THE IMPACT OF PERCEIVED FINANCIAL RISKS ON CUSTOMERS' PURCHASING
DECISIONS, SATISFACTION AND LOYALTY IN ONLINE SHOPPING
PROCESSES
Dr.Lec.Member S.Süreyya BENGÜL
Dr.Lec.Member M.Mine ÇELİKKOL
ABSTRACT
The new world order is a system that requires the production of more information, the
rapid sharing of the generated information, and the constant exchange of the knowledge. The
era we live in this order is called the digital age, and because of the technologies used, it has
economic effects that spread from production to consumption, from sectors to occupational
groups. In addition, there are social effects that differ from personal skills and relationships.
Technological instruments, which are perceived as a component of everyday life in the digital
age, make transactions “online” and accelerate communication and eliminate boundaries.
Online transactions, which become part of daily life, affect individual habits and purchasing
behavior. One of the consequences of this interaction is that customers meet the online shopping
environment. Online shopping, which brings with it several innovations in the form of purchase,
production, distribution, and payment, offers the opportunities of accessibility, variety, and
comparison to customers but it also brings along various risks. One of these risks is the financial
risks. These risks that customers perceive in the online shopping process affect their reliance
and attitudes towards the company, their perceptions of value, their purchasing decisions, their
intentions to buy again, their satisfaction and their commitment to the company. In this study,
it is aimed to investigate the potential effects of the financial risks and payment patterns
perceived by customers during the online purchasing process on their reliance, attitudes and
value perceptions of the company and their purchasing decisions, resale intentions, satisfaction,
and commitment.
1. Perceived Risks In Online Shopping
The incredible rise in Internet-based commerce in recent years and the expectation that
this rise will proceed in the future have made the customers in the online market a focal point.
In order to provide online shopping opportunities to customers, to maintain loyalty, and
accordingly to increase sales, companies of different sizes in different sectors build up websites.
Web sites have evolved into a personal structure that not only provides the product but also
monitors and stores customers ' data in order to expedite decision-making and purchasing
through developing technologies. The basis of this transformation is that despite the
unpredictability of online shopping, customers are encouraged to buy. However, some
uncertainties perceived by the customer in this shopping environment may disturb the
purchasing process and hinder this process.
Uncertainty is expressed as risk whether the customer's decision to buy during the
purchase process will lead him to the conclusion he has targeted. The concept of risk perception
was introduced in marketing literature by Bauer (1960), who evaluated customer behavior
within the scope of risk theory. Bauer (1960), argues that the result of a customer's purchase
action cannot always be predicted and that it includes objective and subjective risks that can
sometimes lead to undesirable situations, and focuses on subjective (perceived) risk in his study.
According to Bauer, customers can perceive risks not only in the pre-decision process but also
in the post-decision process.
The risk perceived by the customer during a purchase process is significant in terms of
influencing the purchase behavior. At this point, another critical matter is the quality and
quantity of perceived risk. Cox and Rich (1964) in their study, considered the most accessible
and most relevant shopping process in the 1960s, the process of Teleshopping were discussed.
The findings of the study reveal that the quality of the risk perceived by the customer, the degree
of risk and the way of dealing with the perceived risk are essential determinants of the decision
to purchase by telephone. The majority of respondents stated that they did not make phone
purchases because they were worried that they could not receive what they desired. At this
point, the size of the risk perceived by the customer is considered to be a powerful deterrent to
the purchase of goods by telephone. The fact that the customer's intended purchase before
shopping is not always sure that it will lead to its purchasing intentions brings along the risk
factor.
Cox (1967) emphasized the necessity of understanding the presence of perceived risk.
Cox states that customers may be inadequate or unwilling to express that the situation they
encounter is risky, but for the intentions of buying, they perceive it in some way and undertake
the risk. The magnitude of the potential loss as a result of the purchase behavior and the
certainty of the individual's feeling that the consequence will be negative determines the degree
of perceived risk. This two-factor risk structure can be reduced to a tolerable level by actions
that reduce the magnitude of loss and the certainty of the loss.
Studies are focusing on specific types or components of the perceived risk in the
literature. Jacoby and Kaplan (1972) discussed the basic structure of risk components about
twelve different products and identified five types of risks that are classified as financial,
performance, physical, psychological, and social. Two years after this study, they crossvalidated the results obtained using different subjects (Kaplan et al. 1974).
Brown and Gentry (1975) investigated the different types of strategies that customers
use to reduce the quantity of risk they encounter in the case of a new car purchase. The findings
reveal that customers perceive economic, psychological or social risks associated with
purchasing a new car and use various strategies to reduce risk.
Brooker (1984) included the risk of loss of time as an extra element to five risk
components identified by Jacoby and Kaplan. Garner (1986) defined six types of risk perceived
for the purchases of services.
By the 1990s, the risks perceived by the customers were differentiated by the impact of
the internet, which interconnected enterprise and personal networks worldwide. While the
internet has become widely accessible to serve millions of users and many purposes in a short
time, it has also altered the process of buying, as in many other matters. With mobile technology
applications, Internet access has become more comfortable and the number of users has
increased. With social web applications, communication among people has shifted to a different
dimension. Customers have the opportunity to meet their needs directly, quickly and
economically by reaching a huge market without being connected to time and space. However,
studies in the literature suggest that customers are more skeptical if the purchase action is
associated with the internet environment and that the levels of adoption of this environment are
affected by the risk they perceive (Jarvenpaa and Todd 1997; Tan 1999). In other words, the
customer's risk perception in online shopping is higher than in alternative shopping methods
and has an adverse impact on shopping behavior (Harrison and Walker 2002; Kim et al. 2005).
