Electronic payment system use: a mediator and a predictor of financial satisfaction

ARTICLE INFO Khurram Ajaz Khan and Mohammed Anam Akhtar (2020). Electronic payment system use: a mediator and a predictor of financial satisfaction. Investment Management and Financial Innovations, 17(3), 246-262. doi:10.21511/imfi.17(3).2020.19 DOI http://dx.doi.org/10.21511/imfi.17(3).2020.19 RELEASED ON Monday, 28 September 2020 RECEIVED ON Monday, 25 May 2020 ACCEPTED ON Friday, 18 September 2020


INTRODUCTION
Financial satisfaction is a major element of not only financial well-being, but also overall life satisfaction (Woodyard & Robb, 2016). One of the key dimensions to achieve overall satisfaction is financial satisfaction (Loewe, Bagherzadeh, Araya-Castillo, Thieme, & Batista-Foguet, 2014). Several aspects have been explored that affect financial satisfaction ( Xiao & Porto, 2017), but the focus of the current study is on the use of digital platforms and how they can affect individuals' financial satisfaction. Studies reveal that with the global expansion of digital sources, the consumption pattern of consumers across the globe also changes (OECD, 2018). Electronic Payment System (EPS) is the essence of the electronic commerce. EPS is a critical issue in the successful implementation of new business models and usage of financial services (Kousaridas, Parissis, & Apostolopoulos, 2008). Besides, as e-commerce expands its horizons, the EPS also gains momentum (С. Kim, Tao, Shin, & K.-S. Kim, 2010). The use of digital platforms in payments can increase effectiveness and ease, which can reduce costs as well. Therefore, this may lead to enhanced financial satisfaction.
Financial capability can be better understood as the technical knowledge of an individual and how well he/she manages resources in each 1. LITERATURE REVIEW 1.1

. Financial advice and EPS use
The current digital explosion has led to the exchange of transactions and services online across various e-commerce and m-commerce channels (Hossain, Xi, Nurunnabi, & Hussain, 2020). Electronic payment system (EPS) is the back bone of a successful e-commerce platform for value exchange (С. Kim, Tao, Shin, & K.-S. Kim, 2010). As e-commerce gains popularity day by day with changing business models, it becomes quite evident that with it EPS also becomes a very critical component (Kousaridas, Parissis, & Apostolopoulos, 2008). Researches have proved that EPS is not only faster but also a safe, reliable, convenient and secure method of payment (M. Cotteleer, C. Cotteleer, & Prochnow, 2007).
A person's understanding of micro and macroeconomic factors and personal finance is better known as financial knowledge (Rothwell, Khan, & Cherney, 2016). Financial knowledge helps an individual in choosing a correct financial product and thus leads to enhanced financial capability through financial know how (Braunstein & Welch, 2002). Advice can be a substitute for learning by one self (Calcagno & Monticone, 2015). It is an alternative way to improve the quality of individual's financial decision-making related to financial services and products. Various authors have argued it to be a substitute to financial literacy (A. Cwynar, W. Cwynar, Kowerski, Filipek, & Szuba, 2020). In the financial market that is full of growing complexity, it is always better to delegate the job by trusting on the services offered by professional financial advisors (Stolper & Walter, 2017). Financial advice seeking behavior is a form of information seeking to make decisions based on marginal benefit and marginal cost (A. Cwynar, W. Cwynar, Kowerski, Filipek, & Szuba, 2020). Some researchers also highlighted that increased internet usage creates access to online experts and resources for advice (van Rooij, Lusardi, & Alessie, 2011). However, the authors failed to find any conclusive literature, which substantiates the point that financial advice seeking behavior has a positive impact on the use of EPS.

