Acceptance and Success Factors for NFC-Mobile-Payment in South Korea. In comparison to Austria and Taiwan

Master's Thesis, 2016

94 Pages, Grade: 1


Table of content


Table of content

List of figures

List of tables


1 Introduction
1.1 Motivation
1.2 Relevance
1.3 Research question
1.4 Goals
1.5 State of the art
1.6 Methods used
1.6.1 Empirical research
1.6.2 Comparison of the countries
1.6.3 Comparison of the data
1.7 Structure

2 Mobile Payment Systems
2.1 Terminology/ technical terms
2.2 The use of NFC-Mobile-Payments from users viewpoint
2.3 Development of Mobile Payments in South Korea
2.3.1 T-Money
2.3.2 Approaches by Korean mobile network operators, banks and credit-card issuers
2.3.3 The Grand NFC Korea Alliance
2.3.4 Apple, Google, Android, Samsung, LG

3 Framework
3.1 Initial point of Research
3.2 Success Factors
3.2.1 Product related factors and intention to adopt NFC-based mobile payments
3.2.2 Personal related factors and intention to adopt NFC-based mobile payments
3.2.3 Trust and intention to adopt NFC based mobile payments
3.2.4 Attractiveness of alternatives and intention to adopt NFC-based mobile payments
3.3 Hypotheses

4 Empirical Part
4.1 Research Method
4.2 Measurements
4.3 Data collection
4.4 Execution annotations
4.5 Data analysis

5 Findings in South Korea
5.1 Presentation of the identified impacting factors in South Korea
5.2 Presentation of the findings in South Korea
5.3 Interpretation of the findings in South Korea
5.4 Comparison with previous findings in South Korea

6 Comparison of the countries
6.1 Economical facts
6.1.1 Spending on R&D
6.1.2 ICT value added
6.1.3 Employment in the ICT sector
6.1.4 Top ICT firms
6.1.5 Business research and development expenditures
6.2 Technical infrastructure
6.2.1 Fibre connections
6.2.2 ICT Development Index
6.2.3 ICT-Opportunity Indices
6.2.4 Businesses’ broadband connectivity
6.2.5 The Networked Readiness Index
6.3 Consumer Facts
6.3.1 Smartphone penetration
6.3.2 Peoples interest measured by search requests
6.4 Cultural comparison
6.4.1 Hofstede
6.4.2 Innovativeness vs. Imitation
6.4.3 The Globe study

7 Comparison of the findings in South Korea, Austria and Taiwan
7.1 Differences
7.2 Similarities
7.3 Interpretations

8 Conclusion
8.1 Suggestions for practitioners
8.2 Impact of the thesis

9 Limitations and further need for research
9.1 Limitations
9.2 Further need for research


10 Appendix
10.1 Testing of the Model used in Korea from SPSS
10.2 Demography
10.3 Survey used

List of figures

Figure 1 - Players most likely to drive growth in mobile payments

Figure 2 - Technology Acceptance Model

Figure 3 - Model of Schierz, Schilke, Wirtz

Figure 4 - The TRAM model as it has been used by Shin & Lee.

Figure 5 - Model of Pham and Ho

Figure 6 - Key Success factors according to the Advanced Payment Report 2015

Figure 7 - Samsung Pay, 3 Steps

Figure 8 - different shapes of T-money "cards"

Figure 9 - Development of mobile payment services in South Korea

Figure 10 - Gross domestic spending on R&D in percentage of GDP

Figure 11 - ICT value added

Figure 12 - Google Trends "Near Field Communication"

Figure 13 - Hofstede’s Dimensions, country comparison

Figure 14 - Technology adoption in different cultures

Figure 15 - Globe Scores

Figure 16 - Similarities and differences of the observed drivers

Figure 17 - English Survey from Pham and Ho part 1

Figure 18 - English Survey from Pham and Ho part 2

List of tables

Table 1 - Hypotheses

Table 2 - Coefficients processed in SPSS

Table 3 - Descriptive statistics processed in SPSS

Table 4 - Comparison of the GDPs

Table 5 - Employment in the ICT sector and sub-sectors 2013

Table 6 - Business R&D expenditures 2013

Table 7 - Relevant figures of the ICT Development Index 2015

Table 8 - ICT-Opportunity Index and ICT-Opportunity rank, DEA-Opportunity Index and DEA-Opportunity rank

