Exploring innovation diffusion of two-sided mobile payment platforms: A system dynamics approach

Abstract

Mobile payment (m-payment) can be considered as a two-sided platform that delivers payment services for mobile devices. Its penetration still faces high barriers in some countries, such as existing consumer payment behavior on traditional payment methods and fragmented merchant acceptance. This research aims to develop an empirical data-driven simulation methodology that integrates system dynamics (SD) and choice-based conjoint (CBC) analysis for analyzing diffusion dynamics of several competing m-payment platforms. Choice-based conjoint analysis is used to collect the multi-attribute preference data on different platform features from each side of user groups. A SD simulation model with the empirical user preference data is developed to evaluate how platform design strategies affect diffusion dynamics of various competing platforms under different scenarios. The methodology is applied to Taiwan's m-payment market. The research findings can help firms understand potential evolution of the m-payment market and formulate appropriate platform design strategies proactively to improve competitive advantages.