Financial inclusion has recently gained an increasing attention across the globe, both developed and developing, due to its vital role in supporting economic and social stability. Technological advancements, particularly in software, have accelerated the pace of financial inclusion. Given the challenges facing many Arab countries, such as weak financial inclusion indicators and rising poverty and unemployment rates, it is crucial to focus on this issue as a key pillar for achieving comprehensive economic and social stability.

Financial inclusion has referred to the availability and use of all financial services for all segments of society through formal channels, such as bank accounts, payment and transfer services, insurance, and financing. It aims to protect consumer rights, encourage sound money management, and reduce reliance on informal and potentially unsafe financial systems. Financial inclusion seeks to expand access by improving both supply and demand. ⁷ The term Financial Inclusion has only emerged in its modern sense in the late 20th century, but becomes formalized and structured in the early 21st century. International institutions have noted that large portions of the global population lack access to formal financial services. Bangladeshi economist Muhammad Yunus was among the first to implement financial inclusion practically through Grameen Bank in the 1970s. The bank focused on providing microloans to the poor without collateral, particularly women a pioneering model of financial inclusion. Later, institutions such as the UN, World Bank, and the World Economic Forum have adopted and expanded upon these ideas. ⁸ There are efforts that are required to enhance financial inclusion focusing on Strengthening financial infrastructure, protecting financial service consumers, developing inclusive financial products, promoting financial education, and creating a financially literate society. ⁷

Payment methods represent the ways individuals settle obligations or pay for goods and services. These have been evolved over time from barter systems, to cash, to modern electronic payment systems. Today, electronic payments include various forms such as credit and debit cards, smart cards, electronic checks, e-money, digital wallets, and electronic fund transfers. ⁹ These systems operate through the internet using encrypted data to ensure secure, fast, and efficient financial transactions. ¹⁰ Their key features include simplicity, clarity, speed, and security. ⁹

As e-commerce has emerged as a key factor in modern transactions, the need for payment methods that are compatible with the digital nature of this type of trade has emerged. ¹¹

3.2.1 Types of electronic payment systems

Many electronic payment methods have emerged, representing some of the most prominent tools used to complete these commercial transactions, the most prominent of which are ¹¹ : 1.

Credit Cards:

Credit cards are one of the most widely used electronic payment methods, especially for online transactions. This category includes credit and debit cards, although credit cards are more widely used. Cards such as Visa and MasterCard are among the most popular, widely used for online purchases owing to their ease and speed of payment.

3.2.2 Relationship between financial inclusion and electronic payment

Electronic payment serves as a crucial tool in achieving financial inclusion, especially in societies with limited access to traditional banking services. It allows individuals and businesses—particularly marginalized groups—to access financial services via smart devices and mobile phones. This reduces the need for traditional banking, facilitates faster and more efficient transactions, lowers transaction costs, and increases transparency. These factors together promote financial inclusion by expanding access, simplifying transactions, supporting e-commerce, and enhancing trust in the financial system. ⁷

3.2.3 Mediating variables between electronic payment and financial inclusion

Mediating variables play a supporting or inhibiting role in the relationship between electronic payment and financial inclusion. This research focuses on three key variables: 1.

Customer Trust

Trust is the foundation of any relationship and exists when both parties believe in each other’s credibility. In banking, customer trust reflects confidence in the institution’s integrity and reliability, along with lower anxiety and greater comfort. ¹²

The following Table 1 presents a description of the characteristics of the sample used in data collection, including gender, age, educational level, and employment status: 1.

Gender

The table shows that 60% of the sample is male, while 40% is female.