Financial anxiety and EPS use
All financial decisions involve an element of risk. This risk of loss of capital or personal bankruptcy leads to distress, which can be termed as financial anxiety (A. Cwynar, W. Cwynar, Kowerski, Filipek, & Szuba, 2020). Researchers around the world have conducted several empirical studies showing that low financial literacy contributes to improper behavior on the part of consumers of financial services, which leads to distress (Lusardi & Tufano, 2015). In a recent study, the authors argue that financial literacy affects the financial risk tolerance of the individual investors (Bayar, Sezgin, Öztürk, & Şaşmaz, 2020). However, more recent study concluded that financial anxiety may trigger financial advice seeking behavior but may not have any impact on the choice of mode of payment (Khan, Akhtar, Dey, & Ibrahim, 2020). Researchers have also established that increased financial anxiety affects the performance level (Joo, Durband, & Grable, 2008). More so, there are studies that have argued that financial anxiety is more amongst males and females born after 1995, as they have witnessed economic recession, wars, etc. (Khan, Akhtar, Dey, & Ibrahim, 2020). Research has also shown that professional financial advice complements financial literacy and thus controls negative behavior and stress (A. Cwynar, W. Cwynar, Kowerski, Filipek, & Szuba, 2020). However, there are studies that have concluded that the level of impact financial advice has on financial knowhow depends on the theme of the advice (Woodyard & Robb, 2016). There are also studies that confirm that increased internet usage leads to increased access to financial advice (van Rooij, Lusardi, & Alessie, 2011). Thus, it can be said that a relationship between financial knowledge and financial anxiety is already being established by many researchers across the globe. Previous literature also has shown that increased exposure to online resources leads to en-hanced financial know-how via advice (van Rooij, Lusardi, & Alessie, 2011) (A. Cwynar, W. Cwynar, Kowerski, Filipek, & Szuba, 2020). However, no conclusive literature has been found that establishes a relationship between financial anxiety and increased usage of EPS, such as anxiousness in digital payment when shopping online.

Financial capability and EPS use
Financial capability can be defined as financial know-how, access to financial resources, and it also includes financial habits of a person (Lin, Bumcrot, Ulicny, Lusardi, Mottola, Kieffer, & Walsh, 2016). Financial capability can also be explained as the ability of an individual to manage his resources well in a given situation (Xiao & O'Neill, 2018). Some studies use financial capability as a synonym for financial literacy (Lusardi & Mitchell, 2014). However, financial capability is much more wider in its scope and includes financial literacy (Sherraden, 2013). It is also discussed as an ability to utilize financial know-how to take calculated financial decisions (Lusardi & Mitchell, 2014). More recently, researchers argued that willingness to plan for financial resources may have a positive impact on the financial capability of an individual (Xiao & O'Neill, 2018). Some of the researchers have used financial behavior to define financial capability (Atkinson, McKay, Collard, & Kempson, 2007). Many researchers argued that financial capability is the application of financial know-how to attain over financial well-being (Xiao, C. Chen, & F. Chen, 2014), and financial capability positively affects financial satisfaction (Çera, Khan, Belas, & Ribeiro, 2020). It also includes access to financial resources specifically for low-income population (Sherraden, 2013). Financially capable people are much more attracted towards digital financial products (Königsheim, Lukas, & Nöth, 2017). Recent studies have shown that generation Z or youths born in and after 1995 are much more digitally involved and active towards online resources (Khan, Akhtar, Dey, & Ibrahim, 2020). Some studies have thus safely identified financial capability as the ability to apply financial knowledge to depict the desired financial behavior (Xiao & Porto, 2016). Therefore, as can be derived from the literature, financial capability is associated with financial knowledge and access to financial resources, but the capability-based approach (Sen, 1993) also requires opportunity, so in this paper, given the lack of avail-able literature, there is an attempt to examine the relationship between financial capability and the use of EPS. From the discussed literature, it is quite evident that this study will investigate how financial capability, financial advice, and financial anxiety influence the use of EPS by young people in the context of a developing country.

