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Save Time or Save Face? The Social Presence Effect and Herding Effect in the Use of Facial Recognition Payment Technology in Retail

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Document pages: 51 pages

Abstract: Although facial recognition (FR) payment technology can be more convenient for customers and reduce their costs, it is still not consistently used by many customers in retail. Using transaction data collected from three retail chains, we develop econometric models and an estimation strategy for examining the social presence and herding effects that affect FR Payment technology use. Our key findings are that: (1) Customers are less likely to use FR payment technology when more customers are in line behind them, waiting and watching; that is, the social presence effect. (2) Customers are more likely to use FR payment technology when the immediately preceding customers use FR payment technology; that is, the herding effect. And, (3) Customers with more experience in using FR payment technology are subject to a weaker social presence effect. The marginal social presence effect can result in a 5.47 reduction in the probability of the focal customer using FR payment technology and that the potential social presence effect is as high as 51.69 . When the focal customer has one additional experience in using FR payment technology, the social presence effect is reduced by 7.02 . The herding effect can result in an 18.30 increase in the probability of the focal customer using FR payment technology. Theoretical and managerial implications are discussed.

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