Traditionally perceived risk types in online shopping have been added as resource risk,
privacy risk, and post-sales risk. Studies have shown that customers can perceive these risks
(Cöddü et al. 2017). The perceived risk plays a vital role in every step of the customer's
purchasing process, and the significance of the risks varies depending on the situation
encountered.
1.1. Performance Risk
Performance risk is also termed as a functional risk. It includes the belief that the
customer will not get the benefit he desires at the end of the purchase process, and that the
product or service that is subject to the purchase will not show the performance he demands. If
the customer is unable to test the product or service or provide physical contact, this risk is
perceived as more prominently. Customers have to rely on limited information and images
displayed on the computer screen. The risk of performance in online shopping includes the
concern that the customer can misunderstand the properties of the product and reflected
differently by the seller. Studies in this particular subject show that the loss that occurs if a
product does not perform as expected is mostly due to the fact that customers cannot accurately
assess the quality of the product (Jarvenpaa and Tractinsky 1999; Bhatnagar et al. 2000).
In online shopping, the possibility of failure limits the behavior of customers. As the
possibilities of benchmarking and ranking increase, these limits are eliminated. In online
shopping, different shopping experiences are created that enhance visual presentations and feel
compatible with the product in order to reduce the performance risk perceived by customers
and increase their purchasing intentions. Product presentations in motion and different image
dimensions are examples of these experiences. If the image size of the product in the web
environment is sufficiently apparent to allow the customer to evaluate, the degree of perceived
risk decreases. Studies prove that the appearance of the product from different angles is
effective in attracting the attention of online shoppers and in reducing the worry they have about
the uncertainty they feel when buying the product. Product mobility facilitates the product to
look visually attractive, increases the customer's purchasing intent and reduces risk perception
(Swinyard 1993; Park et al. 2005).
Information about the properties of the product, such as the color, form, the quality of
the materials used in shopping sites, is used to facilitate risk reduction and decision making.
Studies on the subject show that the quantity of information positively affects the perceived
risk. Kim and Lennon (2000) stated that on television purchases, customers decided to buy
based on the information given during product promotion and previous experience. According
to the results of their study, customers perceive less risk if they provide the information required
to make a purchase decision, even if they cannot physically examine a product.
1.2. Fiziksel Risk
Physical risk refers to the perception that a product or service may be hazardous to health
or safety when it is not operating correctly (Roselius 1971; Garner 1986). A physical risk in
online shopping includes the concern of encountering physical damage as a result of the
customer's purchase action. Ko et al. (2004) reported that the physical risk component was
associated with the evaluation of the product subject to purchase rather than the shopping
channel assessment. In other words, people do not perceive a physical risk to the shopping
channel or method.
1.3. Psikolojik Risk
Psychological risk refers to the potential loss of self-confidence (ego loss) caused by
frustration in achieving a purchase intention (Zheng, et al. 2012). It includes the negative mood
of the unsuccessful purchases made by the customers in the online shopping environment and
the possibility of the tension they may encounter (Hassan et al. 2006). The positive mood of the
customer during the online shopping process leads to lower perceived risk and increased
purchasing intentions. Therefore, it is crucial for websites to design an online shopping
environment that will create a positive mood. According to Park et al. (2005), product
exhibitions using the movement factor attract customers and create a good mood.
1.4. Sosyal Risk
Social risk refers to the adverse impact of other individuals on the consumer's
perceptions of online shopping. In the case of a purchase of a product or service, it can be
defined as the probability of loss of status in the society in which the customer is associated
(Zheng et al. 2012). The perceived social risk involves concerns about the negative thoughts of
the customer's social environment when a bad product selection is made during online
shopping. By family or friends, the result of the purchase may not be approved, may not be
appreciated, or the customer may be considered to be trying to make an appearance of himself
(Mitchell et al. 2003; Chen and He 2003; Hassan et al. 2006).
As a result of a failed online shopping, when his social environment criticizes the
customer, he will experience an adverse psychological state. In this case, there will be a
combined psychosocial risk perceived by the customer. Research suggests that there is a high
correlation between psychological and social risks and that the reason for this is that customers
have difficulty separating these two risks from each other (Mitchell and Greatorex 1990; Hall
et al. 2001). According to Mitchell et al. (2003), psychosocial risk mainly includes three types
of anxiety, which can be listed as (1) fear of adverse impact on social environment and
relationships, (2) feeling of personal dissatisfaction, (3) anxiety about being less popular.
1.5. Risk Of Time Loss
The risk of time loss refers to the perceived risk associated with conditions that may
cause time loss during the online shopping process. Before making the purchase decision, it
refers to concerns about potential delays that may occur during this process, starting from the
collection of information about the product or service and continuing with the ordering process
online, which is expected to end with the delivery of the goods subject to the order. After the
product or service reaches the customer, possible product changes and return processes also
increase the risk of perceived time loss. When customers want to return the goods they have
purchased over the internet, they will have to spend much time, suppliers will not deliver the
product on time, and because of the length of time between ordering and receiving the product,
they perceive the risk of time loss (Hassan et al. 2006).
1.6. Kaynak Riski
It is the risk that the customer perceives as the reliability and expertise of the company
he/she will do online shopping. The perceived resource risk reflects the potential customer's
concern about the reliance and comfort of online vendors (Hassan et al. 2006). In the online
commerce environment, since there is no physical communication between the parties, it is not
possible for the customer to check the identity of the seller (Flavián and Guinalíu 2006).