EPS use and financial satisfaction
When evaluating financial capability and financial satisfaction in terms of behavior, attitude and knowledge, one would feel that the two of them are very much similar to each other (Joo & Grable, 2004;Xiao & Porto, 2017). To achieve financial satisfaction, an individual is required to achieve overall satisfaction in life (Michalos & Orlando, 2017;Xiao, Tang, & Shim, 2009). Financial satisfaction is a subjective measure of overall financial well-being and the state of being happy with the current economic resources at disposal (Xiao & O'Neill, 2018). Many researchers have related financial satisfaction with financial capability and have argued that financial capability leads to financial satisfaction (Xiao & Porto, 2016;Zainul, 2018). Financial capability leads to development of desirable financial behavior, which in turn leads to financial satisfaction (Xiao, C. Chen, & F. Chen, 2014). However, some studies also argued that financial satisfaction is sometimes very subjective (Joo & Grable, 2004). Researchers argued that the ability to plan effectively in terms of financial resources leads to financial satisfaction (Xiao & O'Neill, 2018). It is also achieved through efficient access to financial resources (Sherraden, 2013). Previous literature examined the relationship between financial satisfaction and income as how happy is an individual with his current financial condition (Joo & Grable, 2004), working sector (Ferrer-i-Carbonell & Gërxhani, 2011), and even in relation to demographics (Kageyama & Matsuura, 2018). However, the authors were unable to find any specific literature in which financial satisfaction is associated with the use of EPS. There is also no conclusive study available in which EPS usage is identified as enhancing financial satisfaction. Therefore, this study will try to answer the question of how the use of EPS directly influences financial satisfaction of youth in the context of a developing country.

EPS use as a mediator between financial advice and financial satisfaction
It has already been mentioned that proper financial know-how is required to select the correct financial product (Braunstein & Welch, 2002). There is a risk of loss associated with incorrect financial decisions. Financial advice reduces the risk of loss and is an alternative way of taking effective financial decisions; it can also be taken as a substitute for financial literacy (A. Cwynar, W. Cwynar, Kowerski, Filipek, & Szuba, 2020). Financial advice is also considered as a source of self-learning in previous studies (Calcagno & Monticone, 2015). In a rapidly growing and dynamic financial market, it is always better to seek financial advice before deciding to invest in a financial product (Stolper & Walter, 2017

EPS use as a mediator between financial anxiety and financial satisfaction
Financial anxiety is the stress originating from risk of loss associated with financial decision making (A. Cwynar, W. Cwynar, Kowerski, Filipek, & Szuba, 2020). It is triggered in a situation where an individual is unable to depict the desired behavior, which in turn affects performance (Lusardi & Tufano, 2015). It is associated with the stress that manifests itself in a given decision-making situation (

EPS use as a mediator between financial capability and financial satisfaction
Financial capability, as discussed, can be expressed as a synonym for financial know-how (Xiao & O'Neill, 2018). Some studies argued that financial capability is much more comprehensive and includes financial literacy (Sherraden, 2013). The ability to plan for management of financial resources in an effective manner has a positive impact on the financial capability of an individual (Xiao & O'Neill, 2018). An individual who is able to better manage his financial obligations can be called financially capable (Taylor, 2011) and thus financially satisfied. It is the application of financial know-how to achieve overall financial well-being, which leads to financial satisfaction (Xiao, C. Chen, & F. Chen, 2014). Capability theory (Sen, 1993) states that, along with ability, opportunity is also required to gain complete freedom. It is also established in previous studies that people who are high on financial capability are much inclined towards usage of digital services (Königsheim, Lukas, & Nöth, 2017). Researchers in the past also stated that financial capability amplified financial satisfaction (Xiao, C. Chen, & F. Chen, 2014). Therefore, it is quite logical to test whether the relationship between financial capability (independent variable) and financial satisfaction (dependent variable) is mediated by EPS use as it may be an opportunity in the current digital era to affect financial satisfaction.

AIMS AND HYPOTHESES
The study aims to answer the question of how EPS use mediates the influences of financial capability, financial advice and financial anxiety on financial satisfaction. Thus, the following hypotheses were formulated.
The proposed hypotheses are clearly illustrated by a theoretical model (see Figure 1).

