As novel payment technology becomes more available to retailers, relatively little is known about the impact its adoption has on retailers’ firm value. This study finds that, on average, retailers stand to gain from accepting mobile payments, with retailers who incentivize customers to adopt mobile payments appearing to realize the greatest benefits. Additionally, more pronounced benefits are received by retailers employing technology through an expansive mobile payment rollout strategy (i.e., national rollout) as opposed to those that use a more conservative, phased rollout strategy. It should be noted, however, that there is considerable variation in the benefits received by retailers. For example, in comparison with Office Depot, whose firm value rose by 3.31% after adopting Apple Pay, Rite Aid’s firm value increased by only .04%.
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What You Need to Know
- In general, firm value accrues when retailers adopt and incentivize the use of mobile payments to their customers.
- Retailers targeting younger customers, who tend to be less risk averse, benefit more from adopting mobile payments.
- Companies can benefit from an early-mover advantage, which is maximized by an expansive, national rollout strategy.
Mobile payment technology platforms are quickly gaining popularity. Despite this growth, academic research offers little insight into how adopting mobile payment technology impacts firm value. Further, extant studies are silent on the factors that determine the outcome of pursuing this strategy. Results from an event study of 152 announcements of mobile payments show an increase in firm value by an average of 1.03%, highlighting their effectiveness. Further analysis reveals characteristics of mobile payments that can augment this change in firm value. Specifically, positive firm value accrues when retailers promote the use of mobile payments to their customers. The authors also find that, compared with retailers whose target market comprises older customers, retailers targeting younger customers benefit more from adopting mobile payments. Finally, this study reveals an early-mover advantage, which is maximized in conjunction with an expansive, national rollout strategy. In fact, although a national rollout can be more beneficial early, the results show that for retailers that adopt mobile payments later, there is no difference between using an expansive rollout or a more limited, phased rollout strategy.
Simbarashe Pasirayi and Patrick B. Fennell (2023), “The Effect of Mobile Payments on Retailer Firm Value: The Moderating Role of Promotions, Customer Segment, and Rollout Strategy,” Journal of Interactive Marketing, 58 (1), 90–107.