This section presents a descriptive overview of the study variables, including electronic payment, financial inclusion, and the mediating variables: customer trust, ease of use, and digital awareness, as shown in Table 2. It can be observed from Table 2 that the means of all variables range between 3.69 and 4.10, indicating that participants responses varied from moderate to high levels. This reflects a relatively positive tendency towards the statements related to these variables, based on the standard Likert five-point scale. Moreover, the standard deviations, ranging from 0.60 to 0.75, indicate low dispersion in participants’ responses, suggesting a relative homogeneity in their opinions. The coefficient of variation, ranging from 14.63% to 20.33%, further confirms this conclusion, reflecting a low to moderate degree of variability, which supports the reliability of the computed means for these variables.

4.2.1 Reliability test

To assess reliability, the questionnaire must be tested to ensure the validity and consistency of its elements. This is done by calculating the Reliability Coefficient.

4.2.2 Reliability coefficient

SPSS 27. As shown in Table 3 the overall alpha value is 91, which is considered excellent, since the statistically acceptable threshold is 0.60, and values between 0.70 and 0.90 are considered optimal (Al-Omari, 2018). Specifically, the Cronbach’s Alpha for the Electronic Payment variable is 0.80, and for Financial Inclusion, it is also 0.80, both high values. For the mediating variables, the coefficients are 0.76 for Customer Trust, 0.69 for Ease of Use, and 0.76 for Digital Awareness, respectively. The overall reliability for all combined mediating variables is 0.91. The Cronbach’s alpha values, which ranges from 69% to 84%, indicate a good to very good level of reliability. This is as an evidence of the internal consistency of the items for each variable, reflecting the validity and reliability of the study instrument.

Table 4 presents the correlation coefficients between the study variables as follows:

The results of the correlation coefficient indicate that there is a strong and significant positive relationship between the independent variable and the dependent variable (r = 0.69, sig = 0.001), which indicates that an increase in the independent variable is associated with a clear increase in the dependent variable. The results also show the presence of moderate and significant positive correlations between the independent variable and each of the mediating variables (r between 0.53 and 0.55). And also between the dependent variable and these intermediate variables (r between 0.48 and 0.59), which reflects the possibility of an indirect effect of the independent variable on the dependent variable through the intermediate variables. Since all correlation coefficients are statistically significant at the 0.001 significance level, this supports the strength of the relationships and the reliability of the results and indicates the possibility of constructing a statistical mediation model to test the direct and indirect relationships between the variables. The results of the correlation coefficients among the studied variables, as shown in Table 4, range between 0.48 and 0.69, indicating moderate to relatively strong relationships. This reflects a logical overlap and coherence among the variables within the framework of the study.

Mediating variables are among the key factors that help to explain the relationship between independent and dependent variables. They represent the variables that intervene in this relationship, influencing how—or to what extent—the independent variable affects the dependent variable. In other words, the effect of the independent variable does not transfer directly to the dependent variable, but rather passes through a mediator, which may either strengthen or weaken this effect. Understanding the role of mediating variables contributes to building more accurate explanatory and analytical models and reveals the mechanisms or processes through which the independent variable influences the desired outcomes. Therefore, analysing mediating variables is a crucial step in understanding complex relationships in social, educational, and administrative research.

4.4.1 The effect of electronic payment

The following Table 5 elucidates the effect of electronic payment systems on each mediating variable and the statistical significance of that effect. The mediating variables, namely Customer Trust, Ease of Use, and Digital Awareness, are denoted by the symbols M1, M2, and M3, respectively.

It is evident that electronic payment has a statistically significant effect on the mediating variables M1, M2 and M3. This leads to rejecting the null hypotheses H1 and H2, indicating that electronic payment significantly affects M1 and M2 and M3.

4.4.2 The effect of X, M1, M2, and M3 on financial inclusion (Y)

Table 6 presents the effect of the independent variable (X: Electronic Payment Systems) and the mediating variables (M1: Customer Trust, M2: Ease of Use, M3: Digital Awareness) on the dependent variable (Y: Financial Inclusion). From Table 6, it is evident that in the presence of the mediating variables, the effect of electronic payment on financial inclusion remains strong and direct. This leads to the rejection of hypothesis H4, indicating that electronic payment systems have a statistically significant effect on financial inclusion. However, none of the mediating variables show a significant mediating effect, except M1, which leads to the acceptance of the null hypotheses H6, H7, and reject H5.