Table 9 - Broadband connectivity of enterprises

Table 10 - Networked Readiness Index

Table 11 - Comparison of the β-values

Table 12 - Cronbach Alpha

Table 13 - ANOVA calculated in SPSS

Table 14 - Pearson Correlations calculated in SPSS

Table 15 - Summary of the factor analysis processed in SPSS

Table 16 - Demographic profile of the sample in South Korea

Table 17 - Survey translated from English to Hangul


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Herewith, I want to thank Kim Jeong Hee, who volunteered to offer his excellent language skills to help me with the translation of the survey from English to Hangul, the local Korean language. Further thanks are delivered to Kim Seongjae who helped double checking the survey. Their effort enabled a proper translation to ensure well comparable, high quality findings.

1 Introduction

In this first chapter, an introduction will be provided to point out what triggered the research question and what the motivation to do research in this field is based on. The aims of this thesis will be pinpointed and it will be described for which persons and institutions the planned outcome is meant to be useful and how they will be able to benefit from the research. The underlying models will be named and a brief overview of the actions taken for the research and the structure of the thesis will be outlined.

1.1 Motivation

With the rise of the smartphone, global operating companies started investing billions of Dollars in the development of mobile-payment systems enabled by mobile devices. Brand names like Google Wallet and Apple Pay were created and the forecasts for these services were more than positive. Arthur D. Little Consulting, for instance, predicted a growth from 11.7 billion US-Dollar 2005 to 37.1 billion US-Dollar in 2008 (Little, Arthur D., 2004). This would have been 8% of the mobile-service markets, but it did not become reality. In 2008 just 1% of the mobile phone users had used mobile payments (Gartner Group, 2009). In Austria for example, at the time of writing, no supplier could establish a notable service. But as Samsung electronics announced on October 25 in the year 2015, they could increase the amount of users of their payment service Samsung Pay in South Korea to more than one million, two months after its release already (Business Korea, 2016).

To understand why it might work in South Korea but not in Austria by now, there is a need to investigate the background of technology acceptance in the case of NFC-Mobile-Payment in South Korea. The question therefore is, what makes the difference between technology acceptance in South Korea and technology acceptance in Austria and what lessons can be learned from this difference.

Related previous work of the author

The author of this thesis already did prior research about the topic and focused on finding key success factors for customer acceptance of NFC-Mobile-Payment by doing empirical research in Austria (Harb, 2016). These findings should be comparable to the findings that are to be made in South Korea. The analysis of the data should provide a wider picture of the differences and highlight the factors that could be crucial in order to enable higher technology acceptance. It is meant to enable a better understanding of the different markets.

1.2 Relevance

This research is meant to be useful for implementing NFC-Mobile-Payments, but the implications should also be transferable to accelerate the acceptance of other technologies by understanding the consumers.

Through the new information gained, a better understanding of customer’s technology acceptance in different regions should be enabled. This should help to tailor services and the related marketing strategies to the (considered) diverse markets.

The outcome of the thesis is planned to be addressed to decision makers of the industries involved in the payment services as well to executives of companies that use or plan to use them.

Industries involved in the payment services could be seen as follows: Card networks like Visa, MasterCard etc., but also device manufacturers as Apple or Samsung, or alternative players like PayPal and Mobile Network Operators (MNO). In the research used for the Advanced Payments Report 2015, the players most likely to drive growth are ranked as shown in figure 1 below (Edgar, Dunn & Company, 2015).

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Figure 1 - Players most likely to drive growth in mobile payments

(According to the authors, the survey respondents included industry stakeholders on the general direction of the payments industry.)

Source: Data from: Edgar, Dunn & Company (2015)

1.3 Research question

At the time of writing, no company could realize notable success by establishing a NFC-mobile-payment service in Austria and settle in the market. Even though the forecasts were more than optimistic.

Uprising questions triggered by the information shown above are: Why does it work in South Korea? What made the difference? How could customer acceptance of such technologies be achieved in other countries, such as Austria? What role do cultural differences play?

