Cashless economy technologies, transaction value and fraud occurrence: the case of vendors in Nairobi

Abstract

Fraud remains a significant concern for Kenyan businesses, with small and medium-sized vendors frequently reporting incidents. While the adoption of cashless payment systems has improved convenience and efficiency, it has also introduced vulnerabilities that expose businesses to fraud. The economic sustainability of vendors and trust in cashless systems are critical; however, the factors driving fraud within this context remain insufficiently explored. This study examined the effect of cashless payment technologies on fraud occurrence among vendors in Embakasi East Constituency, Nairobi, with transaction value as a moderating factor. The objectives were to assess the effects of mobile money, credit cards, cheques, and bank transfers on fraud diamond fraud occurrence and to analyse the moderating role of transaction value. Guided by the Fraud Triangle Theory and Routine Activity Theory, the study adopted a positivist research philosophy and employed a descriptive research design. The target population comprised vendors operating fuel stations, grocery shops, supermarkets, and restaurants. Data was collected using structured questionnaires featuring Likert-scale questions aligned with the study objectives. Analysis was performed using SPSS Version 27, with descriptive statistics summarising key data characteristics and binary logistic regression applied to infer relationships. The results indicated that all four cashless payment methods, mobile money, credit cards, cheques, and bank transfers significantly increased the likelihood of fraud. Furthermore, transaction value significantly moderated this relationship, with higher-value transactions more susceptible to fraud across all cashless payment methods. The study concluded that a strong, positive relationship exists between cashless payment technologies, fraud occurrence, and transaction value. The study recommended that policymakers implement stringent regulations for cashless platforms to mitigate fraud risks. Future research should explore advanced technologies such as blockchain, AI, and machine learning to enhance fraud prevention. Additionally, further investigation is needed into the relationship between transaction value and fraud across various industries and vendor types.