ADOPTION OF DIGITAL PAYMENT SYSTEMS IN NEPAL: AN ANALYSIS OF USER PERCEPTION AND TRUST USING THE TECHNOLOGY ACCEPTANCE MODEL (TAM)

This study examines the factors influencing the adoption of digital payment systems in Nepal using an extended Technology Acceptance Model (TAM) that incorporates trust and perceived risk alongside the traditional constructs of perceived usefulness and perceived ease of use. Despite the rapid proliferation of digital payment platforms in Nepal, with over 26.7 million digital wallet users and transaction values reaching NPR 98.43 trillion in FY 2024/25, a substantial proportion of the adult population continues to rely primarily on cash. Understanding the determinants of adoption is therefore a pressing policy imperative. A quantitative, cross-sectional survey design was employed, and data were collected from 412 respondents through a structured, self-administered questionnaire distributed via online and physical channels. Partial Least Squares Structural Equation Modelling (PLS-SEM) was used to test the hypothesised relationships. The results reveal that perceived usefulness is the strongest predictor of adoption intention (β = 0.386, p < 0.001), followed by trust (β = 0.241, p < 0.001), perceived ease of use (β = 0.178, p = 0.004), and perceived risk (β = −0.162, p = 0.012). Perceived usefulness partially mediates the relationship between perceived ease of use and adoption intention (β = 0.159, p < 0.001). The model explains 52.4 percent of the variance in adoption intention. These findings affirm the applicability of the extended TAM in the Nepalese digital payment context and demonstrate that trust and perceived risk are significant determinants of adoption behaviour. The study recommends that service providers prioritise enhancing perceived usefulness through intuitive platform design, invest in trust-building initiatives, and implement robust risk mitigation strategies, while Nepal Rastra Bank should strengthen consumer protection and expand digital literacy programmes to foster a more inclusive digital payment ecosystem.