The Rise of FinTech and the Journey Toward a Cashless Society: Investigating the Use of Mobile Payments by SMEs in Oman in the Context of Vision 2040

Abstract

This study investigates the factors that affect the adoption of mobile payment systems in Oman, focusing specifically on small and medium-sized enterprises (SMEs) within the expanding FinTech landscape. By utilizing secondary sources of data from the Central Bank of Oman and global FinTech reports, this research identifies essential enablers, such as security features and ease of use, which are propelled by developments in FinTech solutions. It also addresses the obstacles, such as high transaction fees and issues with authentication, that impede SMEs from embracing these technologies. Through an examination of worldwide FinTech adoption patterns, this research offers perspectives on Oman’s progress toward becoming a cashless society. This study employs sophisticated statistical techniques, including histograms and correlation analysis, to reveal significant trends in the rates of mobile payment adoption. The results emphasize the necessity for cooperative efforts among regulators, financial entities, and FinTech developers to minimize costs, strengthen digital infrastructure, and enhance user experiences. These findings are consistent with Oman’s Vision 2040, which aims to foster financial inclusion and propel the country’s shift toward a robust, digitally oriented economy powered by FinTech innovation.

1. Introduction

The ongoing digital transformation of financial services in Oman is significantly influenced by the integration of mobile payment platforms such as Apple Pay and Google Pay. These platforms align with Vision 2040’s objective of enhancing Oman’s digital economy, contributing to faster, more secure payment solutions for diverse users, including small and medium-sized enterprises (SMEs). Other emerging economies, like India and Kenya, have demonstrated the importance of minimizing financial and infrastructural barriers to enable smooth mobile payment integration (Muthuraman et al., 2022). Despite the benefits of mobile payment, SMEs face significant financial and operational challenges when adopting these platforms, particularly concerning transaction fees and infrastructure limitations (Patel & Singh, 2021). Furthermore, small businesses face significant challenges in adopting these platforms, particularly due to financial barriers such as high transaction fees.

Mobile payment systems, especially Apple Pay and Google Pay, have revolutionized transaction methods, providing quicker, safer, and more convenient options compared to traditional payment techniques. These systems are crucial to Oman’s move towards a cashless economy, aligning with the government’s Vision 2040 initiative, which focuses on technological progress and economic diversification. On a global scale, the mobile payments sector has seen substantial growth. By 2023, it was valued at more than USD 1.6 trillion, with forecasts indicating a compound annual growth rate (CAGR) of 30% up to 2030 (Statista, 2023). On the other hand, the COVID-19 pandemic necessitated rapid adaptations in teaching models in Oman, leading to innovative approaches that embrace digital transformation across sectors (Sallem et al., 2024). Moreover, the financial services industry in Oman is undergoing a noteworthy change, largely due to the rise of digital payment solutions.

In the Omani context, the Central Bank of Oman (CBO) noted an astonishing 551% rise in mobile payment transactions from 2021 to 2022, underscoring the swift development of digital financial services in the nation (Oman Observer, 2023b). The increasing prevalence of mobile payment systems, particularly Apple Pay and Google Pay, has changed the landscape of digital transactions, with these services leading the way in many areas. The Vision 2040 initiative highlights the significance of encouraging innovation, especially in the financial sector, to lessen dependency on cash transactions and advocate for digital payment methods. Nonetheless, there is a lack of research specifically targeting the Gulf Cooperation Council (GCC) countries, particularly concerning the obstacles that small businesses and SMEs encounter when adopting mobile payment systems. The CBO’s initiatives to create a regulatory framework that supports digital financial transactions are essential in aiding Oman’s shift towards a cashless economy (CBO, 2024).

This study intends to examine the effects, advantages, and challenges associated with mobile payment systems in Oman, focusing on small businesses and SMEs. This study investigates the uptake of mobile payment systems, specifically Apple Pay and Google Pay, within Oman. The primary issue addressed in this research revolves around the difficulties encountered by users, especially small enterprises, in embracing these systems. The aim is to evaluate how mobile payment solutions align with Oman’s Vision 2040 initiative for moving towards a cashless economy. By aligning this research with the objectives of Oman’s Vision 2040, this study enhances the understanding of how digital payment methods can further the country’s larger economic and technological aspirations. This research is crucial due to the increasing disparity between national digitalization objectives and the actual adoption rates, especially among small and medium-sized enterprises (SMEs). Although Oman has made strides in developing FinTech infrastructure, small businesses have not adapted to this shift. When compared to regional counterparts like the UAE and Saudi Arabia, Oman’s FinTech ecosystem is still lagging in terms of both technological capability and user participation. This disparity poses a significant obstacle to national development initiatives and highlights the necessity for data-informed insights to foster inclusive policy measures.

This study examines these drivers and barriers, emphasizing policy recommendations that address financial and operational challenges. This study employs advanced statistical methods, including correlation matrices and scenario-based forecasts, to analyze the complex relationships among transaction fees, user behavior, and adoption rates, focusing on SMEs’ challenges and the broader impact on Oman’s Vision 2040 digital goals. By investigating obstacles such as transaction fees, user behavior, and readiness of infrastructure, this research offers suggestions to improve the uptake of mobile payments in Oman. This research aligns with Oman’s Vision 2040, emphasizing the importance of embracing mobile payments as a vital component within the larger entrepreneurial and innovation ecosystem in Oman, which is critical for sustainable economic development.

Although mobile payment adoption has been extensively studied in developed economies, limited empirical research exists in emerging markets like the GCC, particularly in Oman. There has been insufficient research on mobile payment adoption in Oman, especially concerning Vision 2040 and digital transformation efforts. Existing studies on mobile payment adoption primarily focus on developed economies with mature digital infrastructures. Although TAM and TCT frameworks have been applied widely, their adaptation to Oman’s context remains limited, particularly in examining the roles of digital literacy and the unique security challenges faced by SMEs. Moreover, the existing literature does not adequately address how user errors and authentication failures affect sustained adoption, which is crucial as Oman expands its mobile payment infrastructure. Although the TAM and TCT are widely used, further research is needed to adapt these models to Oman’s specific context, including the roles of security features and digital literacy in shaping adoption.

This study makes significant contributions to the body of research on mobile payments and digital finance, with a particular focus on emerging markets like Oman. While platforms such as Apple Pay and Google Pay have been extensively studied in developed markets, this research fills a critical gap by exploring local adoption dynamics in Oman and the GCC. It examines user perceptions, transaction costs, and behavioral factors through the lens of the TAM and TCT, offering a nuanced understanding of the regional context. Additionally, this study highlights the barriers faced by SMEs and the role of advanced security features—such as biometric authentication and tokenization—in driving adoption. This research provides actionable recommendations to accelerate adoption and promote a secure digital financial ecosystem in Oman.

2. Study Background

2.1. Economic Context

To evaluate the opportunities for mobile payment growth in Oman, it is important to examine the macroeconomic landscape. Several critical indicators highlight the country’s preparedness for the expansion of digital payments:

2.1.1. Gross Domestic Product (GDP)

GDP, which quantifies the total value of all goods and services produced within a country during a specific timeframe, acts as a crucial measure of economic vitality (International Monetary Fund, 2020; Bureau of Economic Analysis, n.d.). Oman’s economy has demonstrated consistent growth, propelled by the government’s Vision 2040 initiative, which focuses on economic diversification. The aim is to lessen dependence on the hydrocarbon sector while enhancing the private sector’s contribution to GDP. The consistent expansion of Oman’s GDP illustrates the nation’s economic robustness, creating favorable conditions for the implementation of digital payment solutions. This stable economic progression promotes a conducive environment for the uptake of digital financial tools, as both consumers and businesses increasingly gravitate towards more efficient payment methods.

Figure 1 depicts Oman’s GDP growth, showcasing the rebound from a −3.5% decline in 2020 to a 3.5% rise in 2021. This underscores the effectiveness of Oman’s Vision 2040 initiative. The information was obtained from the National Centre for Statistics and Information (NCSI), which offers valuable insights into Oman’s economic durability and diversification strategies (NCSI, 2022). As reported by the NCSI, Oman’s GDP stood at OMR 6169 million in 2022, rose to OMR 6857 million in 2023, and experienced a slight decrease to OMR 6856 million in 2024. This consistent performance demonstrates economic strength, facilitating the advancement of digital financial services.

