sharpe et al (2012) which indicates that having knowledge of general credit card characteristics is positively related to the likelihood of having credit cards

Credit card acceptance relies on the information published by banks to their customers The most important reason non-holders do not carry credit cards is not being well-informed and not knowing much about it (Barker & Sekerkaya, 1992) Once a potential customer has adequate and accurate information concerning credit card attributes including its features, availability, applying requirements, payment procedures, membership fees, interest rate, repayment conditions, etc., he/she will understand of how credit card is different from other methods of payment as well as his/her benefits from using credit card, then possibly adopt payment with it Information about promotions related to credit card is also important to

customer as it is one of the most frequently quoted reasons for having a card (Ahmed et al., 2010; Chan, 1997)

Although credit cards have been in Vietnam since 1996, there have been only 15 issuers and the scope of launching is still quite narrow, mainly in big cities like Hanoi, Ho Chi Minh, and some tourist spots (VCCInews, 2014) In a survey done by Nielson Finance IPG (2011), only 42% of Vietnamese customers aware of credit card; a number of customers have not enough basic information about credit card as well as promotion ads about it This turns to be a barrier against credit card growth Therefore, the following hypothesis is developed:

Hypothesis 5: Information about credit card has a positive effect on customer’s intention to use credit card

2.8 Materialism and customer’s intention to use credit card

Materialism is defined as “a tendency to consider material possessions and physical comfort as more important than spiritual values” (Oxford Dictionary, n.d) Richins and Dawson (1992) describe materialism as a mind-set or constellation of attitudes regarding the relative importance of acquisition and possession of objects in one's life Material values are conceptualized as encompassing three domains: the use of possessions to judge the success

of others and oneself, the centrality of possessions in a person’s life, and the belief that possessions and their acquisition lead to happiness and life satisfaction (Richins, 2004) Materialists value possessions and their acquisition more highly than most other matters and activities in life; they tend to judge their own and others' success by the number and quality of possessions accumulated (Richins & Dawson, 1992) Consumers high in materialism believe that acquisition is important to their life, a good indicator of success and necessary to their satisfaction in life, so expanded levels of consumption will make them happier (Yu, 2012) Meanwhile, credit card creates opportunities for individuals to make certain purchases that they otherwise cannot afford; thus, Feinberg (as cited in Delener & Kazenstein, 1994) indicates credit cards as a factor facilitating spending Willis and Worthington (as cited in Khare et al., 2011) suggest that credit cards communicate high

“status and value”; Amin (2012a) insists that credit card has symbolized the status of wealth

of a person in order to make him/her special than others

Credit card possession and use is influenced by materialism (Tokunaga, as cited in Joo, Grable, & Bagwell, 2003) Rindfleisch et al (as cited in Park & Burns, 2005) mentions

a strong relationship between materialism and credit card use According to Watson (as cited in Limbu et al., 2012), consumers with high level of materialism are more likely to view themselves as spenders who spend more money and have more favorable attitudes towards borrowing than consumers low in materialism Pirog and Roberts (as cited in Limbu et al., 2012) report a positive impact of materialism on credit card misuse Pinto et al (as cited in Limbu et al., 2012) claim that highly materialistic consumers use their credit cards more frequently and hold higher outstanding balances than the others Conversely, Norvilitis et al (as cited in Limbu et al., 2012) find that materialism is not a significant predictor of credit card debt Nga, Yong, and Sellappan (2011) study image consciousness, materialism, and consumer spending on credit card usage in Malaysia, then find that materialism is positive correlated to credit card usage intention, but the relationship is not significant Hence, this study proposes that materialism has a positive effect on credit card usage intention in Vietnam where shopping takes about 8% and buying luxury items account for about 7% of household income (Nielson Finance IPG, 2011)

Hypothesis 6: Materialism has a positive effect on customer’s intention to use credit card

2.9 Conceptual model

Owing to extant review of literature and previous researches, a conceptual model is proposed to show the relationship between six independent variables consisting of Attitude towards using credit card, Perceived financial cost, Social influence, Perceived credibility, Information about credit card, Materialism, and one dependent variable – Customer’s

intention to use credit card

H2(-) H1(+)

