Relationship between Risk Perception, Trust, and Adoption of Cryptocurrency-based Payment Systems in Africa

Abstract

The emergence of digital financial technologies (DFT) has opened up many possibilities for payment systems within African economies. Such possibilities arise in the presence of low levels of financial inclusion, expensive remittances, unequal access to conventional banking services, and the expansion of mobile connectivity. Under these circumstances, the use of financial technologies that utilize cryptocurrencies has been proposed as a potential means of making payments from one person to another and from one country to another. Their uptake, however, has not been uniform and can be influenced by people's attitude toward technology, payments platforms, and institutions, as well as risks involved. This paper reviews existing literature to examine the relationship between perceived risk, trust and the adoption of cryptocurrency-based payments in African economies. The review draws on the Technology Acceptance Model (TAM), Diffusion of Innovations, perceived-risk theory and trust-based technology adoption perspectives. Particular attention is given to studies that focus on African economies and distinguish the use of cryptocurrencies for payments from cryptocurrency investment or speculation. According to the literature, the perception of risk influences consumers’ decisions on the use of financial technology using cryptocurrencies, though there might be some variation in that depending on the context. Trust is another critical factor as the users should feel confident about the safety of the technology and payment system, as well as privacy of the information and institutions involved. The adoption of cryptocurrency in African countries can also be influenced by such factors as technological readiness, mobile financial infrastructure, regulation, and access to financial services. Nonetheless, having cryptocurrency or investing in it does not necessarily mean that the users employ them for payment purposes. This paper thus advances a conceptual framework that integrates these variables. It posits that perceived risk has an inverse effect on adoption of cryptocurrencies for payments whereas trust has a direct effect on adoption and may also influence the effect of perceived risk on adoption. The technological and regulatory contexts are seen as important conditions. In integrating these behavioral, technological, and institutional factors in the African context, the paper advances propositions that can be tested in further empirical studies. These propositions might prove valuable to academics, banks, technology companies, and policy makers in building secure and ethical digital payment systems.

Keywords: cryptocurrency adoption; cryptocurrency payments; perceived risk; trust; fintech; blockchain; digital payments; Africa; financial inclusion; regulatory environment