Figure 2 illustrates Oman’s GDP over three years, indicating a rise from OMR 6169 million in 2022 to OMR 6857 million in 2023, followed by a slight decrease to OMR 6856 million in 2024. This consistent performance underscores Oman’s economic stability and fosters the ongoing expansion of digital financial services. The information was derived from the National Centre for Statistics and Information (NCSI, 2022). The increasing involvement of the private sector, especially in digital finance, highlights the possibility for ongoing expansion in mobile payments. We also need to grasp the consumer price index.

2.1.2. Consumer Price Index (CPI)

The CPI assesses the average price changes over time for a selection of goods and services purchased by consumers, acting as a vital indicator of inflation and the purchasing power of households (U.S. Bureau of Labor Statistics, n.d.; International Monetary Fund, 2020). The CPI tracks the average fluctuations in prices over time for a collection of goods and services typically bought by households. It is a key gauge of inflation that aids policymakers in monitoring the economic landscape and adjusting their monetary strategies as necessary. An increase in the CPI reflects inflation, signaling higher costs that diminish the purchasing power of consumers (Church, 2016; Hagemann, 1982). Furthermore, reports from the NCSI and the CBO underscore the importance of monitoring CPI trends for sound economic planning (NCSI, 2022; CBO, 2023). The NCSI’s Monthly Inflation Report for April 2024 and the CBO’s Economic and Inflation Trends Report for December 2023 both offer comprehensive insights into inflation trends and their policy implications (NCSI, 2022; CBO, 2023). Consequently, the inflation rate in Oman, as indicated by the CPI, rose marginally from 1.5% in 2021 to 1.6% in 2022, fostering a favorable environment for consumer expenditure and economic development (NCSI, 2022; CBO, 2023).

Figure 3 presents the CPI inflation rate in Oman, which remained relatively stable, showing a slight rise from 1.5% in 2021 to 1.6% in 2022. This steady inflation rate has fostered a positive environment for consumer spending and the uptake of digital financial services, such as mobile payments (NCSI, 2022). The controlled inflation rate, combined with government efforts to broaden revenue streams beyond oil, has promoted the acceptance of digital financial services, including mobile payments (Al Lawati, 2022). A stable CPI enhances consumer confidence, which is crucial for the expansion of digital payment systems.

Table 1. Growth in digital payment transactions (2021–2022).

Year	Number of Transactions (In Millions)	Transaction Value (In Billion OMR)
2021	199.2	24.1
2022	274.4	27.3

presents the rise in digital payment transactions in Oman between 2021 and 2022, showing a growth of 37.8% in transaction numbers and a 13.1% increase in total value. This trend demonstrates the increasing dependence on digital financial systems in Oman, further emphasizing the importance of strong cybersecurity measures.

By the end of 2023, Oman’s inflation rate had increased by 0.62% compared to the prior year, continuing previous trends. This rise was mainly due to the escalating prices of food and non-alcoholic beverages, which experienced a 2.91% increase. Within this sector, the prices of fish and seafood rose dramatically, by 7.62%, followed closely by dairy products at 6.26% and vegetables at 6.21%. On the other hand, areas such as transportation and education saw price decreases, with transportation expenses declining by 2.65% (NCSI, 2022). Inflation experienced a modest rise in 2024, with April showing a 0.4% increase compared to the same month in the previous year. Notable price hikes were seen in personal goods and services (4.2%), as well as food items (2.8%). Conversely, minor decreases were recorded in transportation and communication expenses, indicating mixed inflationary trends (NCSI, 2022). These variations underscore the fluid nature of Oman’s economy, where food prices have played a crucial role in driving inflation. In contrast, areas such as transportation and education have sometimes helped to moderate the overall inflation rates.

Figure 4 depicts the CPI inflation rates of Oman over three years. The inflation rate held steady at 1.6% in both 2022 and 2023, with a modest rise to 1.7% in 2024. This consistency indicates economic resilience, which creates favorable conditions for consumer spending and promotes the use of digital financial services, including mobile payments. The information was obtained from the National Centre for Statistics and Information (NCSI, 2022). As inflation trends persist in influencing consumer habits and economic circumstances, a detailed review of government finance statistics offers an additional understanding of how fiscal policies and public sector administration work together with these trends to uphold economic stability.

2.2. Government Finance Statistics

Government initiatives designed to foster financial inclusion and digital finance play a crucial role in the growth of mobile payments in Oman. The CBO has implemented regulatory policies aimed at lowering transaction fees for small enterprises, which promotes the use of mobile payment services such as Apple Pay and Google Pay. These policies are in line with Oman’s overall plan to augment financial inclusion and facilitate the advancement of a cashless economy (Ahamed & Shukla, 2023). By diminishing the obstacles that small businesses face, the government is enabling greater adoption of digital payment methods, which is vital for the success of SMEs. As Al Ghunaimi (2023) pointed out in his SME hotel framework, “the SME hotel concept offers a distinctive framework for supporting small and medium enterprises to achieve self-sustainability through incubation assistance” (Al Ghunaimi, 2023).

Expanding the digital shift in trade, interest rates, and financial access are vital elements that enhance these developments. With the growth of mobile payment solutions promoting financial inclusion, it is vital to maintain competitive interest rates and widen access to financial services to foster continued economic growth and support Oman’s advancing digital economy. Nonetheless, emerging markets such as Oman encounter major obstacles, including elevated transaction costs, a lack of robust cybersecurity protocols, and underdeveloped infrastructure, which hinder progress in adoption. In the GCC region, the acceptance of mobile payments differs, with nations like the UAE witnessing quicker adoption than Oman, which is attributable to its more advanced digital infrastructure (Gao & Waechter, 2017).

The emergence of mobile payment systems has greatly facilitated e-commerce and cross-border digital transactions in Oman. Services like Apple Pay and Google Pay have simplified payment methods, supporting Vision 2040’s aims to digitize trade and improve economic competitiveness (Muthuraman et al., 2022). The extensive use of mobile payments for international transactions is vital in enhancing Oman’s stature in global trade. This shift not only facilitates more efficient trade flows but also reduces transaction costs and processing times, which are essential for maintaining a competitive advantage in global markets. The implementation of mobile payment systems is crucial for lowering transaction expenses and processing durations, which is vital for improving trade efficiency and staying competitive in international markets. These innovations facilitate smooth cross-border transactions, fostering economic development and inclusion in the worldwide digital economy (Dewan & Chen, 2005).

Interest Rates and Financial Access

Interest rates are vital in controlling inflation by affecting consumer behavior, borrowing, and investment decisions. An increase in interest rates leads to higher borrowing costs, which dampen spending and reduce inflationary pressures. In contrast, decreasing interest rates encourage borrowing and investment, which can push inflation higher. Central banks leverage this connection through monetary policy to ensure economic stability and manage inflation (Mylonas et al., 2000; Rybina & Shalyhina, 2022). As a result, the interest rate trends in Oman from 2021 to 2024 demonstrate a responsive adjustment to both local and global economic factors. The CBO first kept rates low after the pandemic to aid in economic recovery. However, with rising inflation pressures worldwide, particularly due to increasing oil prices and stricter policies from the U.S. Federal Reserve, Oman’s repo rate was raised from 0.5% in 2021 to 5.0% by the close of 2022. Throughout 2023 and 2024, these higher rates were sustained to manage inflation and uphold financial stability despite ongoing geopolitical uncertainties. Reports from the CBO indicate that these rate strategies bolstered household lending and credit demand, promoting economic growth and consumer confidence until 2024.

Figure 5 illustrates the adjustments made to the repo rate by the CBO between 2021 and 2024, highlighting the adaptive monetary policy in reaction to global inflationary trends and economic circumstances (CBO, 2024; Times of Oman, 2024). Access to affordable credit is crucial for SMEs, allowing them to utilize digital financial tools and incorporate mobile payment solutions like Apple Pay and Google Pay into their businesses (Msomi & Kandolo, 2023). These advancements support Oman’s Vision 2040 objectives, encouraging economic inclusion and enabling smooth trade by promoting accessible financial services (Al-Muharrami & Al-Zaidi, 2019).

