Investigating the Associated Factors of Trust on Online Transactions

Consumer Trust On Online Transaction

There are various studies on the role of trust in transactions. Boeyen and Moses argue that trust can be categorized into two types, i.e., direct and third-party trust (Boeyen & Moses, 2003). Direct trust would be formed by two parties themselves, while third-party trust would be formed by the help of a reliable party known to both parties involved (Salo & Karjaluoto, 2007). In online transaction, since the transactions are mostly conducted by parties who are unfamiliar to each other, the third-party trust plays a more important role. Examples of the reliable third-party would be the online payment service providers, such as Visa, Paypal, MasterCard, who would ensure the secure financial payment protection to their consumers. It could therefore be argued that consumer’s trust on the reliable payment system has a significant impact on the growth of e-commerce.

Research indicates that trust is a critical component that induces online transactions and on the other hand, converting online visits into purchases remains a challenge (Eastlick & Lotz, 2011). Conducting online payment often requires user details including financial related information, such as payment card numbers and codes, and billing address. Often the users need to register before being able to proceed to the payment. This registration is however not required by the online payment provider, but by the online merchant, which will take place after the consumer stores their selected items on the shopping cart. As a result, consumer might abandon the cart and cancel the online transaction. In this way, the consumer reduces online privacy risk by not giving up private details to unknown party (Featherman, Miyazaki & Sprott, 2010). This fact becomes the basis for looking further for the associated factors of trust.

Realising the role of trust in e-commerce, it is then explicable to understand the associated factors of trust in e-commerce. McKnight and Chervany (2002) describe that trust depends on the e-business (interpersonal trust), environment of the web (institutional trust) and the consumer’s trust (dispositional trust) (McKnight & Chervany, 2002). Though these types of trust might intertwine with each other, the interpersonal trust would be the fundamental one that would in the end be the determining type in consumer’s decision making.