4.4.3 Indirect effects (Mediation)

Table 7 shows the indirect effect of the mediating variables on the financial inclusion. The total indirect effect is 0.1949, with a confidence interval [Boot LLCI – Boot ULCI] of [0.0423,0.3395]. This effect is statistically significant. The results in Table 7 reveals that among the three proposed mediating variables, only customer trust demonstrates a statistically significant mediating effect. In contrast, ease of use and digital awareness do not achieve statistical significance. Accordingly, the main hypothesis is rejected, as its overall assumption that none of the mediators would have a significant effect was not fully supported. The significance of customer trust suggests its potentiality as a key mediating factor in the model.

This finding suggests that the relationship between the independent variable and the dependent variable is direct, not mediated by the tested variables. It is possible that other missing mediating variables that are more effective than those used in the research. The Figure 1 above illustrates the mediation model used to analyse the impact of electronic payments on financial inclusion. The results indicate a direct and statistically significant impact of electronic payments on financial inclusion (β = 0.415, p = 0.001). The mediating variables also appear to have an impact on electronic payments, whereas electronic payment contributes positively to enhance customer trust (β = 0.580, p = 0.000) and ease of use (β = 0.510, p = 0.000), in addition to digital awareness (β = 0.608, p = 0.000), which represents the most influential factor on electronic payment.

However, neither ease of use nor digital awareness demonstrate a significant mediating role between electronic payments and financial inclusion. In contrast, customer trust demonstrates a significant mediating role, with its relationship with financial inclusion being statistically significant (β = 0.230, p = 0.000).

These results indicate that the mediating variable M1 plays a true mediating role in the relationship between the independent variable (X) and the dependent variable (Y), i.e., it represents a partial mediation path. As for M2 and M3, although they are affected by X, the lack of a significant relationship with Y indicates that they do not contribute effectively to explain the change in the dependent variable.

Therefore, the hypothesized relationship model supports only a partial indirect effect of the independent variable on the dependent variable through M1, with no mediation paths through M2 and M3. This can be explained by the fact that M2 and M3 either do not represent true mediators in this context, or their effect is limited and insufficient to produce a significant effect on Y.

It is noted in the figure that the black arrows represent statistically significant relationships, while the red arrows indicate non-statistically significant relationships, which enhances the clarity of the model and confirms that “ease of use” is the most influential mediating factor in the relationship between electronic payment and financial inclusion.

Based on the practical aspect, a set of conclusions has been reached: 1.

There is a statistically significant direct effect of the independent variable, Electronic Payment, on the dependent variable, Financial Inclusion. This indicates a relatively strong relationship that does not rely on mediating variables, confirming the importance of electronic payment as a key determinant of financial inclusion in the theoretical model.

In light of the findings, this study presents a set of practical recommendations. These recommendations are classified into three main categories:

First: Recommendations for financial policymakers. 1.

To enhance customer confidence in electronic payment systems by enacting clear legislation that protects user data and imposes strict security standards on electronic payment service providers, thus reducing fraud and cyber breaches.

Second: Recommendations for financial institutions and electronic payment service providers 1.

Focusing on building trust as a strategic element by investing in modern cybersecurity technologies and developing effective communication mechanisms with customers that demonstrate the institution’s commitment to protect their interests.

Third: Recommendations for Future Studies 1.

To retest the research model by including new variables that may mediate the relationship between ease of use or digital awareness and financial inclusion, such as satisfaction or intention to use digital financial services.

Note: Declaration of generative AI and AI-assisted technologies in the writing process During the preparation of this work, the author(s) used chat Gpt in order to improve readability and language of the work. After using this service, the author(s) reviewed and edited the content as needed and take(s) full responsibility for the content of the publication.