By offering SMEs flexible and easily accessible credit, Oman facilitates operational enhancements, allowing businesses to prosper in the digital economy. This access has been vital in spurring innovation, reducing trade obstacles, and improving the competitiveness of Oman’s economy (Rybina & Shalyhina, 2022). Consistency in interest rates creates a favorable setting for SMEs to innovate and grow. Moreover, this environment encourages the wider use of mobile payments, optimizing operations and hastening Oman’s shift toward a cashless society. Expanding on the examination of the four critical economic environments, it is essential to investigate the body of research that sheds light on these dynamics. The subsequent literature review analyses studies regarding the connections between interest rates, inflation, and access to credit, and how they impact SMEs and the utilization of digital financial solutions.

3. Literature Review and Hypothesis Development

In emerging markets, the adoption of mobile payment platforms has been transformative, reducing transaction costs and increasing financial inclusion. For example, countries like India and Kenya have seen the rapid adoption of mobile payment systems like Paytm and M-Pesa, respectively, which have drastically reshaped their financial ecosystems and spurred economic growth (Gao & Waechter, 2017; Muthuraman et al., 2022). Oman’s adoption of Apple Pay and Google Pay can similarly accelerate digital transformation, but the country faces distinct challenges due to its unique SME landscape and regulatory environment. Mobile payment refers to the use of smartphones and other devices to facilitate financial transactions digitally. Its adoption has revolutionized how consumers and businesses interact with financial systems, reducing the reliance on cash, and promoting financial inclusion globally (Khan, 2021; Li et al., 2023).

The widespread adoption of mobile payment platforms has attracted substantial attention from both academics and industry professionals, given their transformative effects on global financial ecosystems. Mobile payment technologies, such as Apple Pay and Google Pay, offer unparalleled convenience and enhanced security through features like biometric authentication and tokenization. In the global context, mobile payment uptake has seen significant progress in China, the United States, and the European Union. China stands at the forefront of mobile payment usage, largely due to platforms such as Alipay and WeChat Pay, which are integrated into everyday transactions and rely on QR-code technology along with extensive ecosystem integration (Xu et al., 2023). In the U.S., although Apple Pay and Google Pay are commonly used, their adoption is hindered by consumers’ strong preference for traditional credit cards and growing concerns over data privacy (Wong & Tsui, 2019). Conversely, in the European Union, regulatory advancements—especially the enforcement of the Payment Services Directive (PSD2)—have fostered interoperability, enhanced consumer protections, and bolstered trust in digital financial services. These international comparisons provide context for Oman’s mobile payment progress and shed light on the roles that regulatory framework, technology design, and consumer confidence play in driving adoption.

However, in emerging economies, where digital literacy and infrastructure may be underdeveloped, the adoption process is often impeded by high transaction fees and security concerns (Muthuraman et al., 2022). However, the challenges faced by small businesses in Oman differ significantly from those in countries with more mature digital ecosystems, where transaction fees and regulatory frameworks have already been optimized (Foster & Miller, 2022). Unlike developed markets, where the digital infrastructure is robust and transaction costs are lower, Omani SMEs face higher costs, weaker digital literacy, and greater regulatory barriers, which inhibit adoption (Patel & Singh, 2021). These discrepancies highlight the need for tailored policy solutions in emerging markets like Oman. This section synthesizes the relevant literature on the drivers of mobile payment adoption, focusing on theoretical frameworks, technological advancements, and regional dynamics. It also addresses key challenges—such as infrastructure gaps, transaction fees, and cybersecurity issues—that shape adoption, particularly in emerging markets like Oman. By integrating global and regional perspectives, this review offers a comprehensive understanding of both the drivers of and barriers to mobile payment adoption.

3.1. Global Growth of Mobile Payment Platforms

The rapid advancement of financial technologies (FinTech) has significantly accelerated the use of mobile payment platforms worldwide. Apple Pay and Google Pay have emerged as market leaders, promoting contactless transactions and facilitating the transition from cash-based to digital financial ecosystems. In 2023, mobile wallets accounted for 41% of global e-commerce payments, with Apple Pay dominating in North America and Europe, and Google Pay seeing rapid adoption in Asia, particularly in India, where the digital infrastructure is evolving rapidly (Statista, 2023). These platforms highlight the potential of mobile payments to enhance financial inclusion and reduce transaction costs across different markets.

3.2. Insights on User Behavior and Errors

One of the key challenges in mobile payment adoption is managing user behavior and errors, which can disrupt the user experience and reduce trust in the platforms. Issues such as authentication failures can hinder continuous usage. Research suggests that seamless authentication processes, including biometric verification, are essential for encouraging sustained adoption (Msomi & Kandolo, 2023). For Oman, enhancing user education and resolving errors promptly will be essential as the mobile payment infrastructure expands.

3.3. Security and Cybersecurity Challenges in Mobile Payment Adoption

One of the most significant barriers to mobile payment adoption is the risk posed by cybersecurity threats. As mobile payment platforms store sensitive financial data, they are particularly vulnerable to cyberattacks, data breaches, and privacy concerns, which can deter users, especially in regions with underdeveloped digital ecosystems (Msomi & Kandolo, 2023). Emerging technologies, such as biometric authentication and tokenization, offer promising solutions to mitigate these risks. However, widespread adoption depends heavily on user trust and the establishment of robust regulatory frameworks. In Oman and the broader GCC, government-led cybersecurity initiatives are critical in fostering a secure financial ecosystem that supports the growth of mobile payments (CBO, 2024).

Cybersecurity remains a pressing issue in Oman’s financial sector. In 2022 alone, the country faced over 12 million cyber threats, including 3.2 million email threats, 2.5 million malicious URL attacks, and 4.8 million malware attacks (Trend Micro, 2022). The CBO has implemented a robust regulatory framework to bolster cybersecurity for financial institutions. This framework is built around six key pillars: governance, compliance and audit, technology operations, third-party supply chain management, online financial services, and risk management. The introduction of Central Bank Digital Currencies (CBDCs) forms part of this effort to secure digital financial systems (CBO, 2024). This regulatory approach is essential for ensuring the stability of Oman’s financial ecosystem as digital payment platforms grow in prominence (CBO, 2024). These threats have had severe financial repercussions. Omani banks reported a 58% increase in cyberattacks, which resulted in estimated financial losses of OMR 35 million, in 2022 (Trend Micro, 2022). This underscores the urgent need for stronger cybersecurity measures to safeguard digital financial transactions and maintain the trust of consumers and businesses alike.

SMEs are particularly vulnerable to these cybersecurity threats. Phishing attacks, ransomware, and malware infections are the most common threats, with phishing alone accounting for 46% of all cyberattacks in 2022 (Trend Micro, 2022). These attacks not only disrupt business operations but also erode trust in mobile payment platforms, posing a major barrier to adoption (see Figure 6). As the mobile payments sector continues to expand, the need to enhance cybersecurity for SMEs becomes even more pressing. To address these challenges, policy initiatives aimed at reducing transaction fees or offering financial subsidies to small businesses could play a pivotal role in improving mobile payment adoption rates. Moreover, increased investments in cybersecurity are critical for ensuring the long-term security and viability of digital financial systems. The financial impact of cyberattacks on Oman’s financial institutions has been growing, with incidents costing banks up to OMR 35 million in 2022 (Trend Micro, 2022). Future policy recommendations must therefore prioritize the development of robust cybersecurity strategies that protect both SMEs and larger institutions as the adoption of mobile payment platforms accelerates. Figure 6 summarizes the distribution of various cyberattacks targeting Omani financial institutions, highlighting the prevalence of phishing and ransomware attacks in 2022–2023.

Furthermore,

Table 2. Cybersecurity threats and financial impact on Omani financial institutions (2019–2022).