H3(+) H4(+) H5(+)

H6(+)

Figure 2.3: Conceptual Model

Hypothesis 1: Attitude towards using credit card has a positive effect on customer’s intention to use

Hypothesis 2: Perceived financial cost has a negative effect on customer’s intention to use credit card

Hypothesis 3: Social influence has a positive effect on customer’s intention to use credit card

Hypothesis 4: Perceived credibility has a positive effect on customer’s intention to use credit card

Hypothesis 5: Information about credit card has a positive effect on customer’s intention to use credit card

Hypothesis 6: Materialism has a positive effect on customer’s intention to use credit card

2.10 Chapter summary

Chapter 2 presents the review of literature to undertaken the study Through careful review of the literature and prior relating studies, the paper applied the TRA with some modifications for best suit in case of Vietnam’s credit card market Three original construct

of the TRA namely attitude, subjective norm, and behavioral intention were retained with little adjustment to fit the case, while four new constructs including perceived financial cost,

Intention to use Credit card

Attitude towards using credit card

Perceived financial cost

Perceived credibility

Materialism

Information about credit card

Social influence

perceived credibility, information about credit card, and materialism were added to form the conceptual model with six hypotheses

CHAPTER 3 – RESEARCH METHODOLOGY

This chapter presents how the research was implemented The chapter composes of three main parts First, the research process shows the way to conduct this study; second part is measurement scales; and the third part mentions the sampling and data collection

3.1 Research process

The research focused on the probability of credit card used by a local bank customer in Vietnamese context It was conducted in Ho Chi Minh City in July – August 2014 The research process in this study consisted of six steps:

Step 1 Define the research problem, research objective, research questions

Step 2 Review the literature

A conceptual model of factors affecting customer’s intention to use credit card together with research hypotheses were developed based on thorough literature review

Step 3 Research design developed

Survey method with convenient sampling was employed to collect the required data for empirical testing the conceptual model A draft questionnaire was designed with measurement scales from previous studies It was initially designed in English and later translated into Vietnamese Especially, there was a screening question designed to know whether the respondent has credit card or not

Step 4 Data collection

The research was carried out through two phases Firstly, a pilot survey was conducted

to test the clarity of the survey questions Secondly, the main survey was launched to collect data The purpose of the main survey is to measure and test the relationship between independent variables and dependent variable

Step 5 Data analysis

Data from the field was compiled, sorted, and coded to have the required quality, accuracy and completeness Data was entered into the computer system using the IBM Statistical Package for Social Sciences (SPSSv22.0) for analysis

Step 6 Report the research findings

After analyzing the data collected, the research results were interpreted to give out research conclusion and implications

Figure 3.1: Research process

3.2 Measurement

3.2.1 Measurement scale

The questionnaire was divided into two sections One section consisted of demographic information (gender, marital status, age, education level, working field, and income) while the other consisted of the measurement of variables There were seven constructs to be examined in latter section, namely: attitude towards using credit card,

Identify the problem

Review the literature

- Variables defined

- Hypotheses & Conceptual model

Research design developed

(Type, purpose, timeframe, scope, environment)

- Data collection design

perceived financial cost, social influence, perceived credibility, information about credit card, materialism, and customer’s intention to use credit card

The items used in this survey were adapted from prior studies published in reviewed journals They were phrased in the form of statements to investigate the respondents’ perception In consistent with previous studies (e.g Amin, 2007, 2008), five – point Likert scale was applied: strongly disagree (1), disagree (2), neutral (3), agree (4), and strongly agree (5) As such, the content validity in this study should be relative acceptable Specifically, the measurements of seven constructs are given as follows:

peer-Attitude towards using credit card (ATT): seven statements capturing information

about attitude towards using credit card was based on the studies of Pattarin and Cosma (2012), Amin and Ramayah (2010), and Al-Smadi (2012)

Perceived financial cost (PFC): this was measured based on three items derived and

adjusted from Luarn and Lin (2005), and Sripalawat et al (2011)

Social influence (SI): information about this was captured through five statements

developed from Yu (2012), Thakur and Srivastava (2014), and Al-Smadi (2012)

