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A transaction cost explanation of the card-or-cash decision among Vietnamese debit card holders

Dung Phuong Hoang (National Economics University, Hanoi, Vietnam) (Banking Academy of Vietnam, Hanoi, Vietnam)
Thong Huy Vu (National Economics University, Hanoi, Vietnam)

International Journal of Bank Marketing

ISSN: 0265-2323

Article publication date: 9 March 2020

Issue publication date: 26 October 2020




This research provides a new perspective in explaining cardholders' willingness to use debit cards instead of cash by applying the transaction costs economic theory. This study also expands the adaptation of transaction cost economics theory in explaining consumer behaviour by investigating the moderating effects of income and education level on the relationship between perceived transaction costs and willingness to use debit cards.


The conceptual framework was developed primarily from the transaction cost economics theory. An in-depth interview method was employed to further support hypothesis development and the development of measurement scales. A structural equation model linking asset specificity, behavioural uncertainty, environmental uncertainty, frequency of payment, perceived monitoring costs, perceived adaptation costs and willingness to use debit cards was tested using data from a sample of 384 Vietnamese debit card holders.


This study's results support the transaction cost economics theory that asset specificity, uncertainty and frequency of payment all positively contribute to the perceived transaction costs associated with debit card usage. However, only environmental uncertainty and perceived adaptation costs have significant negative impact on willingness to use debit cards, with the relationship between environmental uncertainty and willingness to use debit cards being totally mediated by perceived adaptation costs. Moreover, the relationship between perceived adaptation costs and willingness to use debit cards becomes less negative among richer and better-educated cardholders.

Practical implications

The research provides insights into the hidden obstacles for developing cashless economies, thereby supporting policy makers in designing more effective and comprehensive strategies to make debit cards more widely used as a true substitute for cash.


This study provides a new lens in explaining customer willingness to use debit cards, while expanding the transaction costs economics theory by incorporating demographic factors as moderators in the relationship between transaction costs and the card-or-cash choice.



We would like to thank the staff of the major commercial banks in Hanoi city, namely Vietcombank, VietinBank, Tienphong Bank, BIDV, Agribank, SHB Bank and MB Bank, for their assistance with the collection of data. We would also like to express our special thanks to experts and scientists at the Institute for Sustainable Development, National Economics University, Vietnam, for their professional and insightful advice supporting the completion of this research.


Hoang, D.P. and Vu, T.H. (2020), "A transaction cost explanation of the card-or-cash decision among Vietnamese debit card holders", International Journal of Bank Marketing, Vol. 38 No. 7, pp. 1635-1664.



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