Year	Cyberattacks (In Millions)	Financial Loss (OMR)	Average Recovery Time (Days)
2019	6.0	10M	3
2020	8.5	15M	5
2021	10.5	25M	7
2022	12.0	35M	9

illustrates the growing number of cyberattacks in Oman, the financial losses incurred by banks, and the increasing recovery time from 2019 to 2022. It highlights the significant impact of cyber threats on the financial sector, emphasizing the importance of cybersecurity investments to support the adoption of mobile payment platforms. The growing frequency and financial impact of cyberattacks, as demonstrated in Table 2, underscore the urgent need for enhanced cybersecurity measures to protect both financial institutions and small businesses in Oman. These measures will be critical for ensuring the secure expansion of digital financial systems in the country.

3.4. Challenges Facing Small Businesses’ Adoption

While much of the existing literature focuses on consumer adoption, SMEs encounter distinct challenges. The high transaction fees imposed by platforms like Apple Pay and Google Pay present financial barriers, particularly for smaller businesses. Additionally, limited access to affordable credit impedes the ability of SMEs to integrate mobile payment solutions effectively. Reducing transaction costs and providing flexible financial solutions will be critical to promote adoption within the SME sector. By addressing the specific economic and infrastructural conditions in Oman, this study aims to bridge the gap in the existing literature on mobile payment adoption in emerging economies, offering context-specific insights into the financial and operational hurdles faced by SMEs.

3.5. Regional Context and Policy Relevance

This study offers a context-specific investigation of mobile payment adoption in Oman, addressing the gap in the literature on mobile payments in the GCC region. Oman’s Vision 2040 emphasizes digital transformation and financial inclusion, making mobile payment adoption a key priority. Understanding how local economic and regulatory conditions shape adoption is crucial for developing effective policies to support the transition to a cashless economy.

3.6. Technology Acceptance and Transaction Cost Perspectives

The Technology Acceptance Model (TAM), introduced by Davis (1989), has been widely applied to understand user behavior towards recent technologies, emphasizing perceived ease of use and usefulness. However, adoption decisions are driven not solely by user perceptions but also by economic factors such as transaction costs. The Transaction Cost Theory (TCT), developed by Williamson (1986), provides a complementary perspective by analyzing how businesses seek to minimize transaction costs. This theory highlights the importance of reducing the financial fees, time, and risks associated with exchanges to improve operational efficiency. In the context of mobile payments, transaction fees, security risks, and ease of use emerge as critical factors influencing their adoption.

3.7. Extension of TAM and TCT Frameworks

Building on the TAM (Davis, 1989) and TCT (Williamson, 1986), this study investigates the specific factors that shape mobile payment adoption in Oman. While the TAM highlights user perceptions of ease of use and usefulness, the TCT addresses businesses’ efforts to minimize transaction costs. This research integrates both models within the Omani regulatory and economic environment. It examines how transaction fees, contactless transactions, and security features influence adoption among Omani consumers and SMEs. By addressing these factors, this study provides practical recommendations to enhance adoption, overcoming the unique challenges faced by businesses and regulators in Oman. The findings offer insights to improve both the user experience and financial efficiency.

Based on the previous discussions, each hypothesis was formulated based on gaps identified in previous studies and tailored to Oman’s unique financial landscape. The hypotheses focus on transaction speed, transaction fees, and user errors, evaluated with appropriate statistical methods to confirm their influence on adoption. Accordingly, the following hypotheses were formulated:

H1. 

Mobile payment adoption significantly reduces transaction processing times.

H2. 

Higher transaction fees discourage SMEs from adopting mobile payment platforms in Oman.

H3. 

Frequent user errors reduce the continued usage of mobile payments.

4. Methodology

This study examines the adoption dynamics and barriers to mobile payments in Oman between 2021 and Q1 2024, utilizing secondary data from the Central Bank of Oman and global FinTech reports. Secondary data sources provide robust insights into the trends, transaction volumes, and macroeconomic factors shaping adoption, ensuring a comprehensive understanding of the barriers and drivers identified in the literature review.

4.1. Research Design

This research employs a secondary data design using multi-source data from reliable institutions, including reports from the CBO and global FinTech analyses, to examine key factors influencing mobile payment adoption. Structural Equation Modeling (SEM) was selected for its ability to capture complex interrelationships among adoption factors, providing a more comprehensive analysis than traditional regression methods. The data spanned 2021 to Q1 2024, a period marked by substantial growth in mobile payment transactions in Oman. SEM and Interrupted Time-Series (ITS) analyses were selected to investigate the relationships between transaction fees, operational efficiency, and user errors. This approach is well suited for examining how transaction fees, security concerns, and user errors impact adoption patterns.

This study aligns with Oman’s Vision 2040 goals, focusing on the transformative potential of mobile payments to enhance digital financial inclusion. To provide a deeper analysis, additional statistical tools were integrated into this study, including histograms for key variables to identify distribution patterns and potential outliers. A correlation matrix was used to explore the relationships between adoption-influencing factors, while scenario-based forecasting was used to project adoption trends under various conditions. These tools were designed to offer actionable insights into mobile payment adoption and usage patterns among Omani users and SMEs.

4.2. Data Collection

This study utilizes multi-source secondary data from reliable institutional reports, including those published by the CBO, the NCSI, and global financial organizations. Data from these institutions were selected based on their established credibility and relevance to the Omani financial ecosystem. A cross-validation process ensured data robustness, minimizing bias and aligning the findings with Oman’s financial context. This rigorous cross-validation was essential for maintaining data integrity and ensuring that the insights were relevant to Oman’s specific financial landscape. Specifically, reports from the Central Bank of Oman provided critical insights into the regulatory landscape and transaction volume trends, while the National Centre for Statistics and Information offered data on macroeconomic indicators that contextualize mobile payment adoption. Additionally, global financial organizations, including PwC and Statista, contributed benchmarks for comparing Oman’s progress within a broader regional and global framework. The data selection focused on metrics relevant to mobile payment transaction volumes, user error frequencies, and adoption trends within Oman’s digital finance ecosystem.

The NCSI supplied key macroeconomic indicators that contextualize digital financial platforms’ adoption within broader economic trends in Oman. Global FinTech reports and publications from organizations such as PwC and Statista offer comparative benchmarks, situating Oman’s trends within both global and regional digital finance dynamics. This data-driven, multi-source approach ensures a well-rounded analysis of the factors influencing adoption, addressing challenges such as user behavior, transaction fees, and security risks, as identified in the literature review. Each data source was carefully vetted for authenticity, with efforts taken to cross-reference information to mitigate any potential biases inherent in secondary data. This multi-source approach also strengthens the data’s reliability, creating a foundation for high-impact, evidence-based conclusions.

4.3. Key Variables Analyzed

Table 3. Definitions of variables.

Variables	Definition
Adoption Rates	The percentage of consumers and businesses utilizing mobile payment platforms in Oman, reflecting the overall uptake of digital payments.
Transaction Volume	The total number of transactions processed through mobile payment systems, including Apple Pay and Google Pay, indicating platform usage frequency.
Transaction Value	The cumulative monetary value of transactions conducted via mobile platforms, offering insights into the financial scale of mobile payment adoption.
User Errors	Common issues impacting user experience and trust, such as authentication failures and security-related challenges that may hinder adoption rates.

shows the main variables analyzed in this study, as follows:

4.4. Rigorous Analytical Framework

This study adopted a multi-method statistical approach that leveraged advanced techniques to gain comprehensive insights into mobile payment adoption in Oman. Attempting to utilize SEM, ITS analysis, and multilevel regression, this design capitalizes on the strengths of each method to provide a robust understanding of adoption dynamics based on secondary data. These techniques allow for the analysis of both direct and indirect influences, particularly concerning transaction fees, operational efficiency, and user behavior.