Indirect effects
H2a: EPS use plays a mediating role between financial advice and financial satisfaction.
H2b: EPS use plays a mediating role between financial anxiety and financial satisfaction.
H2c: EPS use plays a mediating role between financial capability and financial satisfaction.

METHOD AND DATA
The study targeted recent graduates who are now part of the workforce in northern India and collected data during January and February 2020. The sampling technique used is stratified to ensure the data was collected from different regions of northern India for wider coverage. Since the target population was recent graduates, a database of university alumni was referred to in order to reach target respondents, which was a feasible approach. The respondents were contacted through electronic mails and asked to fill the questionnaire using a shared link of the Google form. All the respondents fall within the bracket of 20-30 years of age having a bank account and using a smartphone or a laptop. Being a part of income generating segment, they are now involved in financial planning, saving and setting financial goals to be achieved in future.
The study targets young population because more than a quarter of India's total population belongs to this segment (World Economic Forum, 2019), therefore, the outcomes of the study can be gen-eralized. The profile of the respondents reveals almost the same ratio between males and females, 50.2% and 49.8%, respectively. 70.7% of respondents hold postgraduate degrees and 29.3% hold bachelor's degrees in various fields. Most respondent were employed in the private sector establishments, typically in tertiary sector. Almost all the respondents were based in the mini-metro cities due to their work. There is confidence in the chosen sample as it can represent the working youth segment fairly to justify the targeted population, and the inference from the study will be useful for policymakers and researchers.
To collect data for this study, four adjoining states were chosen, and from each state, one private institute that has the courses in the following streams: Business management, Computer science, Engineering, Pharma and Information technology. Respondents were contacted through a list of recent alumni. The study aimed to collect 300 samples, but due to delay in responses and partially filled questionnaires, the totally completed samples were only 205, which reflects the 68.33 percent response rate. The study was conducted in accordance with the suggestion given by Hair, Hult, Ringle, and Sarstedt (2014); since there are five constructs, the study runs the analysis on N = 205, fulfilling the basic rule, defined as a "10 times rule method", satisfying the generally acceptable rule of thumb for the sample size. All the latent variables in the current context are the outcomes of reflective indicators. A two-step procedure was applied in which the direct and indirect impact of financial capability, financial anxiety, financial advice and EPS use on financial satisfaction is tested. Thereafter, EPS usage as a mediator between financial capability, financial advice, financial anxiety and financial satisfaction was tested. PLS-SEM technique was performed through Smart PLS 3.2.9 (Ringle, Wende, & Becker, 2015). To identify the significance of the framed associations, the uniform paths were examined using the bootstrap procedure with 5,000 iterations of re-sampling. No serious concerns about common method bias were spotted, and in this regard, much care was taken from the commencement of the analysis. Thus, a common method bias is not a serious concern in this analysis ( all the respondents were assured their responses will be analyzed in strict confidence. To investigate the significance of the carefully chosen relationships between the variables, the reliability and validity of the models must be scrutinized. The first step in the analysis of convergent validity is the factor loading. At stage one, measurement model was examined using PLS-SEM based on the three main criteria: convergent validity, reliability and discriminant validity ( loadings 0.40 should be removed. Therefore, FC1 with 0.649 and FC2 with 0.515 are included, and all other items have loadings above 0.7 threshold. AVE, as a measure of convergent validity, must be above 0.5 (Hair, Hult, Ringle, & Sarstedt, 2014). This study has found that all the AVE values are between 0.535 to 0.683, comfortably above the minimum threshold level of 0.50; hence, convergent validity of all the constructs are satisfied. Composite reliability (CR) considers the variability of item loadings, which must be greater than 0.7, and it is interpreted as a traditional indicator of Cronbach's alpha. Moreover, the composite reliability (CR) of the items in this study is between 0.866 to 0.932, above the threshold, i.e. 0.7 thresholds (Hair, Ringle, & Sarstedt, 2011) (see Table 3). Thus, the reliability figures reflect the acceptable and satisfactory numbers in the study (see Table 3).
VIF values were below the conservative threshold of signaling collinearity (see Table 2). According to the analysis, all item loadings, CA, CR and AVE values were significant (p < 0.001). Finally, the Heterotrait-Monotrait (HTMT) criterion is used to check for discriminant validity (Henseler, Ringle, & Sarstedt, 2014). All HTMT values were below the conventional value of 0.85 (see Table 3), indicating that all constructs were dissimilar from each other. Thus, the discriminant validity is established for this research.
The discriminant validity (Fornell and Lacker criteria) is also proven, as the AVE of each variable is much larger than its squared correlations with other variables in the model (see Table 4).
Once the measurement model has been confirmed and there has been no violation of PLS-SEM assumptions, proceed to the next step of the analysis dealing with the investigation of the structural model (see Table 5). The model explains 43.6% of variations in EPS use and 15.7% in financial satisfaction. No critical issues were observed with multicollinearity, since the VIF values of the latent variables were found much below the con-