To help solving this puzzle, the following question forms the central question of this thesis:

What are the affecting key success factors that the customer acceptance of NFC-Mobile-Payments in South Korea depends on?

The found factors will then be set in comparison to the findings from Austria and occurring similarities and differences will be identified and discussed.

1.4 Goals

The overall aim of this research is to provide a better understanding of the customers, how they decide to use a new technology, in particular NFC-Mobile-Payments and what affects their decision to use them. The importance of the various factors will be measured and suggestions will be made, what actions marketers and developers should take to trigger an increase in technology adoption. Through this paper, recipients (as listed in 1.2) will be enabled to make better decisions how to adapt and market their services to the customers in their targeted countries/ markets. Therefore, the factors that drive acceptance of NFC-Mobile-Payment-Services will be identified and similarities and differences of the markets will be pinpointed.

1.5 State of the art

The most popular model to analyze the acceptance of new technologies in the relevant literature is the Technology Acceptance Model (TAM) of Davis (Davis, et al., 1989) as shown in figure 2 below.

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Figure 2 - Technology Acceptance Model

Source: Venkatesh (2015)

The model was introduced to enable researchers to study how individual perceptions affect the intentions to use information technology acceptance. It differentiates two concepts. On the one hand, the perceived usefulness, that reflects the benefits a user expects from a technology and on the other hand, the perceived ease of use that reflects the perceived behavioral control.

The base model of TAM was further developed and complemented several times (TAM2, TAM3, UTAUT) (Venkatesh, 2015).

Schierz et al. examined the acceptance of Mobile-Payments in Germany by using the TAM as a basis and adapted it. They enriched the model by adding the factors of perceived security, perceived compatibility, subjective norm and individual mobility as illustrated in figure 3 below. In their findings, they pinpointed that compatibility with consumers’ lifestyles and tasks, individual mobility and subjective norm had significant influence on the technology acceptance. (Schierz, et al., 2010)

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Figure 3 - Model of Schierz, Schilke, Wirtz

Source: Schierz et al. (2010)

In 2014, Shin and Lee published an article about readiness and technology acceptance on NFC-Mobile-Payment-Services in Korea using the TRAM model. The TRAM model is an integration of the Technology Readiness (TR) model and the TAM, as shown in figure 4 below (2014). They wrote: “While the NFC-Mobile-Payment is struggling in most of the world, Korea became a pioneer in rolling out the NFC-Mobile-Payment technology.” (Shin & Lee, 2014).

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Figure 4 - The TRAM model as it has been used by Shin & Lee.

Source: Shin & Lee (2014)

In their findings, Shin and Lee stated that the four constructs of the TR (innovativeness, optimism, discomfort and insecurity) have significant impact on the perceived usefulness which, in itself, significantly affects the intention to use the technology. They claimed that instead of just underlining the convenience of NFC-Mobile-Payment, it would be better to emphasize the benefits and value of the technology. Another finding of the study was, that ease of use without perception of usefulness would not encourage consumers to use NFC-Mobile-Payment-Services.

In 2015, Pham and Ho published an empirical research about the acceptance of NFC-Mobile-Payments in Taiwan. For that purpose, the researchers developed a model by using the TAM and the model of the Diffusion of Innovations (DOI). They developed a model with eleven drivers. They differentiated seven product related factors and two personal related factors. Additionally, they added the trust of the consumers and the attractiveness of the alternative methods, as presented in figure 5 below. (Pham & Ho, 2015)

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Figure 5 - Model of Pham and Ho

Source: Pham & Ho (2015)

This model has also already been used by the author of this work to analyze the Austrian market, as stated above in 1.1, and will be the base of this work as well, to enable a qualified comparison between the countries.

The consultant firm Edgar, Dunn& Company illustrated the success factors they found in association with Payment Cards and Mobile for their annual Advanced Payments Report 2015 as figure 6 shows below (2015).