SEM was selected to analyze complex relationships between variables such as transaction fees, security concerns, and platform usability, facilitating an in-depth exploration of both direct and indirect effects on adoption. This approach uses indices such as the Comparative Fit Index (CFI) and Root-Mean-Square Error of Approximation (RMSEA) to validate model fitness and ensure a robust analysis of interactions between costs, usability, and efficiency (Hox et al., 2017). Furthermore, ITS analysis was used to examine the changes over time in transaction processing efficiency before and after the widespread adoption of mobile payments. This method identified long-term efficiency trends, allowing insights into how mobile payments influenced operational efficiency across different periods. Moreover, multilevel regression was used to assess variations in adoption based on sector and business size, with specific attention to the challenges faced by SMEs. By controlling these variables, multilevel regression highlighted unique sector-specific barriers, such as financial and infrastructural limitations that can affect mobile payment adoption in smaller enterprises. In addition to these primary methods, bootstrapping and robustness checks were applied to enhance the reliability of the findings, reinforcing the consistency of the statistical results even in the presence of outliers or small sample sizes. This approach ensures a high degree of trustworthiness in the conclusions drawn from secondary data.

4.5. Statistical Methods

This study also employs Pearson’s correlation and linear regression models to test the hypotheses and analyze the relationships among key variables, including transaction fees and mobile payment adoption rates. These methods were used to rigorously examine the strength and direction of the associations established in the literature (Field, 2018). A significance level of α = 0.05 was set to balance the likelihood of Type I errors (false positives) while maintaining statistical reliability (Cohen, 1988). The risk of Type I errors, as described by Field (2018), was carefully considered during the hypothesis testing to minimize incorrect rejections of the null hypothesis. Additional measures, such as bootstrapping, were used to reduce the Type I error risk and verify the stability of the statistical results under various assumptions, providing greater reliability to the hypothesis testing’s outcomes.

SEM is used to analyze the direct and indirect effects of variables such as transaction fees, security, and convenience on mobile payment adoption rates. This technique captures the interdependencies among variables, providing a holistic view of the factors driving adoption. Model fit indices, including the CFI and RMSEA, are applied to validate the model accuracy and ensure alignment with theoretical expectations (Kline, 2015). Furthermore, multilevel regression allows for nuanced insights by evaluating the influence of transaction fees across different industries while controlling for variables such as business size and transaction volume. This approach enables sector-specific analysis, offering detailed insights into the adoption behaviors of SMEs and other business sectors (Hox et al., 2017). ITS analysis is used to assess the evolution of transaction processing times before and after mobile payment adoption, highlighting any efficiency gains over time. This method helps identify the impact of mobile payment adoption on operational efficiency by capturing changes across distinct periods (Wagner et al., 2002). Moreover, bootstrapping and robustness checks are applied to validate statistical results, particularly where the sample sizes in secondary data may be limited. Robustness checks ensure that the findings are consistent and unaffected by outliers or extreme values, reinforcing the reliability of the analysis (Efron & Tibshirani, 1993).

4.6. Data Analysis Methodology

This study employed advanced statistical techniques to examine the factors influencing mobile payment adoption in Oman, aligning with secondary data and a quantitative analysis approach. These methods enabled a comprehensive examination of adoption trends, addressing complex interdependencies among key variables such as transaction fees, security, convenience, and user behavior. Initially, Structural Equation Modeling (SEM) was recognized as a technique for modeling the connections between variables; however, it was not utilized in this research, because appropriate primary survey data were lacking. Consequently, the analysis utilized multilevel regression, Interrupted Time-Series (ITS), and logistic regression models based on secondary datasets. By integrating multilevel regression, ITS analysis, and bootstrapping, this framework provided a robust and reliable analysis of adoption dynamics. This analytical approach ensured a thorough evaluation of the factors impacting mobile payment adoption in Oman. The selected techniques collectively offer insights into the relationships between transaction fees, operational efficiency, user behavior, and platform usage. Our findings contribute directly to Oman’s Vision 2040 goals, offering practical recommendations to improve adoption rates and support SMEs in overcoming financial and operational barriers. By leveraging both descriptive and inferential statistical methods, this study enriches theoretical perspectives on mobile payment adoption using the TAM and TCT frameworks. These insights contribute to fostering a secure and inclusive digital financial ecosystem.

The data analysis utilized a blend of descriptive and inferential statistical techniques to explore the factors influencing mobile payment adoption in Oman, consistent with this study’s quantitative approach. This approach not only ensured a detailed examination of current adoption trends but also identified specific structural and behavioral barriers unique to the Omani context, enhancing the relevance of the findings. Descriptive statistics, including the mean, median, standard deviation, and variance, were calculated for key variables to establish baseline insights. To further explore the data distribution, histograms for transaction fees, usage frequencies, user errors, and adoption rates were constructed. These visualizations helped identify skewness and outliers, which could affect the assumptions for regression analysis. The histograms below (Figure 7, Figure 8, Figure 9 and Figure 10) illustrate each variable’s distribution, showing that transaction fees are predominantly low, with some higher outliers likely to affect smaller businesses significantly. The usage frequencies reveal active engagement levels, while user errors remain relatively low, yet impactful for continued usage. The adoption rates suggest moderate uptake, with the potential for growth as transaction fees decrease and technical issues are resolved.

Figure 7 illustrates the skewed distribution toward lower fees with occasionally high outliers, which could disproportionately impact SMEs. This pattern indicates an inconsistent pricing system that may impose significantly higher costs on some users (especially in certain situations) than others. This particularly affects small and medium-sized enterprises (SMEs), as they may be unable to bear these sudden high costs, potentially hindering their adoption or continued use of the service. Figure 8 displays active engagement, showing a range in usage patterns that may reflect varying levels of adoption among different demographics or business types. This disparity may reflect differences in adoption among user groups (individuals, businesses, and organizations). Furthermore, it may reflect differences in the actual need for the service or comfort level with technology. This indicates the need to understand user characteristics and behavior more deeply, and perhaps to tailor promotional or training strategies to each group to enhance engagement.

Figure 9 shows a relatively low error frequency but emphasizes the potential for errors, particularly authentication issues, to affect continued usage. Even if the error rate is small, the nature of the error (such as difficulty logging in, or data loss) can lead to user frustration, and possibly to churn. This requires focusing on improving the user interface and verification processes, and on providing prompt technical support to anticipate and mitigate these issues. Figure 10 highlights the current adoption levels, with room for growth, especially if transaction fees are reduced or the user experience is enhanced. Some users have started using the system, but there are large groups that have not yet adopted it. To increase adoption, focus could be placed on reducing fees to make the service more attractive, improving the user experience to reduce technical or psychological barriers, and providing incentives for new or regular users.

Inferential statistics allowed us to test the relationships among variables and enabled a more granular interpretation of how factors such as transaction fees and security impact mobile payment adoption. This analytical framework included multilevel regression, ITS analysis, and logistic regression, ensuring a rigorous assessment of the relationships between transaction fees, operational efficiency, user behavior, and mobile payment platform usage.

5. Results

5.1. Descriptive Statistics

The descriptive statistics provide foundational insights into the trends in mobile payment adoption in Oman from 2021 through Q1 2024. Mobile payment usage grew significantly, with mobile banking and digital wallet transactions increasing at an annual rate of 99.5% between 2021 and 2023, primarily driven by the introduction of the MPCSS (CBO, 2023). In 2023, electronic payment transactions rose by 39.4%, reflecting the ongoing shift toward digital finance platforms (CBO, 2023). Furthermore, in 2023, POS transactions accounted for 50.2% of all digital payments, while e-commerce transactions represented 35.5%, underscoring the growing role of mobile wallets in both physical and digital environments (CBO, 2023; Statista, 2023).

5.2. Inferential Statistics

Sophisticated statistical techniques were applied to test three primary hypotheses derived from the literature review and rooted in the TAM and TCT frameworks. Interrupted Time-Series (ITS) analysis was utilized to examine the changes in transaction processing times before and after adoption, yielding insights into operational enhancements associated with mobile payment uptake. Multilevel regression analysis was employed to investigate the impacts of transaction fees, company size, and industry on adoption trends, providing a nuanced understanding of financial and contextual obstacles. Moreover, logistic regression was used to evaluate how user errors influence the probability of continued platform use. Collectively, these inferential methods established a solid empirical basis for assessing the behavioral, operational, and economic factors that affect mobile payment adoption in Oman.