RESULTS
Based on the theoretical framework, the direct effect of financial capability, financial advice, financial anxiety and EPS use on financial satisfaction was tested. It was found that the use of EPS positively affects financial satisfaction (β = 0.396, p < 0.001), financial capability positively affects EPS use (β = 0.469, p < 0.01), financial advice positively affects EPS use (β = 0.174, p < 0.05), and financial   (Cohen, 1988) benchmarks, the effects on EPS use were moderate on financial capability (f 2 = 0.344) and financial satisfaction (f 2 = 0.186) and small on financial advice (f 2 = =0.044) and financial anxiety (f 2 = 0.078). Thus, enough evidence has been identified to support H1a, H1b, H1c and H1d.
Hypotheses H2a, H2b and H2c, which tested the mediating role of EPS use in financial capability, financial advice, financial anxiety and financial satisfaction, respectively, were all found positive ( Table 5). The indirect effects of financial capability on financial satisfaction via EPS use (β = = 0.186, p < 0.05) and financial advice on financial satisfaction via EPS use (β = 0.069, p < 0.05) were also found statistically significant. The impact of financial anxiety on financial satisfaction via EPS use was also positive and significant. Hence, these positive significant results show that the chosen mediator, which is EPS use, is vital and affects financial satisfaction indirectly through financial capability, financial advice and financial anxiety. Hence, hypotheses H2a, H2b, and H2c were all found significant. Consequently, evidence supported that the relationship between financial advice, financial capability, financial anxiety and financial satisfaction was statistically mediated by EPS use. According to Zhao, Lynch, and Chen (2010), this situation is called complementary mediation, as mediating effect and direct effect both exist and point in the same direction. Taking all together, analysis gives an evidence, which supports the hypothesized mediating relationship, and validates the role of EPS use in individual's financial satisfaction. So, EPS use can be a predictor of financial satisfaction directly and indirectly through financial capability, financial advice and financial anxiety as all the formulated hypotheses are supported positively.
The estimated adjusted R 2 of 0.427 with p < 0.05 showed that financial capability, financial advice and financial anxiety together explain 43.6% of variance in the EPS use and 15.7% in the financial satisfaction (Table 6).