Perceived credibility (PC): this was measured by four items based on studies of Yu

(2012) and Amin (2007, 2008)

Information about credit card (INF): three statements relating to this construct was

developed by Amin (2007, 2008) and Nasri (2011)

Materialism (MAT): a short form of nine-item scale for materialism developed by

Richins (2004) was applied This short form encompassed the same three domains of materialism as the long form and possessed acceptable levels of reliability and validity for measuring overall materialism

Customer’s intention to use credit card (INT): this was measured by three statements

from studies of Amin (2007, 2008) and Davis (1989)

Table 3.1: Scale Items

Measures Code Research Items Source

Attitude towards

using credit card

(ATT)

ATT1 It is a good idea to have something

now and pay for it later

Pattarin & Cosma (2012), Amin & Ramayah (2010), Al- Smadi (2012)

ATT2 Having credit card is a good idea

ATT3 I have positive perception on credit

card

ATT4 Credit card is beneficial

ATT5 Using Credit card is wise

ATT6 I like the idea of having credit card

ATT7 I do not like borrowing money

Perceived financial

cost (PFC)

PFC1 The total fee of using credit card is

higher than using other methods of payment

Luarn & Lin (2005), Sripalawat et al (2011)

PFC2 The credit card issuers charge me lot

of money in case of late making monthly payment

PFC3 Credit card monthly installment is

cost burden to me

Social influence

(SI)

SI1 People who are important to me

think that I should use credit cards

Yu (2012), Thakur & Srivastava (2014), Al- Smadi (2012)

SI2 People who are familiar with me

think that I should use credit cards

SI3 People who influence my behavior

think that I should use credit cards

SI4 Most people surrounding with me

use credit cards

SI5 People whose opinion I value think I

should use credit cards

Perceived

credibility (PC)

PC1 I believe my information is kept

confidential when using credit cards

Yu (2012), Amin (2007,

2008)

PC2 I believe my transactions are secured

when using credit cards

PC3 I believe my privacy would not be

divulged when using credit cards

PC4 I believe the banking environment is

safe

Measures Code Research Items Source

Information about

Credit card (INF)

INF1 I have generally received enough

information about credit cards

Amin (2007, 2008); Nasri (2011)

INF2 I received enough information about

the promotion of credit cards

INF3 I obtained information on credit

cards via the bank and its management

Materialism

(MAT)

MAT1 I admire people who own expensive

homes, cars, and clothes

Richins (2004)

MAT2 The things I own say a lot about how

well I’m doing in life

MAT3 I like to own things that impress

people

MAT4 I try to keep my life simple, as far as

possessions are concerned

MAT5 Buying things gives me a lot of

pleasure

MAT6 I like a lot of luxury in my life

MAT7 My life would be better if I owned

certain things I don't have

MAT8 I’d be happier if I could afford to buy

more things

MAT9 It sometimes bothers me quite a bit

that I can’t afford to buy all the things I’d like

Customer’s

intention to use

credit card (INT)

INT1 My general intention to use a credit

card is very high

Amin (2007, 2008), Davis (1989)

INT2 I’ll think about using a credit card

INT3 I’ll use a credit card in the future

3.2.2 Pilot test

A pilot test was done by asking 5 banking specialists and 6 bank customers who have experience of credit cards Feedback from the pilot test then was employed to improve the translation, the readability and the quality of the questions used

As commented from respondents, one item measuring “attitude towards using credit card” (ATT6) was eliminated due to overlapped meaning with another, only formatting and some editing work were done to make the final version of questionnaire (see Appendix A)

3.3 Sampling and Data collection

3.3.1 Minimum sample size

The target population of this study are individual customers who have at least one account at any banks but are yet to have used credit cards

In terms of sample size, Hair, Black, Babin, Anderson, and Latham (2006) suggest that the minimum requirement for sample size is at least five participants per item According to Comrey and Lee (1992), a sample size of 50 is very poor, 100 is poor, 300 is good, and 500

is very good in factor analysis The total number of items to measure all of the variables in this study is 33 (after removing one item from pilot test) Hence, by applying Hair et al (2006) recommendation, the minimum requirement is to have 165 responses (33 items x 5)