Moreover, multilevel regression analysis was used to evaluate the effect of transaction fees on mobile payment adoption, accounting for business size and sector. The results revealed a negative impact of higher transaction fees on adoption, particularly among smaller businesses. ITS analysis was used to examine transaction processing times before and after mobile payment adoption, showing substantial improvements in efficiency post-adoption. T-statistics and confidence intervals were calculated to determine the statistical significance of these changes. Logistic regression was used to assess the impact of user errors (e.g., authentication failures) on continued platform usage. The results indicated a significant decrease in the likelihood of continued usage with increased user errors, quantified through odds ratios.

5.3. Hypothesis Testing Results

The ITS analysis showed a statistically significant reduction in transaction processing times following mobile payment adoption. Pre-adoption times ranged from 4.7 to 5.1 min, while post-adoption times averaged 3.4 to 3.6 min. The confidence interval (3.37 to 3.67 min) and t-statistics (t = 11.62, p < 0.05) confirmed that adoption significantly improved processing times, supporting the hypothesis that adoption enhances operational efficiency.

The analysis of Hypothesis 1 demonstrated that mobile payment adoption leads to a statistically significant reduction in transaction processing times, enhancing operational efficiency. These improvements are visualized in Figure 11, which shows the pre- and post-adoption transaction times using line graphs. This visual demonstrates operational efficiencies post-adoption, with Figure 11 illustrating the time reductions clearly. These consistent reductions in processing times are not only statistically significant but also indicate that operational efficiency is achievable with wider mobile payment adoption in SMEs. This finding aligns with the prior literature, attributing efficiency gains to technological advancements and improvements in digital infrastructure. Faster, more convenient transactions align with consumer expectations and are likely to encourage broader adoption of mobile payment platforms.

Figure 11 illustrates the transaction processing durations for five distinct instances before and after the introduction of mobile payment platforms. The uniformity in reduced processing durations across instances indicates not only enhanced operational efficiency but also a possible model for scalability within Oman’s emerging digital finance sector. The blue line signifies the processing durations before adoption, while the green line denotes the times after adoption. The graph demonstrates a significant decrease in transaction processing durations following the implementation of mobile payment systems, reinforcing the idea that mobile payment solutions enhance operational efficiency. Each instance exhibits a steady decline in processing time, with the post-adoption durations consistently lower than those recorded before the adoption.

Multilevel regression analysis confirmed that higher transaction fees significantly deter mobile payment platforms’ adoption among small businesses. A negative regression coefficient of −0.25 (p = 0.03) indicated this relationship, with business size showing a positive effect on adoption (coefficient = 0.15, p = 0.04), although sector-based differences were not statistically significant. These findings are consistent with those of Muthuraman et al. (2022) and Xu et al. (2023), suggesting that, as transaction speed becomes increasingly vital, mobile payment systems are positioned to progressively replace traditional payment methods for both businesses and consumers.

The results of Hypothesis 2 confirm that higher transaction fees present a substantial barrier to adoption, especially for small businesses in Oman. This outcome is consistent with the TCT, which posits that higher costs deter technology adoption. For small businesses operating on limited profit margins, elevated transaction fees pose financial challenges that limit the feasibility of adopting mobile payment platforms. Addressing these financial barriers is essential for fostering broader adoption among SMEs, and this aligns with strategies to make digital payments more accessible for smaller enterprises.

Logistic regression analysis identified a significant negative impact of frequent user errors on the continued usage of mobile payment platforms, with an odds ratio of 0.7, indicating a 30% reduction in the likelihood of continued usage for each unit increase in user errors (p < 0.05). This result is comparable to the findings of Kim et al. (2010), Foster and Miller (2022), and Zhao et al. (2021), supporting the hypothesis that user errors reduce sustained platform usage.

The logistic regression analysis of Hypothesis 3 revealed that frequent user errors significantly reduce the continued usage of mobile payment platforms. The bar charts in Figure 9 illustrate how error frequency relates to sustained usage, underscoring the need for improved user interfaces and error resolution mechanisms to promote long-term adoption. This aligns with the TAM, which identifies ease of use as a critical factor in technology adoption. The high discontinuation rate due to user errors underscores the need for a seamless user experience. Enhancing retention will require platforms to reduce authentication failures and bolster security features. Additionally, consumer education on security measures, such as biometric authentication and tokenization, could help mitigate the adverse effects of user errors on sustained usage. These findings are consistent with those reported by Lee et al. (2020) and Statista (2023).

Accordingly, the analysis provides a holistic understanding of the factors influencing mobile payment adoption in Oman. The significant reduction in transaction times and the deterrent effect of high transaction fees underscore the importance of both operational and financial incentives. These findings align with the TAM and TCT, which emphasize ease of use, security, and cost considerations in technology adoption. Moreover, the impact of user errors on continued usage highlights the importance of improving the user experience through error mitigation and enhanced security. Figure 12 illustrates that the negative correlation is critical, especially for SMEs operating on limited margins. As transaction fees decrease, adoption rates increase, demonstrating a need for cost-effective solutions. Each blue point represents an observed pair of transaction fees and corresponding adoption rates. As the transaction fees increase, the adoption rates decline, as demonstrated by the red trendline, which indicates a strong negative correlation. The trend highlights how higher transaction fees serve as a barrier to the adoption of mobile payment platforms, particularly for small businesses with limited financial flexibility. This visualization supports the hypothesis that transaction costs are a critical factor in determining adoption rates.

Figure 13 presents the correlation between user errors (such as authentication failures and security problems) and the ongoing use of mobile payment platforms. The chart reveals that as the frequency of user errors rises (from low to high), the percentage of continued usage diminishes. This visualization supports the findings from the logistic regression analysis, which indicated that frequent user errors significantly decrease the probability of sustained platform usage. Elevated error rates result in a sharp decline in user retention, highlighting the necessity for enhanced usability and error reduction efforts.

The scatter plot highlights the inverse relationship between transaction fees and adoption rates, especially for small businesses, indicating that higher expenses obstruct the widespread use of mobile payment platforms. To clarify the relationships among various factors, a correlation matrix was constructed, illustrating the connections between significant elements such as transaction fees, usage frequency, user errors, and the rate of adoption. Figure 14 reveals a slight negative correlation between transaction fees and adoption rates, implying that lowering fees might enhance adoption. User errors display a minimal negative correlation with adoption rates; however, they still affect ongoing usage. The scatter plots and bar charts were improved with trend lines and error bars to emphasize the confidence intervals and visually reinforce these trends. Figure 14 reveals the connections between transaction costs, frequency of use, mistakes made by users, and the rate of adoption, offering insights into the elements that affect trends in adoption.

The line graph clearly illustrates the decrease in transaction processing times after the introduction of mobile payment systems, offering strong proof of the improved operational efficiency achieved through these platforms. The bar chart emphasizes the negative correlation between user mistakes and ongoing platform usage, indicating that an increase in error rates considerably diminishes user retention. These visual representations enhance the statistical evaluation, supporting the findings from regression models and time-series analysis. They offer a thorough insight into how transaction costs, processing efficiency, and user experience influence the adoption and continued use of mobile payment platforms in Oman. The visual data further provide practical insights for policymakers and businesses, highlighting the necessity of lowering transaction fees, enhancing processing efficiency, and tackling user experience challenges to encourage increased adoption and retention.

The mobile payment systems’ adoption in Oman offers significant benefits but also encounters obstacles that impede their broader adoption, especially among small enterprises. Mobile payment solutions like Apple Pay and Google Pay provide improved security using sophisticated encryption and tokenization techniques. Tokenization substitutes sensitive credit card information with distinct tokens, protecting users from potential fraud. Moreover, biometric authentication methods such as fingerprint scanning and facial recognition offer an additional layer of security, enhancing the safety of transactions. Figure 15 illustrates a notable rise in cybersecurity expenditure in Oman between 2020 and 2023, demonstrating a 20% growth rate each year. This ongoing investment highlights the government’s dedication to enhancing the country’s cybersecurity framework to align with the increasing use of digital payments.

Mobile payments provide a fast, efficient, and secure way to conduct transactions, reducing the need for physical cash. This convenience benefits both consumers and businesses by enabling faster payment processes, which is particularly valuable in today’s fast-paced digital economy. The shift toward mobile payments aligns with Oman’s Vision 2040, which seeks to promote a cashless society. By modernizing financial infrastructure and fostering digital transformation, mobile payments contribute to economic growth through innovative technologies and more efficient financial systems.

