Risks of Using Digital Payment Method Using the Perceived Risk (PR) Theory Approach

Purpose: Most studies focus on the advantages of adopting innovations, such as Internet banking and mobile banking, assuming that new technology should be adopted because it is good enough. However, very few have specifically examined the risks perceived by customers when using DPM, especially mobile banking. Therefore, this study aims to determine the influence of privacy risk, security risk, access risk, personalization risk, and trust risk on the use of digital payments.Design/Methodology/Approach: This study is explanatory. The sampling technique used is purposive sampling where the sample is taken with certain considerations or conditions. The criteria are as follows: 1) the millennial generation aged 18 to 45 years and 2) the selected sample is an active user of DPM such as SMS, internet, and mobile banking. The distribution of questionnaires used purposive convenience sampling to select samples. Convenience sampling is based on the availability of elements and the ease of obtaining them. To test the hypothesis, the Partial Least Square (PLS) technique was used using the smart PLS 3.0 application.Findings: personalization risk and trust risk variables have a significant positive effect on the use of digital payments. At the same time the access risk, security risk, and privacy risk variables do not affect the use of digital payments.Implications/Originality/Value: This study can enrich the literature on Perceived Risk (PR) theory by providing insight into how the risk perceived by users affects the adoption and use of digital payment methods. This can help understand the psychological and emotional factors that influence consumer decisions and open up opportunities to integrate PR Theory with other theories, such as the Technology Acceptance Model (TAM) or the Theory of Planned Behavior (TPB), to get a more comprehensive picture of technology adoption.