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Figure 6 - Key Success factors according to the Advanced Payment Report 2015

Source: Data from: Edgar, Dunn & Company (2015)

1.6 Methods used

To answer the research question, as mentioned above, the model used by Pham and Ho, as illustrated in figure 5, has been used and the hypotheses have been formulated according to it. In order to make the findings in the different countries as comparable as possible, the same questionnaire that was used in Austria has been carefully translated to Hangul, the Korean local language, and presented to the subjects in a way as similar as possible to the proceeding used in Austria and Taiwan before.

1.6.1 Empirical research

After carefully translating the survey to Hangul, a pretest with a small number of people has been held, to ensure that everything works and to detect problems or uncertainties, if there would have been any left.

In the main survey, the subjects had to answer questions that were formulated to provide an overview of why the payment-systems are accepted by customers, or why not. The survey also contained questions that give an indication of the popularity of the services, availability of NFC ready devices and the current knowledge about them. In the main part of the questionnaire, the weighting of the key success factors, identified by Pham and Ho, has been analyzed. As supportive variables, to understand and evaluate the findings better, demographic characteristics like age, profession, gender and educational level have additionally been requested.

1.6.2 Comparison of the countries

In order to filter out the differences that might play a role, to enable a better interpretation of the found figures, the countries that are subjects of this research, Austria and South Korea and also Taiwan, where data was available, have been compared according to information about their economical, technological, and cultural background. For instance, the status of development of Information and Communication Technology (ICT) infrastructure or cultural security attitudes could have an impact on technology acceptance.

1.6.3 Comparison of the data

After calculating the figures, the data found in South Korea has been compared to the data from Austria. As the data from South Korea has been collected in the most possible similar way as the data from Austria and Taiwan, they are suitable for a qualified comparison. Similarities have been found and differences have been detected. By using also the findings of the comparison of the countries as described in 1.6.2 above, explanations and interpretations of the figures and their differences and similarities have been developed. Through this information, a better understanding of customer’s technology acceptance in different regions should be enabled. This should help to tailor services and the related marketing to the diverse markets.

1.7 Structure

In this first chapter, the motivation for this research has been delineated and the recipients that can benefit of the outcome of it have been named. The explicit research question has been presented and the targeted goals have been pinpointed. Also the research method has been illustrated.

In chapter 2, to provide a better understanding, the mobile payment systems that are subject of the research will be described and technical terms will be explained. Some variations of Mobile-Payment-Systems will be presented briefly. It will be described from a user’s perspective how NFC-Mobile-Payments work and what actions need to be taken to understand, what the user is facing. To provide a better understanding, a timeline of the development of Mobile-Payments in South Korea will be drawn.

Chapter 3 contains the Framework. The initial point of research will be located and the considered motivational factors of technology adoption will be described and the hypotheses that are to be tested will be named.

The fourth chapter contains the empirical part of the research. The methods used and the measurements will be described. It will be captured, how the data has been collected empirically and all unexpected occurrences will be noted.

In chapter 5, the findings of the empirical research, executed as described in chapter 4, will be presented and interpreted. In the last section of this chapter, the findings will be compared to the state of the art of the previous findings by other researchers in South Korea.

In order to be able to compare and interpret these findings from South Korea with those from Austria and also Taiwan, economical, technological and cultural comparisons are presented in chapter 6. Background information is provided to understand the differences of the countries in terms that appear to be relevant for ICT adoption. Key figures are mentined and interpreted and comparative studies are provided.

In chapter 7, the findings in South Korea, as presented in chapter 5, will be compared to the findings in Austria and the findings of Pham and Ho in Taiwan. Similarities between the findings and differences will be pinpointed and discussed in order to provide suggestions for practitioners in the following chapter.

In chapter 8, the conclusion will be drawn and the suggestions based on the findings described in chapter 5 and 7 will be provided and the impact of the thesis on firms and individual deciders in the affected industries will be demonstrated.

Chapter 9 will complete the thesis by pointing out the limitations detected and the further demand for research.

2 Mobile Payment Systems

In this chapter, to provide a better understanding, the Mobile-Payment-Systems that are subject of the research will be described and critical terms will be explained. Some variations of Mobile-Payment-Systems will be presented briefly. It will be described from a user’s perspective how NFC-Mobile-Payments work and what actions need to be taken to understand, what the user is facing. Also a timeline of the development of Mobile-Payments in South Korea will be drawn.