On the other hand, one of the main barriers to mobile payment adoption is the high transaction fees imposed by payment processors. For small businesses operating on tight profit margins, these fees represent a considerable cost. As shown in the analysis, the negative correlation between transaction fees and adoption rates highlights how higher fees deter small businesses from adopting mobile payment solutions. Despite the advanced security features offered by platforms like Apple Pay and Google Pay, many consumers are unaware of how these systems protect them. For instance, features such as tokenization and biometric authentication significantly reduce the risk of fraud, but users often lack knowledge about these benefits. This lack of education contributes to hesitancy in adopting mobile payments, as potential users are concerned about security or unfamiliar with the technology. Frequent user errors, such as authentication failures, have a significant impact on the continued usage of mobile payment platforms, as demonstrated in the analysis. Poor user experience can deter long-term engagement with these platforms. Therefore, improving the user interface and educating consumers on how to troubleshoot common issues are critical to maintaining user retention.

5.3.1. Forecasting Mobile Payment Growth (2024–2026)

Oman’s mobile payment industry has seen tremendous growth, with transaction volumes rising at an annual rate of 99.5% from 2021 to 2023, highlighting a significant uptake of digital financial services among consumers (Oman Observer, 2023a; Muscat Daily, 2024). This increase was fueled by major improvements in digital payment infrastructure and the accelerated move towards cashless transactions during the COVID-19 pandemic. The monetary value of mobile payments also saw considerable growth, experiencing an annual increase of 75.1% during the same period (CBO, 2023). This rise in transaction values indicates a growing confidence in and comfort level with digital platforms among consumers. The strong growth in both transaction volumes and values suggests a wider acceptance of mobile banking and digital wallets. Several key factors are expected to further support this growth trend in the years ahead.

5.3.2. Key Drivers for Growth

By 2023, Oman saw an 11.7% rise in mobile phone subscriptions, along with a 4.5% increase in mobile broadband subscriptions. This growth in mobile and internet infrastructure lays a strong groundwork for the further adoption of mobile payments, allowing more consumers and businesses to participate in digital transactions (TAS News Service, 2024). As internet access improves, mobile payments are anticipated to reach an even larger audience, particularly in underserved regions. The government of Oman has been instrumental in encouraging the adoption of mobile payments through initiatives such as the MPCSS and regulations designed to promote a cashless economy. These initiatives are anticipated to further enhance the usage of mobile payments. By creating a favorable regulatory framework and investing in digital infrastructure, the government supports Oman’s Vision 2040, which emphasizes the establishment of a digital financial ecosystem (Oman Observer, 2023c). Such initiatives will provide additional motivation for both businesses and consumers to adopt mobile payment solutions.

Oman’s economic development, especially in sectors outside of oil, has paved the way for the growth of digital payment solutions. In the first quarter of 2024, the nation recorded a GDP increase of 1.7%, with non-oil sectors—including digital services like mobile payments—expanding by 4.5% (ZAWYA, 2024; Muscat Daily, 2024). As the economy becomes more diverse and non-oil industries keep expanding, the need for effective and secure payment solutions will rise, further promoting the use of mobile payment technologies.

5.3.3. Forecasting Approach

A CAGR model, based on historical data (2021–2023), was utilized to estimate future mobile payment growth. Given the potential for market maturation, a slightly moderated forecast was assumed. Transaction volumes, which grew at 99.5% annually between 2021 and 2023, are projected to grow at a more conservative 75% CAGR moving forward. This reflects a more sustainable rate of expansion as mobile payments transition from early adoption to widespread usage. To address potential market fluctuations, best-case and worst-case scenarios were modeled, accounting for macroeconomic influences such as regulatory shifts, economic slowdowns, and advancements in digital infrastructure. Seasonal decomposition was also applied to identify peak usage periods, establishing a clearer picture of growth trends. For instance, transaction volumes often increase during holiday seasons, which can help anticipate demand patterns under varying economic conditions.

Table 4. Projected mobile payment growth (2024–2026).

Scenario	2024 Projections	2025 Projections	2026 Projections
Best Case	13.95	16.45	19.27
Moderate Case	13.68	15.60	17.78
Worst Case	13.44	15.05	16.85

shows the anticipated transaction volumes and values across various scenarios, integrating seasonal patterns to offer an in-depth perspective on possible market developments. These estimates are based on data from the Omani market, as outlined in industry reports by GlobalData (2023) and 6Wresearch (2023), specifically highlighting growth trends and circumstances unique to Oman’s mobile payment industry. In the same vein, the monetary worth of mobile payments is anticipated to rise at a CAGR of 60%, which is a slight decrease from the previous historical rate of 75.1%. This forecast considers the growing consumer confidence in digital payment methods, the backing of favorable regulatory conditions, and advancements in FinTech. The information shown in

Table 5. Projected mobile payment growth (2024–2026).

Year	Projected Transaction Volumes (Index, 2023 = 100)	Projected Transaction Values (Index, 2023 = 100)
2024	175.0	160.0
2025	306.3	256.0
2026	535.9	409.6

indicates a noteworthy increase in the adoption and usage of mobile payments from 2024 to 2026.

The forecast for 2024 indicates a 75% increase in transaction volumes compared to 2023, showcasing strong market growth. Likewise, transaction values are expected to grow by 60%, signaling greater consumer confidence and wider adoption of mobile payments. From 2025 to 2026, while a slight slowdown in growth may occur as the market nears maturity, transaction volumes are anticipated to increase more than threefold, reaching around 536% of their 2023 levels by 2026. Concurrently, transaction values are projected to quadruple, reflecting an expected growth in average transaction size and an ongoing integration of mobile payments into the daily activities of consumers and businesses. These forecasts highlight a continuous and rapid transition towards mobile payments, propelled by advancements in technology, heightened consumer acceptance, and a movement towards cashless transactions.

6. Discussion

The findings from this research offer important perspectives on the elements affecting the adoption of mobile payment solutions in Oman, particularly within SMEs. This analysis emphasizes the implications of these results, evaluates them critically in the context of the existing literature, and considers possible policy measures to encourage broader acceptance of mobile payment systems.

Establishing a secure and user-friendly mobile payment environment is essential for boosting adoption, especially for SMEs that are more susceptible to cyber risks and operational mistakes. These results align with worldwide trends in mobile payment usage. For instance, in China, the simplicity of QR codes, widespread integration among merchants, and collaborations between the public and private sectors have bolstered user confidence, leading to one of the highest adoption rates globally. Conversely, the regulatory framework in the EU, established through PSD2, has fostered increased consumer trust and facilitated smoother collaboration between banks and FinTech companies. The USA, despite its technological advancements, highlights the need to address consumer worries regarding data security and the fragmentation of systems. Oman’s advancements, especially in enhancing operational efficiency and developing digital infrastructure, reflect the initial adoption phases observed in these other regions. Nevertheless, significant transaction costs and varying levels of digital literacy remain critical factors that necessitate customized solutions.

This resonates with global observations in emerging markets, where digital transformation initiatives encounter similar cybersecurity and financial hurdles. Oman’s development can be likened to the early adoption stages seen in countries like Kenya and India, where regulatory assistance and infrastructure enhancements have played pivotal roles in navigating these challenges. These results confirm the literature that identifies cybersecurity as a fundamental obstacle in emerging economies. Improved security mechanisms, such as tokenization and biometric verification, could help alleviate these issues, thereby enhancing user confidence and encouraging adoption. These apprehensions reflect findings on a global scale, where concerns around data privacy and cybersecurity are recognized as major impediments to the acceptance of digital payment solutions (Msomi & Kandolo, 2023). As depicted in Figure 6, phishing and ransomware incidents are common, underscoring the urgent requirement for improved cybersecurity strategies (Trend Micro, 2022). Additionally, high transaction costs disproportionately burden smaller enterprises, as shown in Figure 7, which illustrates the substantial adverse effects of increased transaction fees on the adoption rates of small businesses. This trend is consistent with transaction cost economics (Williamson, 1986), which argues that financial expenditures are a key determinant in the adoption of modern technologies.