1.7. Privacy Risk
Privacy risk refers to the risk which the customer perceives in case the private
information is lost during the online shopping process. Customers ' chances of encountering
spam, hacker attacks, and viruses are also perceived at this risk. Customers are concerned that
during online shopping, when they have to enter information such as name, delivery address,
telephone number, identification number into shopping websites, they may use such
information for the illegal purposes. Requests for identification number information, news
about an unauthorized partition of personal information by web sites from the internet
environment and in-store purchases do not demand this information, increases the level of the
privacy risk perceived by the customers (Iconaru 2012; Zheng et al. 2012; Flavián and Guinalíu
2006). The fact that the companies that transmit their products to the customer over the internet
have the necessary technical infrastructure to protect the customer's information and make it
clear that this information will not be shared without the approval of the customer will decrease
the level of the privacy risk perceived by the customer.
1.8. Post-sales Risk
Post-sales risk is the perceived risk of failure to deliver the product on the promised date
at the end of the online shopping process, a long time for delivery, delivery of the product as
damaged to the customer, the loss of the product in the delivery process and misdelivery
(Iconaru 2012). In particular, the fact that payment has been made before the delivery of the
product increases the perception level of this risk.
1.9. Finansal Risk
One of the most effective risk types on customers ' online buying decisions is a financial
risk. It refers to the possibility of purchase to cause a loss of money (Tsiakis 2012). The main
subject of the study is the financial risk perceived during the online shopping process, which
has the potential effects on customers ' purchasing decisions, satisfaction and loyalty, which is
taken into consideration under the main heading.
2. Online Alışverişte Algılanan Finansal Riskler
The perceived financial risk is defined as the potential financial resource loss or the
possibility of exposure to financial losses occurring from online shopping. Financial risk can
be expressed as the product of which the purchase is not worth the compensation (Roselius
1971). In online shopping, the inability to measure the performance and compliance with
expectations of the product before purchase increases the perceived financial risk. Also, the
payment method used to pay the price of the product purchased and the resulting costs are
efficient on the financial risk perceived by the customers.
When customers decide to buy online, they go through the process of ordering, payment,
and delivery and take a separate risk at each step. The payment method and the uncertainties it
brings are one of the major problems confronting online shopping. The increase in Internet
fraud makes customers more sensitive to payment. Misappropriation of financial information
(card number, etc.) used in payment and leaking this information to third parties are the
concerns customers are most involved in paying. Specifications of financial and non-financial
information that may reveal incorrect or unintended use of information disturb customers and
does not prefer to shop online because they fear that it will be stolen or used without their
consent. Customers only make a purchase decision if they can reduce uncertainty with feedback
from the social environment, other customers or the company itself. Therefore, they have a high
level of financial risk perception at this stage (Hong and Yi 2012).
2.1. Components Of Perceived Financial Risk
Financial risk reflects the customer's concern that the product or service purchased will
not be able to achieve the best monetary gain for him. The sources of this concern are the
potential losses arising from the method of payment online with the possibility that the costs
incurred during the purchase process cannot be sufficed with the benefit obtained.
2.1.1. Satın Alma Maliyeti
Products and services ranging from non-durable consumption goods to durable
consumption goods, from daily journals to consulting from the business world are subject to
commerce in this environment. Kiang and Chi (2001) express that online shopping customers
perceive lower financial risks in products such as books, music, clothing. According to Ye
(2004), products can be treated at higher prices in online shopping, and extra charges can be
charged for delivery and payment. This situation increases the purchase cost and therefore the
occurrence of financial loss. When the subject product is technologically developed and the unit
price rises, the perceived degree of financial risk increases. In particular, if there are significant
differences in financial, social and psychological factors among customers, there are
discrepancies in the degree of perceived risk. Customers in an advanced social network can take
greater financial risks with the impact of this network (Bhatnagar et al. 2000; Sims and Xu
2012).
2.1.2. Payment Method
Financial risk represents the fear of monetary losses arising from online shopping; if
customers pay online, it is related to the acquisition of financial information, stealing of credit
card numbers, and the fear of being attacked by bank accounts. In order to increase online
commerce, companies must assure the customer that their websites do not carry this risk;
therefore there is no possibility of financial loss (Arshad et al. 2015).
Iconaru (2012) found that online customers left shopping because of the possibility that
they could suffer from financial damage if they used a credit card during the payment phase.
Individuals surveyed declared that they preferred to make payments using alternative methods
such as cash, money transfer or Paypal as possible and that they relied more on the internet
banking platform than on the e-commerce platform. In a study, it is emphasized that customers
think that small businesses do not have enough financial resources to keep their e-commerce
platforms safe and find a payment system guaranteed by companies other than the merchants
more secure. Customers who prefer to transact from well-known vendors against financial risk
generally only receive a low-limit credit card they use in online transactions.
Financial risk plays a vital role in making decisions when shopping online and adversely
affects purchasing behavior. Studies reveal that the suspicion of credit card fraud is one of the
most disturbing issues in online shopping. These studies focus on the relationship between
financial risk and online shopping behavior and emphasize the importance of confidence. If
retailers focus on financial risk and give the customer confidence in paying, they will be able
to sell their products online more easily (Bhatti et al. 2018).
2.2. Financial Risk and Confidence
Today, despite the rapid development of e-commerce and the increasing of virtual stores
that provide online shopping opportunities in almost all sectors and product groups, some
factors cause uncertainty in customers and affect risk perceptions. These factors are effective
in customers ' purchasing decisions. Confidence is one of the most critical constituents in these
factors. Because confidence affects customers ' acceptance of the online shopping process, their
online purchase intentions, and decisions, their intentions and decisions to buy again, website
traffic and visiting rates, perceived quality of service, loyalty and compensation (Thomas et al.
2006).
