Determinants of the usage of payment cards among employed youth in Nairobi

Abstract

In Kenya’s rapidly digitizing financial landscape, mobile money platforms like M-Pesa have become the primary mode of payment for many citizens, including formally employed youth. Despite widespread issuance of payment cards to this demographic through salaried bank accounts, anecdotal and industry evidence suggests that card usage remains low. This research examined the effects of financial literacy, demographic factors, and mobile payment adoption on the usage of payment cards among Nairobi’s youth in formal employment. The theoretical foundations of this study were Technology Acceptance Model (TAM) and Diffusion of Innovation Theory (DIO). Convenience sampling was used to recruit 397 participants for this study. Data for this study was collected using structured questionnaires comprising of standardized, closed questions. To the findings suggest that financial literacy, demographic characteristics, and mobile payment adoption all contribute to shaping the usage of payment cards among formally employed youth in Nairobi. Financial literacy emerged as a particularly strong factor, as knowledge and awareness about financial matters increased the likelihood of using payment cards. Demographic factors, including income and education, further influenced adoption, while mobile payments played a complementary role, encouraging the use of card-based transactions. The findings of this study have several important implications for financial institutions, policymakers, and managers. First, financial literacy plays a crucial role in payment card adoption; hence, the need for targeted financial education programs to improve consumer understanding of payment cards. Second, demographic factors influence card usage, which underscores the need for customized card payment products to meet diverse consumer needs. Third, the complementary relationship between mobile payments and card payments indicates that seamless integration between these systems can enhance usage. Keywords: Demographic factors, financial literacy, mobile payment adoption, employed youth, payment cards usage.