6.1. Financial Obstacles

A crucial insight from this study is the substantial barrier created by elevated transaction fees, particularly for SMEs. To foster adoption, it is vital to explore specific fee reductions or subsidies aimed at small businesses. Strategies that decrease entry costs for SMEs could resonate with the objectives of Vision 2040 regarding financial inclusion and economic advancement. Such initiatives are essential for harmonizing Oman’s financial landscape with effective models from emerging markets and mitigating the digital divide that affects the competitiveness of SMEs. As illustrated in Table 1, the rise in digital payment transactions highlights the growing dependence on mobile payments in Oman, making the issue of fees a pivotal concern. Drawing upon the TCT (Williamson, 1986), this research validates that transaction costs serve as significant obstacles to adoption, especially in the context of Oman. These conclusions are consistent with earlier findings by Mallat (2007), who recognized transaction costs as a significant hurdle in less-developed digital ecosystems.

6.2. Operational Efficiency

The ITS analysis performed in this research emphasizes the operational benefits of adopting mobile payments, especially in terms of decreased transaction processing times. As illustrated in Figure 12, there was a notable reduction in transaction processing times following the adoption of mobile payments, indicating improved operational efficiency. These gains in efficiency contribute to increased customer satisfaction and lower business expenses, further strengthening the argument for embracing mobile payment methods. This observation aligns with the diffusion of innovations theory (Rogers, 2003), which posits that perceived benefits, such as enhanced efficiency, play a pivotal role in the uptake of modern technologies.

6.3. Policy Recommendations

To boost the adoption of mobile payments in Oman, specific interventions are needed. Practical strategies include modifying fee structures, expediting settlement times, and implementing consumer education programs to enhance the understanding of security advantages such as encryption and tokenization. Policy measures like government subsidies or tiered fee systems for SMEs would lighten financial burdens and encourage wider adoption. Such initiatives are particularly pertinent in developing markets, where high transaction fees impede growth (Figure 7). Improving knowledge of mobile payment security features, such as biometric authentication and tokenization, would foster user confidence and dispel myths surrounding digital financial safety. Ongoing investments in cybersecurity systems are crucial considering the rising frequency and complexity of cyberattacks targeting financial institutions in Oman (Table 2). By integrating these recommendations, policymakers can create a supportive environment for the adoption of mobile payments, driving economic growth while ensuring financial inclusion.

6.4. Practical Recommendations

High transaction fees are a significant barrier to mobile payment adoption, particularly for SMEs. Financial institutions and payment service providers should consider implementing tiered fee structures that offer lower transaction fees for smaller businesses. This reduction in fees would alleviate the financial burden on SMEs, encouraging them to integrate mobile payment systems into their operations. Figure 16 highlights how varying levels of transaction fees (high, medium, and low) influence the probability of small retailers utilizing mobile payment systems. It indicates that a reduction in transaction fees leads to a substantial rise in adoption rates, growing from 20% when fees are high to 80% when fees are low. To encourage wider adoption, providers should consider implementing government subsidies or financial incentives designed to lower transaction costs for small enterprises.

Quick transaction settlement times are essential for companies to sustain a robust cash flow. Accelerating the settlement speed for mobile payments can increase the appeal of these platforms to merchants, particularly those in cash-dependent settings. Providers could partner with FinTech firms to optimize payment systems and boost settlement efficiency, thereby enhancing operational performance for businesses.

There is an urgent necessity to enhance the understanding of mobile payment platforms’ security advantages among both consumers and businesses. A significant number of consumers lack awareness about sophisticated security measures like biometric authentication and tokenization, which serve to combat fraud. Educational campaigns should be initiated that showcase these security features and clarify how mobile payments offer secure and effective transaction options. These campaigns should focus specifically on SMEs to foster trust and confidence in the use of these technologies.

The Central Bank of Oman, along with other financial authorities, is essential in fostering a supportive environment for the uptake of mobile payments. Regulatory guidelines need to adapt to offer clear direction on how digital payments can be integrated across different sectors while also prioritizing consumer safety and data protection. Actions to be taken should focus on enhancing cybersecurity regulations and providing incentives for businesses to implement mobile payment solutions. Regulatory structures should similarly promote innovation in mobile payment technologies, in line with Oman’s Vision 2040 objective of advancing a cashless economy.

7. Conclusions

This research comprehensively examined the implementation and obstacles related to mobile payment systems, such as Apple Pay and Google Pay, underscoring their ability to enhance Oman’s digital financial landscape meaningfully. Nevertheless, high expenses and usability challenges still hinder widespread acceptance. The results indicate that although security, convenience, and operational effectiveness are key motivators, financial hurdles like elevated transaction costs and authentication problems present significant issues, particularly for SMEs. The originality of this study stems from its focus on the use of mobile payment technologies in the small and medium-sized enterprises (SMEs) sector in the Sultanate of Oman, a sector that has not received sufficient attention in previous studies within the context of digital transformation. This study also distinguishes itself by its analytical link between the adoption of these technologies and the achievement of the goals of Oman’s Vision 2040 in building a cashless society. This study relies on an integrated theoretical model that takes into account technical, behavioral, and cultural factors, supported by a mixed methodology that combines quantitative and qualitative analyses to provide a deep and comprehensive understanding of the challenges and opportunities associated with adoption.

This research highlights the critical role of regulatory support and consumer education in promoting the adoption of mobile payments. Initiatives from the government, designed to enhance cybersecurity and lower barriers for SMEs, will be crucial for increasing the utilization of mobile payments. There is a need for improved cooperation among regulators, banks, and businesses to foster a more inclusive digital financial landscape, which aligns with Oman’s goals for economic diversification. This research applied sophisticated statistical techniques—such as correlation matrices, histograms, and scenario-based forecasting—to offer a data-centric view of adoption trends and their effects on Omani SMEs. The insights gained from these analyses emphasize the necessity for focused actions, including reducing costs and enhancing user interfaces, to encourage adoption, especially in the SME sector. These results are in support of Vision 2040’s policy framework, which advocates for a secure, efficient, and inclusive financial environment.

The Limitations and Future Research Directions

Although this research provides important information regarding the present level of mobile payment usage, several constraints must be recognized. Dependence on secondary data establishes a strong quantitative base; nonetheless, it restricts the ability to capture detailed behavioral insights, particularly concerning the user experience of SMEs and consumers. The data analyzed in this study span from 2021 to the early part of 2024, which may not accurately represent emerging trends for the full year of 2024. As mobile payment systems continue to advance, future studies would benefit from integrating more comprehensive data that encompass an entire year and beyond, to present a fuller picture of the sector’s progression.

Furthermore, while the present study emphasizes quantitative metrics, qualitative approaches—such as detailed interviews with small business owners, consumers, and regulatory bodies—could reveal deeper insights into the unique challenges and user behaviors that quantitative data alone may miss. This corresponds with suggestions in the literature to fuse frameworks like the TAM and TCT with contextual factors, including digital literacy, consumer trust, and security apprehensions. A mixed-methods strategy would be particularly advantageous for future investigations. Merging qualitative data from interviews and focus groups with quantitative statistics on transaction volumes, fees, and security considerations would yield a more complete understanding of mobile payment adoption in Oman. as Additionally, future studies ought to explore users’ payment behaviors, their trust in digital platforms, and their awareness of technology, as these behavioral aspects are essential for grasping the acceptance and ongoing use of mobile payments. This would also facilitate a better grasp of the social and behavioral factors affecting adoption, especially within an emerging market context such as that of Oman.

Additionally, investigating the influence of modern technologies, like CBDCs and sophisticated biometric authentication techniques, on mobile payment adoption could shed light on the evolving nature of the financial sector. Future research might also explore the long-term effects of governmental regulatory frameworks and investments in cybersecurity on the sustainability of digital financial growth in Oman. Future investigations should aim to obtain more detailed behavioral insights using qualitative approaches, including interviews and surveys directed at SMEs, regulators, and consumers. Furthermore, examining the effects of modern technologies—like CBDCs and sophisticated biometric authentication—might yield a better understanding of the upcoming stage of mobile payment development in Oman.