DISCUSSION
This study aimed to answer three framed questions. First, how do financial capability, financial advice and financial anxiety influence EPS use among working youth in the context of a developing country? The study confirms that financial capability, financial advice and financial anxiety are important drivers of EPS use. So far as known, this is the first study measuring a direct impact of financial capability, financial advice, and financial anxiety on EPS use, apprehending the idea from the prior studies on EPS usage and customer satisfaction. The idea was developed based on the existing literature, which indicates that individuals' preferences for a particular payment method depends on their personal characteristics; besides, the features of the mode of payment influence its acceptance and desirability leading to customer satisfaction (Foscht, Maloles, Swoboda, & Chia, 2010). Digital financial inclusion reduces farmers' vulnerability and improves their ability to cope with risk, even poverty alleviation (Wang & He, 2020). It seems that using digital platforms enhances individuals' capability. The paper also considers that anxiety is associated with behavior (Hayhoe, Cho, Devaney, Worthy, Kim, & Gorham, 2012), and trust plays an important role in adopting mobile payments (Hossain, 2019; Oyelami, Adebiyi, & Adekunle, 2020). Therefore, individuals' financial capability, financial anxiety or trust can be enhanced by the right guidance and financial advice and thus affects the EPS use and choice of payment mode leading to financial satisfaction.
It has been already established that the digital inclusion is part of financial inclusion, which improves individual's ability to manage risks and reduce poverty (Wang & He, 2020 The last question was how the use of EPS mediates the influence of financial capability, financial advice and financial anxiety on financial satisfaction among working youth in a developing country context. To answer it, this study confirms that EPS use acts as a mediator between financial capability, financial advice, financial anxiety and financial satisfaction and is vital for achieving higher financial satisfaction in the context of a developing country like India. This means that EPS use is influenced by the level of individual's financial capability, financial advice seeking behavior and financial anxiety and thus affects satisfaction. So far as known, this is one of the few studies in which such effects are investigated from an individual's financial perspective. The study examined selected relationships to identify these relational gaps in published re-search and subsidize the current literature as one of the main aims of using EPS with financial constructs. Interestingly, the influence of EPS use on financial satisfaction was found to be a positively significant mediator of these constructs. The availability of financial advice services may encourage EPS use, therefore, an individual's financial capability, financial advice and financial anxiety positively affect EPS use and enhances financial satisfaction. Moreover, better quality financial advice can lead to higher financial satisfaction of individuals who seek advice, mostly those who lack knowledge and competency (Moreland, 2018;Stolper & Walter, 2017). Therefore, a good advisor can play a significant role in improving financial satisfaction. These findings are especially important in the context of developing countries.

CONCLUSION
The results of this study provide useful insights for the future. Considering Sen's (Sen, 1993) capability theory, this investigation provides additional understanding of exposition individuals' financial satisfaction through selected financial constructs. The analysis shows that financial satisfaction can be achieved when an individual enhances his/her level of financial capability and financial advice seeking behavior through increased EPS usage. In this regard, the results complement the prevailing study and add further value by introducing the mediating impact of EPS use on financial satisfaction and thus consider the use of EPS a key predictor of financial satisfaction amongst the individuals in a developing country.
This research makes the following additional contributions. First, the paper explores the mediating role of EPS in financial satisfaction; second, it evaluates the relationship between financial advice, financial anxiety and financial capability and the use of EPS; and third, the paper shows how EPS use affects financial satisfaction. Thus, this study proposed an amplifying and more inclusive model to explore the effects of financial constructs on financial satisfaction, with the focus on the role of EPS use. The research findings can be useful for policymakers interested in financial and digital inclusion and literacy, as well as for social practitioners involved in supporting individuals to improve their financial capability and satisfaction.
This study proves the vital role of EPS use. According to the results of this study, people who are more involved in EPS use may be better financially satisfied, so the study insists on enhancing individual's EPS usage, their knowledge and training, especially in developing countries. There also remains a scope for future efforts to explore how EPS use affects the financial literacy of individuals in the developing countries. Albeit, the current research is not flawless from all the outlooks, it also has certain limitations. First, the sample size is not large enough and represents only a minor section of the society, which confines the study from generalizing its results to other sections. Second, self-evaluating statements were used to quantify individuals' perceptions on the chosen variables, which may lead to the social comparison bias. Third, the study is limited only to one developing country, India, so the results cannot be generalized to all the developing nations, as developing countries may differ economically, socially, culturally, and in terms of digital exposure. These identified limitations can be overcome by further research in the related area.