The problem of confidence that may arise in online shopping is defined as the situation,
condition or event that has the potential to cause economic distress in the data, disclosure of
network resources in which the data is obtained, destruction of data, alteration of data, refusal
of service promised to be offered, fraud and abuse of data. Customer confidence is accepted as
one of the preconditions for e-commerce success. Promoting security, privacy, and reliability
and their optimum use are essential components to promote the growth of e-commerce from
business to customer (Belanger et al. 2002). Online transactions and exchanges are
characterized not only by uncertainty, but also by anonymity, lack of control and potential
opportunism, and putting the confidence in critical components of e-commerce at risk (GrabnerKrauter and Kaluscha 2003). For this reason, it is hard to imagine that customers can shop
unless there is confidence in customers in online purchases (Pang et al. 2007).
In order to increase customer confidence and direct the purchase intent to behavior,
vendor companies benefit from high brand power. Brand power affects people with higher
education more than those with lower education. Design strategies, which make several
highlights on web sites, reflect brand power to the customer and reduce the perceived financial
risk level. (Bart et al. 2005). Considering that online customers are resisting to participate in
transactions that involve a higher level of perceived financial risk, the significance of this
strategy is evident. It is also one of the ways to ensure confidence that retailers, who are
intermediary to online shopping, cooperate with brand-value suppliers to reduce the perception
of financial risk.
The price of the product or service subject to purchase is one of the indicators of
financial risk.
Research reveals that vendors offering lower prices to customers in the online shopping
environment do no more trade than other vendors and that online customers ' price sensitivities
are lower than other customers. In contrast, the perceived level of financial risk is more sensitive
to retailers who meet the customer's service expectations at an advanced level. According to
Keating et al. (2008), the visual appeal of vendor websites, ease of use, and physical properties
in the early stages of the purchasing process encourage the customer and reduces the level of
financial risk perceived. Inexperienced customers use website-related features as the primary
indicator of financial risk. This argument signifies that the design of the web site in the
perceptions of customers is a powerful element to provide confidence. The fact that retailers
invest in websites is not just about aesthetic reasoning. It is also necessary to increase customer
confidence and reduce financial risk perceptions. High financial risk for perceived product
groups and websites, it would be prudent to develop recommendations and assistance
mechanisms in web design that help reduce the customer's options and enable them to make the
purchase faster.
In order to generate customer confidence in online shopping, it is necessary to pay
attention to virtual consultants, accurate information, keeping promises, proper order
fulfillment, website appearance, company credit, extended warranties, recognition and quality
of the website, quality, quantity, and currentness of information issues (Thomas et al. 2006).
Because e-confidence affects e-commitment positively and e-commitment has a positive
influence on behavioral intentions (communication from mouth to mouth, purchasing intention,
and constant interaction). (Mukherjee and Nath 2007). At the same time, e-trust affects esatisfaction and e-loyalty (Shin et al. 2013). Trust and satisfaction are the pioneers of the
commitment of the relationship (Li et al. 2006). The customer's satisfaction with the interaction
established at the beginning of the relationship will ensure the development of confidence and
consecutive relationships (Ramaseshan et al 2006). Likewise, website satisfaction has a positive
impact on website trust (Horppu et al. 2008). Enterprises need to do quantification and develop
strategies to mitigate the risks that may occur in their customers ' decision-making processes.
Because customers expect the company to give confidence and reduce the risk, they perceive
in online shopping (Lapin 2006). Yıldız (2017) listed the strategies that can be applied to
mitigate perceived risks as follows:
●
Use of permission-based e-mail marketing
●
Increasing the quantity of shopping in the electronic environment
●
Giving customers more information about the product
●
Generating brand loyalty of the company (shopping site)
●
Reassuring the customer that he or she can exchange or refund the product in
case of a problem.
According to Bart et al. (2005), security is considered to be the main reason for
customers' hesitation to give their financial information when buying high-cost
products/services over the internet. It has been determined that people who are concerned about
payment security in the internet environment have less shopping on the internet. Customers
have many concerns about their personal information, bank account passwords and online
shopping, including the security of cash transferred during the transaction. In order to eliminate
the security concerns, a security structure should be established on the internet, which involves
extensive activities, from storage of information to payment methods, legal arrangements to
organizational arrangements, where customers, vendors, and intermediaries are guaranteed
against possible misuse. This structure should include several techniques, such as digital
signatures, hardware, and software methods.
3. Online Alışverişte Ödeme Yöntemleri
With customers starting to use their mobile devices for online shopping, 1.8 billion
people worldwide have made online purchases of US $ 2.8 trillion in 2018. The 2021 forecast
reveals that more than 2.14 billion people will buy online at the expense of 4.8 trillion US
dollars. As of the first quarter of 2017, 53 percent of global internet users ordered online through
mobile. Since 2017, customers worldwide prefer online shopping in book, film, video games
and toy product groups more than in-store shopping (www.statista.com). Customers use
electronic payment systems to make purchases of goods and services that are increasingly
developing in the online environment. Electronic payment systems (EPS) are integrated
hardware and software systems that provide ease of use to customers with high-level policies
on the protection of customer information in the internet environment. In online shopping,
payment methods that transfer the product or service charge to the retailer are listed as; credit
card, electronic payment (PayPal), debit card, cash on delivery, bank transfers, gift checks and
coupons, mobile payment, and cryptocurrency. Table 1. displays the preferred payment
methods for online shoppers worldwide as of March 2017. In particular, small and mediumsized enterprises have moved their products beyond conventional distribution chains through
the internet and have entered a virtual world where they can compete with big businesses.
