The rapid growth of Fintech globally, and its increasing importance in Pakistan, has prompted this research. While Pakistan has seen significant advancements in financial technology, the factors hindering widespread adoption remain unclear. This study focuses on perceived transaction costs (PTCs) and their influence on consumers' intention to use fintech services. Previous research has identified various barriers to online shopping and internet banking, including privacy concerns, difficulties in product evaluation, and return processes. However, limited research has explicitly examined the impact of PTCs on fintech adoption in Pakistan, particularly considering the moderating effects of situational factors. This study addresses this gap by investigating how perceived transaction costs and their antecedents (perceived asset specificity, perceived complexity, perceived uncertainty, dependability, and convenience) influence consumers' intention to use fintech. It further explores how situational factors such as the pandemic and impending policies (PIP) and environmental and physical surroundings (EPS) moderate the relationship between PTC and intention to use fintech. The overarching goal is to provide insights into how fintech companies can improve adoption rates by understanding and addressing the cost-related factors and situational contexts influencing user behavior in the Pakistani market.

The study draws upon three theoretical frameworks: Transaction Cost Economics (TCE), Innovation Diffusion Theory (IDT), and Belk's Theory of Situational Influences. TCE emphasizes the costs associated with transactions, highlighting the importance of factors like asset specificity, uncertainty, and frequency. IDT examines how innovations are adopted and diffused within a society, considering factors like relative advantage, complexity, and compatibility. Belk's theory focuses on how situational factors influence consumer behavior. The integration of these three theories provides a robust theoretical foundation for understanding the complexities influencing fintech adoption. The authors review existing literature on the Technology Acceptance Model (TAM) in the context of fintech adoption in Pakistan, noting its limitations in fully capturing the cost-related aspects. This research differentiates itself by focusing specifically on PTCs and incorporating situational moderators, offering a more nuanced understanding than previous TAM-based studies. The integration of these three theories provides a robust theoretical foundation for understanding the complexities influencing fintech adoption.

Data was collected through a two-part online questionnaire distributed via various social media platforms and email. The questionnaire employed five-point Likert scales to measure constructs related to perceived transaction costs, their antecedents (PAS, PCX, PUC, DPND, CONV), intention to use fintech (IU), and the situational moderators (PIP and EPS). A total of 276 responses from Pakistani individuals aged 20 and above with internet access and some experience with fintech were collected over a one-month period. The sample included a diverse representation in terms of gender, age, education level, occupation, and income. Convenience sampling was used, acknowledging potential biases due to overrepresentation of certain demographics (high education levels, specific age groups). The collected data was analyzed using Smart PLS 3, employing a two-step approach suggested by Anderson and Gerbing (1988). This involved first assessing the measurement model for convergent and discriminant validity and then analyzing the structural model to test the hypotheses. Convergent validity was assessed using composite reliability, Cronbach's alpha, and average variance extracted (AVE), while discriminant validity was assessed using the Fornell-Larcker criterion and the heterotrait-monotrait ratio (HTMT). Bootstrapping with 5000 subsamples was used to test the significance of the path coefficients in the structural model, considering multicollinearity using the variance inflation factor (VIF).

The study confirmed a significant negative relationship between PTC and intention to use fintech (β = -0.280, p < 0.0001). This indicates that higher perceived transaction costs lead to a lower likelihood of adopting fintech services. The antecedents of PTC showed varying degrees of influence. Perceived uncertainty (β = 0.204, p < 0.0001) and perceived asset specificity (β = 0.203, p < 0.007) had the strongest positive relationships with PTC, suggesting that greater uncertainty and asset specificity increase perceived transaction costs. Perceived complexity (β = 0.181, p < 0.005) also had a positive influence. Conversely, dependability (β = -0.223, p < 0.017) and convenience (β = -0.186, p < 0.005) showed significant negative relationships, highlighting the importance of trust and ease of use in reducing perceived costs. The moderating effects of situational factors were also significant. The pandemic and impending policies (PIP) negatively moderated the relationship between PTC and IU (β = -0.149, p < 0.009), implying that during uncertain times like the pandemic, individuals were more willing to tolerate higher transaction costs. Environmental and physical surroundings (EPS) had a positive moderating effect (β = 0.139, p < 0.025), suggesting that difficulties in physical access to services increased the reliance on fintech, even if it entails higher costs. The overall model demonstrated high explanatory power, with R-squared values of 0.667 for PTC and 0.404 for IU.

The findings highlight the importance of considering both the direct effects of PTC and the moderating role of situational factors when assessing fintech adoption. The negative relationship between PTC and intention to use fintech underscores the need for fintech companies to adopt strategies that minimize perceived costs. This includes enhancing the dependability and convenience of their services, addressing uncertainty and asset specificity concerns, and simplifying the user experience. The moderating effects of PIP and EPS indicate that contextual factors significantly shape user behavior. During times of crisis or when physical access to financial services is limited, the willingness to tolerate higher transaction costs increases. Fintech companies should tailor their strategies to specific situational contexts, focusing on building trust and offering easily accessible services during times of uncertainty. The high explanatory power of the integrated model suggests the value of combining multiple theoretical frameworks for a comprehensive understanding of fintech adoption.

This study provides valuable insights into the factors driving fintech adoption in Pakistan. It underscores the crucial role of perceived transaction costs and situational factors in shaping user intentions. The findings offer practical implications for fintech companies, emphasizing the need for strategic cost management, enhanced service dependability and convenience, and context-specific marketing strategies. Future research could explore other cost-related factors, investigate the actual usage of fintech services, and replicate the study in other cultural contexts to assess the generalizability of the findings. Further investigation into the relationships between independent variables would also enhance the understanding of this complex phenomenon.

The study relied on self-reported data from an online survey, limiting the generalizability of findings due to potential response bias and the convenience sampling method. The focus on internet users excluded a significant portion of the Pakistani population lacking internet access. Incentives offered to participants might have influenced responses. The study focused primarily on perceived transaction costs, potentially overlooking other crucial factors influencing fintech adoption. Future studies should address these limitations through the use of more robust sampling methods, inclusion of a broader population, and consideration of additional factors beyond PTC.