The Rise of Digital Wallets: Customer Trust, Security Concerns, and Adoption in Retail Transactions

Abstract

The rapid rise of digital wallets has reshaped retail transactions by offering convenience, speed, and contactless payments. This study examined the determinants of customer trust, security concerns, and adoption intentions toward digital wallets within retail contexts. Grounded in an extended Technology Acceptance Model (TAM), the research integrated perceived usefulness, perceived ease of use, trust, and perceived risk to explain customer attitudes and behavioural intentions. A quantitative survey was conducted with 400 participants, and data were analysed using structural equation modelling. The findings revealed that perceived usefulness, ease of use, and trust significantly enhanced positive attitudes, whereas perceived risk had a strong negative influence. Among these factors, trust demonstrated the strongest predictive power, highlighting its critical role in shaping consumer perceptions. The model explained 68% of the variance in attitudes toward digital wallets and 72% of the variance in adoption intention, confirming its robustness. These results emphasized that fostering customer trust and addressing perceived risks were as important as enhancing technological efficiency for achieving sustainable adoption. The study offered both theoretical contributions by extending TAM with trust and risk constructs, and practical insights by recommending secure, user-centred digital wallet ecosystems. The research further identified directions for future exploration, including cross-cultural comparisons, longitudinal studies, and the integration of alternative payment innovations. Ultimately, this research provides a validated framework for developers and retailers to prioritize key psychological and functional drivers, thereby accelerating the transition towards a cashless society while ensuring consumer confidence and security are maintained as foundational pillars of digital finance.

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