3.1. Credit Card
It is the most widely used payment instrument in online shopping, due to its security
and legal infrastructure that has become standard throughout the world and is accessible to a
large number of people. As of March 2017, 42% of online shoppers worldwide prefer to pay by
credit card. Credit card payments are made on all online shopping sites through card providers
such as Master, Visa, Maestro. In addition to the ease of use for customers, installment is the
most significant advantage. With credit cards, customers are offered options such as more
installment, installment suspension, an installment with interest-fee in online shopping. With
the introduction of online money transfer companies, it is possible to pay without any currency
problem in international online purchases and to make transactions without giving his/her
personal and credit card information. The methods that combine all the credit cards that the
customer has in a single application and allow the customer to choose and use what he/she
desires while shopping is also offered to the customer thanks to today's technologies
(https://circlelove.co/eticaret-odeme-yontemleri/).
In online shopping, it is vital to offer a secure payment with a credit card and reduce the
financial risk perceived by the customer. Several applications have been developed to assure
credit card security. SET (Secure Electronic Transfer) is an advanced technical standard for
maintaining the security of monetary transactions performed over the internet. The SET
Protocol, which is the most secure standard accepted by the world among payment systems
made by credit card over the internet, was developed by a consortium of Visa, Mastercard,
Microsoft Netscape, GTE, IBM, SAIC, Terisa Systems and Verisign in order to secure the
information regarding bank cards and payments. The most crucial contribution that SET brings
to online security solutions is the use of digital certificates. SET predicts an electronic wallet to
be given to each customer. The electronic wallet is a file that contains account information such
as the customer's credit card number and digital certificate. Verification of the transaction and
transaction of a user with an electronic wallet is realized among the customer, the vendor, and
the client's bank, in full, by the combined use of a digital certificate and digital signature. In
this way, the transaction is guaranteed to be private and confidential. SET guarantees the
confidentiality of payment information during shopping through the e-commerce site, that the
card user is the rightful owner of the card and that the company is a bank-contracted business.
In the SET Protocol, which uses a combination of Public Key Cryptography and DES (Data
Encryption Standard), RSA (Rivest, Shamir, Adleman) encryption methods, shopping is
conducted in a more secure environment through virtual wallet and certificate. SET provides
confidentiality and security integration in online payments made by credit card from ecommerce sites and in the transfer of information over the internet. The SET protocol only
encrypts the payment phase among the customer (the credit card holder who ordered the
product) and the e-commerce (e-store) and the credit card company. At the same time, because
the credit card and order information is encrypted differently, it prevents the credit card
information from being seen by the store (http://setvesslnedirr.blogspot.com).
Another of these applications is SSL certificates. These certificates, "Secure Sockets
Layer," are a primary layer of security that records and stores transaction details between
customers and vendors emerging from online transactions, and provides the filtering and secure
transfer of valuable information between a customer and a related server (Kukreja and Swaroop
2018). In a web site with SSL encryption, information is automatically encrypted before it is
sent through specific algorithms and can only be decrypted by the actual recipient at the correct
address. In this way, the confidentiality and integrity of the transaction and information are
protected by verification on both sides. In particular, it is aimed to have a reliable relationship
between the consumer and the site through this feature which has to be found in shopping sites.
All information entered on the web sites with SSL certificate is secured utilizing an encrypted
connection and is prevented from accessing third parties. The proof that any web site has an
SSL certificate is that the address bar in the browser has a green key and is logged into the site
with https:// protocol. The fact that the online shop website is protected by (SSL) encryption is
required for security. For this reason, the padlock, which appears to the left of the Web Site
URL in the browser's address, is one of the measures to protect the customer against financial
risks (https://circlelove.co/eticaret-odeme-yontemleri/).
While using the same encryption method, the critical points that are different between
SSL and SET security protocols are as follows: In SSL, it is not guaranteed that the person
sending the card information is the actual owner of the card. However, in the SET protocol
where the cardholder uses his/her username and password and his/her virtual wallet, it is
guaranteed that the person sending the card information is the cardholder. In SSL, banks owned
by the card and owned by POS are not included in this model. In SSL, the card holder's card
information is encrypted on the internet, but the seller company sees card information.
However, the card information in SET is kept confidential from the store and can only be seen
by the bank (http://setvesslnedirr.blogspot.com).
3D Secure is another security system that enables the flow of information among the
customer, bank and seller companies in online shopping that is paid by a card with individual
passwords and keys. In other words, 3D Secure is a payment system that aims to secure the
cardholder and member businesses in online shopping with debit and credit cards; enables
transactions to be performed within the knowledge of the cardholder; protects the vendor
against any objections that may occur after the transaction of the product; and has proven
reliability around the world. Visa card application of the system is called “Verified by Visa,”
and MasterCard application is called “SecureCode.”
Customers who are shopping from companies using 3D Secure system can complete the
payment phase by entering the one-time password on their mobile phones after providing their
credit card information. The primary purpose of 3DS is to protect both the customer and the
seller by enabling a customer to manage the mobility of his or her credit card number. Firms do
not often need a third-party service provider to authenticate the customer unless there is any
reporting of errors or attacks; they interfere after financial risk occurs. In this environment, the
possibility of obtaining a secure system for online shopping is eliminated. However, companies
adopting 3DS decrease their responsibilities in the questionable transactions taking place on the
internet, and they go to eliminate potential problems with the control of the customer before the
transaction is executed (Murdoch and Anderson 2010).
3.2. Virtual Credit Card
In order to direct customers to e-commerce, banks made some modifications in the use
of credit cards. One of the applications that emerged as a result of these changes is virtual credit
cards. Virtual credit cards are cards that are consequential to the initial credit card; however,
different from the card number, expiration date, and the security code (www.maximum.com.tr).
