Decoding mobile payment adoption in the unorganized sector: the mediating role of merchant trust in a digital shift

The shift to cashless transactions has accelerated due to the quick growth of digital payment infrastructures in India. Due to technological, psychological, and security-related issues, acceptance of mobile payment systems among merchants in the unorganized retail sector remains uneven despite their expansion. Through the theoretical lens of the Unified Theory of Acceptance and Use of Technology (UTAUT2), this study investigates the major factors influencing merchants’ adoption of mobile payment systems and examines the mediating role of merchant trust in this relationship. A structured questionnaire was used in a quantitative research design to survey 403 unorganized retail merchants in the suburbs of major Indian metropolitan cities. The use of purposeful sampling ensured that a variety of retail subsectors were included. Structural Equation Modeling (SEM) was used to investigate correlations among technology anxiety, perceived value, perceived security and fraud, merchant trust, and adoption of mobile payment systems, following an exploratory factor analysis (EFA) to validate the constructs. The correlations between characteristics of perceived value, perceived security and fraud, and technology fear and adoption of mobile payment system by merchants are partially mediated by merchant trust. The findings demonstrate that trust serves as a stabilizing factor, reducing technology fear and improving merchants’ perceptions of the advantages and security of mobile payment technologies. By incorporating merchant trust as a mediating construct in the context of India’s unorganized retail sector, this study extends the UTAUT2 framework and adds context-specific insights into digital payment adoption among small merchants in emerging markets.