2.1 Terminology/ technical terms

Mobile-Payment (M-Payment):

Various definitions of this term can be found in current literature, Gartner Research defines it as follows: “Banking instruments such as cash, bank account or debit/credit card, and stored value accounts (SVAs) such as transport card, gift card, PayPal or mobile wallet.” (Gartner, 2016)

Tech Target states as: “Mobile payment is a point-of-sale (POS) transaction made or received with a mobile device. […]Technologies being used for mobile payments include Near Field Communication (NFC), Bluetooth, Wi-Fi, and RFID, a short-range transmission system.” (Tech Target, 2016)

Near Field Communication (NFC)

Near Field Communication (NFC) enables a broad variety of contactless and proximity-based applications, like payments, customer loyalty applications, mobile marketing and device pairing. The wireless technology has an operating range of 10 cm or less using the 13.56MHz frequency band. At the moment, there are three modes defined for NFC operation: Card emulation, tag reading and peer-to-peer (P2P). (Gartner, 2016)


NFC-Mobile-Payment is a contactless technology that enables payment transactions by using a contactless chip embedded in payment cards, tags, and mobile phones. The chip communicates with a reader device that uses NFC standards. (Gartner, 2016)

The research of this thesis focuses on NFC-Mobile-Payment by using smartphones, but the implications should be adaptable and useful for all kinds of mobile payments and for increasing acceptance of new technologies in related fields as well. Therefore, whenever the term NFC-Mobile-Payment is mentioned in the following sections of this thesis, it implies NFC-Mobile-Payment using smartphones.

Digital Wallets

Also known as e-wallet, a Digital Wallet is an application that securely stores users’ payment information and passwords for payment methods like credit cards, bank accounts and alternative payment forms. Mobile Wallets can also be used to store information like loyalty cards and coupons. (Investopedia LLC, 2016)

Magnetic Secure Transmission

Magnetic Secure Transmission (MST) is a technology that sends a magnetic signal that imitates the magnetic strip on a standard payment card. MST sends the magnetic signal from the mobile device to a payment terminal's card reader. The card reader receives the same signal, as if a standard magnetic-stripe-card would be swiped. Through this, most of the card readers do not even require a software update to be able to accept MST technology. (Samsung, 2016)

2.2 The use of NFC-Mobile-Payments from users viewpoint

To use NFC-Mobile-Payment on a mobile device, a few preparations have to be made in advance by the user. The payment application needs to be downloaded and installed. This can be done for example from Google Play, in case the user is running an Android system or from Appstore, if the user is running IOS. The applications can only be installed on smartphones that are equipped with the necessary technical requirements. After the installation, the customer needs to add the data of at least one payment account that is to be used later. This can be a credit- or debit card account, but also an alternative payment method, like PayPal. After setting up the application, the smartphone can be used for payments following the steps as described below and illustrated in figure 7.

1. Select and start the application.
2. Authorize payments by scanning a fingerprint or entering a preset pin code.
3. Hover the phone over the Terminal.

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Figure 7 - Samsung Pay, 3 Steps

Source: [March 11 2016]

2.3 Development of Mobile Payments in South Korea

2.3.1 T-Money

First implemented back in 2004, the Korean Smart Card Corporation (KSCC) launched the T-money services. In the beginning, as a card, to enable fast and easier ticketing in public transportation (Lee, 2014).

Later in 2014 the card was transformed into a rechargeable prepaid radio frequency (RF) smart card embedded with a CPU that can also be used to make purchases. Since 2014, T-money can be used as a payment method not only for public transportation, but also in taxis or for purchases in convenience stores and supermarkets. T-money cards are designed in different shapes, to fit convenience or taste of the customers. There are standard cards in the shape of a credit card, but also key chains, watches, rings, cell phone charms and even stuffed animals. Sometimes they are also embedded into mobile phones. Some examples are given in figure 8 below. (LTP, 2014)

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Figure 8 - different shapes of T-money "cards"

Source: [March, 11. 2016]

2.3.2 Approaches by Korean mobile network operators, banks and credit-card issuers

In 2002, KTF and SK Telecom, the two biggest MNOs of South Korea at that time, released post-pay mobile proximity payment programs almost at the same time. Both of these infrared technology based programs, named K-merce and Moneta, turned out not to be successful. As a first reason, they were inconvenient for the customers, as they had to scroll through several menus to process a payment. As a second reason, POS were just compatible with either one or the other provider’s technology. The third problem was that banks and credit card firms did not promote the programs, as KTF and SK Telecom demanded large shares of the revenue of each payment made.