Customers transfer the money as much as the product costs they want to buy to the virtual card
within their primary credit card limits, and the balance of the card is reset at the end of each
purchasing. Thanks to the “limit identification feature” of the virtual card, even if the credit
card information has been stolen while shopping online, the money cannot be withdrawn from
the virtual card beyond the identified limit.
3.3. Electronic Payment (PayPal)
It is a payment system that connects the credit card with the e-mail address of the
customer and enables to pay only with the e-mail address without using the credit card number
in online shopping. Due to the facility of use, the preferability ratio is increasing day by day.
The most significant benefit for the customer is that it allows them to shop from businesses that
they do not know. In this type of payment, the cash flow between the parties is performed using
PayPal cash. PayPal cash withdrawn from the buyer's account is transferred to the seller's
account. It is also possible to convert different currencies to each other during this process.
PayPal mobile application is the application that allows to pay for online shopping with the
mobile phone and control the flow of transactions. When the first account is opened to the
PayPal system, the customer's credit card and delivery information are identified and protected
by PayPal with encryption. In order to be able to exchange with PayPal, merchants must accept
this payment method and be included in the system (www.paypal.com).
3.4. Banka Kartı
One of the preferences of the customers who do not prefer to use credit cards in their
online purchasing is their bank cards. Payments made by the bank card, there is no possibility
of installment. The bank card is directly connected to the customer's deposit account. If the
account does not have a credit definition with a certain limit or cash, it does not provide the
customer with an additional expense, and it allows the customer to control their expenses. As
with credit cards, the 3D secure payment system is also used for online purchases performed
by the bank card. During the card payment phase, the bank asks for the payment password sent
to the mobile phone of the cardholder and requires to insert the related field and authenticates
are executed. Thus, this prevents the use of credit cards in the internet environment other than
their owners.
3.5. Cash On Delivery
This payment method is widely used in our country. Its advantage is that it is reliable
and that payment is performed without sharing card information with the seller. The price of
the product purchased as a result of online shopping is paid by the customer to the courier when
the product is delivered. Payment can be made in cash or using a card. In the online shopping
environment, vendors can reflect the price demanded by the courier company to the customer
for the payment option at the door.
3.6. Banka Transferleri
One of the most secure methods used in online shopping is bank transfers. Bank transfer
refers to the payment of the product subject to online shopping, from the buyer's bank account
to the seller's bank account, in an electronic environment. If the accounts of the buyer and seller
belong to the same bank, bank transfer is called money order. On the other hand, if it belongs
to different banks, it is called EFT (electronic fund transfer). Even if the EFT can be done at
any time of the day, it is possible to obtain processing during the working hours of the banks.
For this transaction between banks, customers may also have to pay an additional fee. The
money order is processed immediately after the instruction is given to the bank and thus
payment is realized.
3.7. Gift Cards and Coupons
Gift cards are the form of gift vouchers accommodated to today. They are handy plastic
cards designed to be given on special occasions such as birthday, holiday, wedding. Gift cards
can be obtained from banks, internet or stores. Gift cards are disposable cards. The amount
transferred to the card is used for online or in-store purchases. When the balance of the card is
depleted, the utility of the card is also completed (visa.com.tr).
Coupon is a paper that can be used for a price discount when purchasing a product.
Coupons are distributed from mail, magazines, newspapers, internet (social media, email
digest), stores and mobile devices such as cell phones. Coupons provide free shipping, free
samples, gifts, as well as discounts. Customers who strive to collect and use coupons are
considered
to
be
more
sensitive
to
prices
than
non-users
(https://en.wikipedia.org/wiki/Coupon)
3.8. Mobile Payment
With this method, which has been used in online shopping in recent years, easy and
secure payment can be made by using only a mobile phone number without the necessity for a
credit card or cash. Payments are made to contracted vendors via SMS, one-time password and
mobile applications.
3.9. Cryptocurrencies
Cryptocurrencies are digital values that are controlled by the BlockChain transaction
database and positioned in a decentralized structure, providing a virtual money supply.
Cryptocurrencies are used as a payment instrument in online shopping. The first encryption
currency is Bitcoin and was created in 2009. Bitcoin is a collection of concepts and technologies
that are the foundation of the digital monetary system.
Cryptocurrencies are utilized to store and transmit value among participants in this
decentralized structure. Users communicate with each other using protocols over the internet.
This stack of protocols can be operated on a variety of devices that advance technology
effortlessly accessible, including laptops and smartphones (Antonopoulos 2015).
3.10. Other
In addition to the methods as mentioned above, although lower frequency, payment
methods such as electronic credit card, mail order, e-cash, electronic money, smart card,
electronic check, e-wallet are also used in online shopping.
4. The Impact Of Perceived Financial Risk On Customer Behavior In Online
Shopping
In the online shopping process, the financial risks that customers perceive and the
methods of payment that they use or have to use, influence their behavior in this process. By
proceeding to influence not only a one-off purchase but also recurring purchase decisions, it
leads to shifts in the customer's satisfaction and loyalty to the seller company and its website.
4.1. The Effect Of Perceived Financial Risk And Payment Methods On The
Purchasing Decision
The most common method of payment in online shopping is credit cards. In online
shopping, payment through credit cards affects customers ' confidence in the payment system.
