Digital Payment Adoption and Overspending Behaviour the Mediating Roles of Reduced Pain of Paying and Perceived Convenience and the Moderating Effect of Financial Literacy, Psychological Detachment and Expense Awareness- Evidence from Mobile Wallet Payment Users in Addis Ababa, Ethiopia
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Date
2026-06-03
Authors
Selome Yoseph
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Addis Ababa University
Abstract
The main aim of this research analysed The Psychological Effects of Digital Payment Adoption on overspending Behaviour: Evidence from Digital Payment Users in Addis Ababa, Ethiopia. The research focused on how the Digital Value Decoupling, through "Trust-Risk Paradox", drives the budget violation due to the mandated adoption enforced by the government of the mobile wallets even when the users are anxious about using them because of fears of transaction risk. The research followed a Positivist deductive philosophy, used explanatory research methodology and quantitative research approach. Eighteen hundred survey responses were collected from mobile wallet users (Telebirr and M-Pesa), following the purposive nonprobability sampling method yielding 384 completed surveys, of which 383 were usable. The data was then analysed using Partial Least Squares Structural Equation Modelling (PLS-SEM). The SEM structure provided strong explanatory power (R2 = 0.741). The results of the research showed that Digital Payment Adoption (DPA) had a significant direct effect on Overspending Behaviour (β = 0.892, p < 0.001) and that the relationship was significantly mediated by Reduced Pain of Paying (p = 0.017) which serves as a cognitive numbing function for the psychological pain of losing money through the use of digital interfaces; on the other hand, the Perceived Convenience Relationship was not a significant mediator (p = 0.374), further demonstrating that most digital overspending was due to a calculated lapse in tracking due to an individual's inability to see their wealth. Additionally, the researchers found that Traditional Financial Literacy did not provide any significant protective buffer in a transaction (p = 0.188). Lastly, Psychological Detachment was established as the only statistically significant moderating variable (β = -0.102, p = 0.044).The study recommends that the National Bank of Ethiopia and fintech developers consider incorporating real-time Cognitive Friction mechanisms, like dynamic balance updates and sensory haptic alerts, into application architectures. Given that Psychological Detachment emerged as the sole effective boundary condition, behavioural self-regulation nudges must be prioritized over traditional informational literacy campaigns to suppress digital overspending
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Keywords
: Digital Payment Adoption, Overspending Behaviour, Reduced Pain of Paying, Psychological Detachment, Trust-Risk Paradox, Mobile Wallets, Ethiopia