In 2003, LG Telecom, another Korean mobile network carrier, partnered with Kookmin Bank and released BankOn. It was the first IC-chip based mobile banking service in South Korea. It adopted single IC-chip technology, but it did not provide mobile payment services like K-merce or Moneta did. It offered the consumers to use their mobile devices instead of ATM or transit cards. After launching BankOn, LG Telecom could significantly increase its market share. In 2005, SK Telecom followed by collaborating with a number of banks and launched MBank, a mobile banking service. This service was based on a dual-chip technology. One part of the chip was controlled by the bank, the other part contained information by SK Telecom’s Moneta product. The competitor KTF also released a banking service running under the name KBank. KBank was using a single-chip technology. The chip was issued and controlled by the partnering bank.

In 2006, Visa and MasterCard started to offer contactless payment solutions in South Korea. The products were named Wave (Visa) and PayPass (MasterCard). Since then, SIM-sized credit cards issued by the credit card companies could be inserted into mobile devices to enable proximity payments. The inconvenience of this system was, that whenever a customer wanted to proceed a payment using a card of a different issuer, the IC-chip needed to be changed. In 2007, in order to get rid of this problem, SK Telecom released a service that enabled the customers to download credit card applications to a SIM card. Additionally, customers were also able to download mobile banking and public transportation applications to their SIM cards. KTF and LG Telecom followed with similar services. At this point it was clear, that mobile network providers were gaining more and more control. (Bradford, 2007)

Contactless mobile payment terminals spread all over the country during the following years and in 2010, KT launched its NFC-service Olleh my Wallet. (Clark, 2012)

In the same year SK Telekom issued Smart Wallet. An application for Android and IOS that offered the service to pay for transport tickets, entrance tickets, other services, but no full payments yet. This service should reach 10 million users three years later in June 2013.

According to the fin-tech platform LTP (2014), the growth of the mobile-payment market can be credited to this high amount of terminals and the interoperability of the systems. In May 2012, the above mentioned contactless products, MasterCard’s PayPass and Visa’s payWave, could be used at more than 200,000 terminals in South Korea. (LTP, 2014)

2.3.3 The Grand NFC Korea Alliance

Back in June 2011 already, the biggest mobile network providers, card issuers, device manufacturers and government organizations formed the Grand NFC Korea Alliance. Their aim was to place Korean firms as market leaders in NFC (Chung, 2015). Members of this alliance included the big network operators, SK Telecom, KT and LG U+, the credit card issuers Hana SK Card, BC Card, Shinan Card, MasterCard and KB Kookmin Card, the manufacturers Samsung, LG, Pantech, Ubivelox, KEBT, MtekVision and 3A Logics. Further members were the Telecom billing service providers Mobilians, KCP, Danal and Galaxia. As governmental organizations, and associations, KISA, ETRI, TTA, MOIBA and the Korea Internet Companies Association were also part of the alliance. (Brown, 2011).


Excerpt out of 94 pages


Acceptance and Success Factors for NFC-Mobile-Payment in South Korea. In comparison to Austria and Taiwan
University of Graz  (Department of Information Science and Information Systems, University of Graz, Austria / Department of Management Information Systems, Chungbuk National University, Republic of Korea)
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NFC-Mobile-Payment, NFC, Mobile-Payment, kontaktlos, check out, Bezahlen, Smartphone, Mobiltelefon, TAM, technology acceptance, samsung pay, apple pay, google wallet, google pay, mobile wallet, Bankomatkarte Mobil, samsungpay, applepay, googlepay, payment, mobile payment
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Jakob Harb (Author), 2016, Acceptance and Success Factors for NFC-Mobile-Payment in South Korea. In comparison to Austria and Taiwan, Munich, GRIN Verlag,


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