CHAPTER 2
REVIEW OF RELATED LITERATURE
The Review of Related Literature (RRL) presents a comprehensive synthesis of prior research,
theories, and empirical findings relevant to the topic. It maps the existing academic landscape,
identifies prevailing trends and research gaps, and establishes the theoretical and empirical
foundation of the current study. This study specifically investigates the adoption and readiness
of electronic wallets (e-wallets) among small and medium-sized enterprises (SMEs) and
customers in Butuan City. The literature cited spans both international and local contexts from
2020 to 2025, providing a grounded understanding of the topic.
1. E-Wallet Adoption
E-wallets are digital financial platforms enabling users to conduct transactions such as sending
money, paying bills, or making purchases via mobile or online systems. These technologies have
become increasingly popular due to their convenience and the acceleration of digital
transformation in the financial sector.
Chawla and Joshi (2019) emphasized that adoption is strongly influenced by perceived ease of
use, convenience, and promotional benefits. Similarly, Sharma and Sharma (2019) found that
younger demographics are more inclined to adopt e-wallets due to their familiarity with digital
interfaces and preference for fast, contactless transactions.
In the Philippine context, Santos (2022) observed a significant increase in e-wallet use during
the COVID-19 pandemic, particularly driven by the rise of contactless payments and e-
commerce. Major platforms like GCash and PayMaya saw substantial growth in active users and
transaction volumes during this time (Bangko Sentral ng Pilipinas [BSP], 2023).
2. Factors Affecting Adoption
2.1 Perceived Usefulness and Ease of Use
The Technology Acceptance Model (TAM), developed by Davis (1989), posits that perceived
usefulness and ease of use are key determinants of technology adoption. Supporting this
model, Gupta and Arora (2020) found that individuals are more likely to use e-wallets when
these are seen as beneficial and user-friendly.
In Southeast Asia, Pham and Ho (2021) emphasized that intuitive designs, low setup barriers,
and mobile accessibility significantly contribute to e-wallet uptake, especially among first-time
users.
2.2 Trust and Security
Trust is critical in digital payment adoption. Foundational studies by Kim et al. (2010) and
Pavlou (2003) highlighted that concerns regarding data privacy, fraud, and transaction security
directly affect trust. Further research by Ali et al. (2020) demonstrated how Malaysia's
regulatory environment and robust cybersecurity systems have contributed to improved user
confidence in e-wallets.
In the Philippines, the BSP has reinforced trust through regulatory frameworks that emphasize
consumer protection and cybersecurity standards (BSP, 2023).
2.3 Readiness: Infrastructure and Literacy
Readiness refers to both the technological infrastructure and the digital capabilities of users and
institutions. Alalwan et al. (2017) defined digital readiness as a mix of organizational support,
digital infrastructure, and access to training.
Rao et al. (2021) noted that SMEs in regional cities such as Butuan often struggle with unstable
internet access, lack of awareness, and limited training opportunities. In response, national
initiatives by the Department of Trade and Industry (DTI) and the BSP have provided digital
skills training, financial tools, and support programs to assist SMEs across the country, including
those in Mindanao (DTI, 2022).
2.4 Customer Attitude and Social Influence
According to the Unified Theory of Acceptance and Use of Technology (UTAUT) by Venkatesh
et al. (2003), social influence significantly affects users’ behavioral intentions. Oliveira et al.
(2016) confirmed that peer usage and social norms play a role in reinforcing digital payment
adoption.
In the Philippines, Santos (2022) reported that as more Filipinos began using e-wallets during
the pandemic, especially among social and family circles, usage patterns increased due to a
“network effect,” reinforcing user confidence and normalizing digital transactions.
3. E-Wallet Usage Among SMEs
E-wallets offer SMEs a number of advantages such as faster transaction processing, better
financial tracking, and expanded market access. However, challenges persist.
Ali et al. (2020) highlighted that SMEs often perceive e-wallet systems as complex, particularly
due to transaction fees, technical issues, and lack of customer support. Mothobi and
Grzybowski (2017) added that in developing regions, digital adoption is hindered by limited
infrastructure and unclear government policies.
To address these issues, the BSP’s Digital Payments Transformation Roadmap (2020–2023)
aims to onboard more SMEs into the digital economy through streamlined onboarding
processes and incentives. Recent reports show increased adoption rates in Mindanao, but
Butuan-based SMEs still cite internet issues and customer hesitance as barriers (BSP, 2023).
Local research by Garcia and Razon (2023) in Butuan City confirms these findings, noting that
while SMEs are aware of e-wallets, only a small percentage have fully adopted them due to
uncertainty in handling digital payments and lack of customer demand.
4. Regional Context: E-Wallets in the Philippines and Butuan City
The Philippine government has launched multiple efforts to promote financial inclusion,
particularly in underserved regions. The Paleng-QR Ph program, spearheaded by the BSP and
DTI, promotes the use of QR-based digital payments in public markets and transportation
sectors.
However, Dela Peña (2021) documented that cities like Butuan face unique challenges,
including low smartphone penetration, unstable mobile networks, and limited awareness
campaigns. These infrastructural and informational barriers hinder the full adoption of digital
payment systems.
Between 2020 and 2025, targeted efforts to address these issues—such as providing local
merchants with QR code kits and offering digital literacy training—have begun to bridge the gap
in digital adoption (DTI, 2022; BSP, 2023).
5. Synthesis of Literature
The literature reveals several recurring themes: the importance of ease of use, trust,
infrastructure readiness, and social influence. Numerous studies underscore that the success of
e-wallet adoption is multifactorial and context-dependent.
However, there is a noticeable scarcity of studies focusing on secondary cities like Butuan,
particularly those that integrate both SME and customer perspectives in the same framework.
Most existing research isolates either the consumer side or the business side, thereby missing
the full transactional picture.
6. Research Gap
Despite the increased scholarly attention to digital payments between 2020 and 2025, there
remains a notable research gap in localized, dual-perspective studies—especially in cities like
Butuan, which represent a growing but often underrepresented urban sector.
This study seeks to fill that gap by examining both SME and customer adoption and readiness
of e-wallets in Butuan City. By doing so, it aims to generate insights relevant to policymakers,
local business leaders, and technology developers seeking to improve financial inclusion and
digital readiness in emerging urban contexts.