Because of the nature of the internet, easier access to personal information has increased the
risk of intruders and made it easier for the acquisition of personal information. Customers avoid
online shopping because of the risk of being exposed to their personal information on one hand
and the risk of breaking the passwords of their credit cards and performing some transactions
on their cards. On the one hand, customers avoid shopping online because of being exposed to
an intrusion on their personal information, and on the other hand, due to the risk of breaking
the passwords of their credit cards and performing some transactions on their cards (Keser
2000). If customers do not believe that their data will remain confidential and that payment is
secure, they will not use the internet for shopping (McCole et al. 2010). If online customers '
credit card numbers and personal information are guaranteed and this assurance stated on the
website, only then the customers will decide to purchase (Salisbury et al. 2001). E-commerce
businesses have to take many precautions to mitigate these risks occurring from payment
methods in online shopping. Security software, such as SET, SSL, which ensures that credit
card numbers are securely transmitted in online transactions and that unauthorized persons do
not acquire this information, will help customers to make easy purchasing decisions by reducing
the risks they perceive. Customers ' perception of confidence regarding information systems on
e-commerce enterprises has a positive impact on their confidence in the enterprise (Lowry et
al. 2008; Hung et al. 2012).
In addition to the reservations made by online shoppers about providing identity and
credit card information in payment processes, there are doubts about whether the e-commerce
business really exists, whether the product purchased will be the same as the image on the
website, and whether the product will meet expectations. Besides, the factors that impact
customers ' online purchase decisions are the doubts they have about whether or not product
delivery will be made after payment and whether they can benefit from after-sales services
(Bhatnagar et al. 2000). Such suspicions that customers experience about purchasing behavior
can be reflected in their behavior and can negatively affect future purchasing decisions (Soutar
and Sweeney 2003; Koller and Salzberger 2008).
The risk that customers perceive about financial security and protection of personal
information is closely related to the seller's reputation (being a recognized and trustworthy
company) and how well security technologies are used, so companies operating in a virtual
environment need to use advanced encryption technologies and acquaint their customers about
it (Shergill and Chen 2005). Factors affecting the information system such as system reliability,
operation speed, user-friendliness, and content quality are effective in customers ' determining
whether e-commerce business is reliable (Hung et al. 2012).
4.2. Impact Of Perceived Financial Risk On Satisfaction
Due to the developments caused by globalization, the number of businesses operating
in almost every sector has increased, and this situation has created a dense and overwhelming
competitive environment. The most crucial problem created by the competitive market structure
is not to obtain the customer but to keep it. The increase in competition extends the alternatives
of the customers, brings replacement products to the agenda, changes the determination criteria
that customers pay attention to when purchasing the products, and increases their expectations.
Customer satisfaction is defined as the positive result of comparing the expectations of
customers before purchasing a product with the value of the product after purchasing (Kotler
1991; Oliver 1980; Zeithaml et al. 1990). Customer satisfaction is the perception of
satisfactoriness in the form of a pleasurable loyalty provided by the fulfillment of a merchandise
or service (Oliver 1997). In other words, customer satisfaction refers to the level of fulfillment
of customer expectations, the positive feelings that are created by the customer towards the
merchant company (Huang et al. 2006; Kim et al. 2007; Lengler and Moyano 2011; Su 2004;
Valenzuela and Vásquez-Párraga 2006). Satisfaction is the happiness generated by these
positive emotions in the customers, and the customer who achieves this happiness will be
willing to buy from the same business again in his/her next selection (Ladhari and Leclerc
2013).
E-satisfaction is defined as the departure of customers from the stores where the
electronic commerce is conducted and the future thinking of using this online shopping
environment again (Bayram and Şahbaz 2017). In online shopping processes, a website that
provides the customer what he/she wants ensures customer satisfaction (Mitra and Fay 2010).
Factors affecting customer satisfaction in traditional markets include quality, delivery speed,
delivery reliability, elasticity, values, competitiveness, product mix, customer service, price,
reliability, professionalism, employee behavior, technology, suppliers, costs and perceived
risks (Zhang et al. 2013; Bitner and Hubbert 1994; Dick and Basu 1994; Jones 1996; Zeithaml
et al. 1990); On E-customer satisfaction, factors such as accessibility of the website, emendation
of errors, site reliability, flexibility, communication, and feedbacks are effective (Tontini 2016).
Especially in online shopping, reducing the risks perceived by customers will increase esatisfaction (Chen et al. 2011). Online shopping sites need to follow and support all processes
until the product is delivered to the customer in order to provide customer satisfaction. As a
result, the level of satisfaction of the e-customer will increase, and the customer who is pleased
with the product or service he/she purchased will make his/her decision again from the same
website, in short, loyalty will be provided (Ladhari and Leclerc 2013).
4.3. The Effect Of Perceived Financial Risk On Loyalty
Customer loyalty is the commitment made by the customer to purchase a preferred
product or service consistently in the future, and this commitment maintains repetitive
purchasing behavior against all situational factors and marketing efforts that fuelled brand
change and enabled the customer to spend more time on the website (Oliver 1999; Jeon 2009).
E-loyalty is the repeated purchasing behavior of the customer as a result of the positive attitude
towards the e-retailer (Srinivasan et al. 2002). E-loyalty is the desire of the customer to maintain
a future relationship consistently. It enables the customer to choose the business website as the
first choice among alternatives, to revisit the site and to show the behavior of buying online
products by developing positive feelings and assurance towards the business (Toufaily et al.
2013). If the customer purchases again from the same vendor, it indicates a potentially loyal
customer, which is directly associated with customer satisfaction and loyalty (Jaiswal et al.
2010).
Among the pioneers of e-loyalty, confidence and satisfaction are of great significance.
In particular, there is a stronger relationship between e-satisfaction and e-loyalty on online
shopping sites compared to conventional purchasing channels. Therefore, online customers
have more levels of loyalty to the internet retailer they like (Horppu et al. 2008). Because loyal
customers prefer the website, they trust and are satisfied with when choosing among alternative
websites in their online shopping. At the same time, as long as the website perseveres its
business life, it will be the invariable preference of the loyal customer (Audrain-Pontevia et al.
