Abstract

Purpose: This study investigates how digital payment capabilities enhance retail logistics and distribution efficiency and how these improvements influence customer retention in South Korea’s highly digitalized retail market. Research Design / Methodology: Drawing on the Resource-Based View, Dynamic Capabilities Theory and the Technology–Organization–Environment framework, four digital payment capabilities are examined: payment technology sophistication, omnichannel payment integration, payment data analytics capability and payment-based relationship programs. Survey data were collected from 350 retail consumers in South Korea and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). Results: The results indicate that all four digital payment capabilities positively and significantly improve retail logistics and distribution efficiency. Among them, payment data analytics capability and omnichannel payment integration exert the strongest effects. Retail distribution efficiency has a substantial positive impact on customer retention and partially mediates the relationships between digital payment capabilities and retention. Conclusions: The findings suggest that retailers can improve logistics performance, trade operations and customer loyalty by investing in advanced digital payment systems and analytics-driven distribution processes. This study extends distribution science by demonstrating how digital payment capabilities function as operational enablers that strengthen retail logistics efficiency and customer retention in advanced digital markets.