3.3.2 Data collection

The survey was delivered to bank customers in form of both electronic survey and handout survey by end of August 2014 The respondents were informed that their responses would be kept confidential and would be analysed only at the aggregate level A hand delivered, self-administered survey was chosen because it is considered to result in less interviewer bias and has a lower cost per survey Using this style of survey ensured the availability of someone to answer the respondent’s questions and to encourage the subject to complete the survey (White & Yanamandram, 2004)

A link of electronic survey was established on Google Drive then sent to 150 participants (colleagues, friends, and relatives who have bank account) via e-mail Participants just needed to click on the link led them to the electronic questionnaire and ticked their answer for multiple choice questions Meanwhile, paper survey was also distributed to 350 customers at four branches of Agribank, BIDV, Vietcombank, and Vietinbank (top four biggest banks in Vietnam) in District 1; three supermarkets (BigC Go Vap, Coopmart Nguyen Kiem, Maximart 3/2); and two shopping malls (Parkson Flemington, Diamond Plaza)

A total of 500 questionnaires were distributed and 387 responses were received, showing a response rate of about 77 percent Such a high response rate was mainly due to the fact that the questionnaires were collected when the respondents completed the forms However, only 314 questionnaires were usable (63 percent of total questionnaires distributed and 81 percent of total returned ones) due to unqualified respondents and incomplete forms This provides a good sample size for factor analysis as recommended by Comrey and Lee (1992)

3.4 Data analysis

Once data collection was completed, raw data was compiled, sorted, and coded to have the required quality, accuracy and completeness Edited data was input and analyzed by SPSSv22.0 Variables’ reliability would be tested by Cronbach’s alpha, validity would be tested by exploratory factor analysis (EFA), hypotheses and model would be tested by multiple regression analysis

3.4.1 Reliability measure

In order to check reliability of each scale with particular sample and to consider the internal consistency of the scales, it was necessary to use Cronbach’s alpha which should be above 0.60 (Nunally, as cited in Ahmed et al., 2010)

Also, the corrected item-total correlation values should be at least 0.30 to ensure each

of items was measuring the same from the scale as a whole (Pallant, 2011)

Besides, in order to examine the psychometric properties of factors, the scale composite reliability (SCR) that focus on the standardized loadings and error of measurement for every item and the average variance extracted (AVE) measures have been calculated SCR and AVE are calculated by the following formular:

SCR = {(sum of standardized loadings)2} / {(sum of standardized loadings)2 + (sum of indicator measurement errors)}

AVE = {sum of (standardzied loadings squared)} / {[sum of (standardzied loadings squared)] + (sum of indicator measurement errors)}

3.4.2 Exploratory factor analysis (EFA)

In order to evaluate the validity and the correlation among variables to determine extracted factors that qualified for further data analysis, EFA was applied using Principal Component Analysis alongside with Varimax and Kaiser Normalization rotation method According to Pallant (2011), some requirements of EFA should be satisfied:

- The minimum of sample size should be at least 100 and rate of observations per items of models should be five cases for each of the items, it means the minimum required sample size should be at least 165 cases (33 items x 5) The actual sample size was 315, higher than 165 so it met the requirement

- Kaiser-Meyor-Olkin (KMO) test must be equal or above 0.60 (Tabachnick & Fidell, 2007)

- Barllett’s test of sphericity should have significant less than 5%

- In order to extract factors, the eigenvalue of factors must be greater than 1 (Kaiser, 1956)

3.4.3 Multiple regression analysis

The multiple regression analysis was done to determine how independent variables affect the dependent variable The multiple regression analysis required that following conditions should be satisfied (Pallant, 2011):

- The minimum sample size: n = 50 + 8m = 50 + 8x6 = 98 reponses (m: number of independent variables in the conceptual model) The actual number of cases was 314, so this condition was satisfied

- The collinearity test on variables was accessed by two values namely “Tolerance” and “VIF”; in which, VIF values should be less than 10 and Tolerance values should be more than 0.10

- The Normal probability plot (P-P) was required with most of the plots concentrated into the center (along the 0 point)

- The presence detection of outliers was considered from the Scatterplot