2013). Every time the customer wants to purchase a product, the website he/she is loyal to is
always the first preference. Even if the customer finds a competing website that offers the same
benefit, or a website that offers a little price, he/she does not change his preferred site (Toufaily
et al. 2013). E-loyalty procure the customer to stay on the website longer, to an assertive world
of marketing more and to purchase the product from the site that he/she is satisfied with, even
if the product is at a lower price in another website (Hou 2005).
Brand loyalty is one of the critical factors that reduce perceived risk (Mitchell and
Greatorex 1993). Because customers tend to reduce uncertainty and risk by repurchasing the
brands they are satisfied with. When repurchasing the same brand, customers are loyal to avoid
errors and risks rather than the intention of obtaining more benefits (Mitchell 1999). Therefore,
customer loyalty reduces perceived risk if the customer detects a high level of differentiation
between brands, the perceived risk increases. It is asserted that this situation triggers loyalty to
reduce perceived risk (Chaudhuri 1998). If the customer is satisfied with the brand he/she has
tried for the first time, it is anticipated that loyalty will occur in order to avoid the risk. In other
words, customers buy the same brand over and over again to avoid the risk of trying a new
brand (Demir 2011).
CONCLUSION
Because of the uncertainty and adverse outcomes of online shopping, individuals avoid
this environment. However, when these perceptions of individuals are eliminated, and they feel
protected against the risks, their intention to buy is increasing. The types of risk customers
perceive for online shopping involve more than the types of risk they perceive in traditional
shopping. It is of great importance that businesses who want to be successful in the extreme
competition in the internet market should satisfy their customers and make the shopping
environment less risky for their customers.
In online shopping processes, the types of risk that customers perceive most are
performance risk, financial risk, and time risk. Social and psychological risks are less perceived
than in traditional shopping (Corbitt et al. 2003). Reducing the risks perceived by customers in
online shopping processes leads to ensure that the e-commerce business is reliable and credible,
that the customers are positive towards the store and that the intention to shop from that store
is revealed and that this intention is repeated. Customers ' confidence and their positive attitudes
in e-commerce businesses affect the results such as satisfaction and loyalty by increasing the
company's image care of customers (Badrinarayanan et al. 2014).
The risk that customers perceive for the website will guide their buying decisions (Kim
et al. 2008). The perceived risk is one of the foremost prohibitive to online buying (Udo et al.
2010). The fact that customers have more risk perceptions affects the online trading process
and reduces the occurrence of buying (Martin et al. 2011). The perceived risk has an adverse
effect on e-satisfaction, meaning that e-satisfaction decreases as the perceived risk increases
(Altunışık et al. 2010). At the same time, the fact that the products offered on the websites are
not possible to be tested before the purchase results in an increased financial and performance
risk perceptions in the customers. This situation prevents the customer from having confidence
in the website and its products (Lim 2003) to increase the risk perception and adversely affect
the repurchasing intention and loyalty (Gefen 2000; Kim et al. 2008). The financial security
perceived by the customer regarding the website is effective on e-satisfaction (Evanschitzky et
al. 2004). The risks perceived by customers for the assurance of financial security and privacy
assessed within the framework of site security are a fundamental prerequisite in the online
shopping processes, and the perceived quality of service has a substantial impact on esatisfaction and e-loyalty (Szymanski and Hise 2000; Wolfinbarger and Gilly 2003). In online
shopping, delivery performance, which is defined as the accurate delivery of an order, is also a
significant risk factor. Customers are less satisfied if the product they ordered does not come
accurate in their online shopping, and they do not repeat product purchase behavior from the
same website (Wolfinbarger and Gilly 2003; Kim 2005). However, customers ' interaction with
e-store executives on the internet, payment processes and risk perceptions related to transaction
activity, which are defined as ensuring order follow-up, are effective on e-satisfaction and eloyalty (Loiacono 2000). In particular, the main reason potential customers do not purchase
products from online shopping sites is that they perceive the risks at the security point (Chiu et
al. 2009). Highly perceived security risk reduces customer satisfaction (Eid 2011; Chen 2012).
Online shopping sites need to increase their confidence in the site by producing solutions for
the risks they perceive in order to influence their customers ' satisfaction and loyalty positively
(Kuo and Wu 2012).
The risk that customers encounter with sellers –sometimes vendors, sometimes
manufacturers, and sometimes intermediaries - is the financial risk that the customer perceives
and distorts from the purchase decision in the internet environment through established
websites. The degree of perceived financial risk increases with uncertainty about the vendor
and its representative website. Some websites are established to enable fraudsters to access the
customer's credit card and identity information, not to mediate online shopping. Websites
similar to familiar websites belonging to companies known by customers can be created and
offers submitted to customers from these websites. The perceived financial risk level may
increase when low prices combined with, high discount rates and uncertainty about the seller.
When the perception that the method used in the payment phase is far from security is joined,
the purchasing is renounced.
Customers need to be cautious when providing their financial information, such as credit
card and bank account numbers. They should protect their private information and avoid
providing non-transactional information. In order to avoid financial risk, it should be checked
whether websites that offer online shopping have specific security requirements. The security
symbols for these terms are embedded in the website. These symbols are not known or noticed
by many customers. It is a fact that the payment methods used in online purchases have a
significant impact on customers ' buying decisions. In online shopping, if it is wanted to pay by
credit card; SSL Certificate and 3D secure integration in particular, such as PayPal, securityapproved payment system options should be available on the web site to be traded. When it
proceeds to the payment page, these security applications in the field where credit card
information is being filled are essential to eliminate the perceived financial risk.