Adoption of Digital Payment Systems in The Era of Demonetization in India An Empirical Study

Journal of Science and Technology Policy Management
Adoption of digital payment systems in the era of demonetization in India: An

empirical study
Brijesh Sivathanu,
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Brijesh Sivathanu, (2018) "Adoption of digital payment systems in the era of demonetization in India:
An empirical study", Journal of Science and Technology Policy Management, https://doi.org/10.1108/
JSTPM-07-2017-0033
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Adoption of
Adoption of digital payment digital
systems in the era of payment
systems
demonetization in India
An empirical study
Brijesh Sivathanu Received 26 July 2017
Revised 6 September 2017
Symbiosis Centre for Information Technology, Symbiosis International University, 19 November 2017
Pune, India Accepted 20 November 2017
Abstract
Purpose – This study aims to investigate the actual usage (AU) of digital payment systems by the
consumers during the period of demonetization (from November 9, 2016 to December 30, 2016) in India.
Design/methodology/approach – The conceptual frame work for this study is based on the unified
theory of acceptance and use of technology (UTAUT 2) and innovation resistance theory. A total of 766
sample respondents were surveyed using a pre-tested questionnaire. The empirical validation of the
framework and analysis was done using partial least squares (PLS)-structural equation modeling (SEM)
technique.
Findings – The results suggest that the behavioral intention (BI) to use and innovation resistance (IR) affect
the usage of digital payment systems. The relation between BI to use digital payment systems and the AU of
digital payment systems is moderated by the stickiness to cash payments.
Research limitations/implications – This cross-sectional study is limited by geographic constraints
and highlights the AU of digital payment systems by using the UTAUT 2 and IR theory only during the
demonetization period.
Practical implications – This study offers valuable insights to the economists, policymakers and digital
payment service providers regarding the usage of digital payment systems by consumers during
demonetization.
Originality/value – This study assumes importance as it empirically examines the influence of BI and IR
on the AU of digital payment systems during the demonetization period in India. This study empirically
validates the moderating influence of stickiness to cash payments on the AU of digital payment systems.
Keywords PLS-SEM, Stickiness, Digital payment systems, Innovation resistance, UTAUT 2
Paper type Research paper
1. Introduction
The Indian Prime Minister Narendra Modi announced on November 8, 2016 regarding the
demonetization, mentioning that 500 and 1,000 rupee currency notes in circulation will not
be legal anymore. The Government of India (GoI) directed the Indian citizens to deposit the
old denomination notes of 500 and 1,000 rupees in their bank accounts and exchange them
for new currency notes. GoI issued new currency notes of 2,000 rupees to avoid the cash
crunch. This unexpected demonetization move, which happened earlier in 1946 and 1978,
took everyone by surprise, as it occurred for the third time in the Indian economy (PWC,
2016).
The Indian economy is largely based on cash based transactions. As per the Reserve Journal of Science and Technology
Policy Management
Bank of India, 86 per cent of the Indian bank notes are in 500 and 1,000 rupees © Emerald Publishing Limited
2053-4620
denominations (RBI Annual Report, 2016). Though 2,000 rupees currency notes were DOI 10.1108/JSTPM-07-2017-0033
JSTPM introduced by GoI to replace the old notes, still the economy witnessed a massive cash
crunch. There were long queues in front of the banks, and automated teller machines
(ATMs) were closed as the supply of cash was limited. One of the important solutions to this
problem is the alternate modes of digital payment systems. GoI notified the citizens
regarding the introduction of cash withdrawal limits. Scarcity of cash fueled faster adoption
of alternate methods of digital payment systems.
As per the Indian Payment and Settlement Act 2007, digital payments are defined as
electronic fund transfers. When an individual initiates the transfer of funds through an
electronic medium by means of authorization or bank instructions to credit or debit an
account maintained with that bank, it is called as digital payment system. It also
comprises ATM transactions, transfer through telephone, point of sale transfer, internet
and card payments along with direct deposits or withdrawal of funds. Hence, the digital
payment systems are dependent upon the different technologies which are as discussed
in Table I.
Demonetization triggered millions of citizens to shift and embrace digital payment

systems. According to Nielsen Report Part II (2016), post the demonetization announcement,
there was a windfall for digital payment system providers like digital wallets. A major
chunk was driven by aggressive advertising along with swift adoption by small business
firms. There was a quick adoption of digital payment systems by restaurants, cafes, small
vendors, auto-rickshaw drivers and small shops (Kiranas). GoI also provided incentives on
using digital payment systems to progress the pace of adoption. There are many advantages
of digital payment systems – easy and convenient, pay and send anywhere, discount from
taxes, written records easily maintained and less risky. There is also a dark side to digital
Sr. No. Type of digital payment system Description
1. Unstructured supplementary service The service works across all GSM service
data (USSD) *99# providers and handsets
2. Immediate payment system (IMPS) It is available on basic mobile phones, smart
phones, via internet and at ATMs
3. National electronic fund transfer (NEFT) Individuals, corporates or organizations keeping
accounts with a bank branch can transfer funds
electronically to any account
4. Real-time gross settlement (RTGS) The RTGS system is primarily meant for large
value transactions
5. Prepaid payment instrument (PPI) Individuals/Organizations are permitted to hold
pre-paid payment mechanisms to pay for
purchase of services, goods and financial
services
6. Unified payment interface (UPI) Interconnect banks to help fund transfers
7. Mobile banking Access to bank account via browser or App
8. Mobile wallets Popular digital payment system via smart
phone apps. Examples – HDFC payZ app, ICICI
Pocket and Paytm
9. Aadhar-enabled payment system (AEPS) Complete payment system using biometric
authentication
10. BHIM UPI-based system to enable money transfer just
using mobile number
Table I. 11. Credit card/debit card Card-enabled fund transfer
Digital payment
systems in India Source: Singh (2016)
payment systems, which citizens faced – difficulty for non-technical persons to comprehend, Adoption of
risk of spending and risk of data theft. digital
As per UPI Payments Website (2016), India had seen a remarkable growth in mobile
banking transactions in 2015-2016, which were Rs 4,018bn in total as compared to Rs 60bn
payment
in 2012-2013. The GoI also supported digital payments by announcing incentives and systems
reducing taxes to trigger movement toward a cashless society.
After studying the challenges and benefits of using digital payment systems, the
knowledge of the various factors influencing the adoption from the citizen’s perspective is
crucial for developing countries and emerging markets like India to understand. During the
demonetization era, the GoI had invested large amount resources for the development and
deployment of digital payment systems for its citizens; however, the success is ultimately
dependent on the user’s adoption and acceptance. The research deals with this gap by
investigating the adoption of digital payment systems, which were at its nascent stage,
during the era of demonetization. The research question is hence formulated as:
RQ1. What is the prevalent situation in India regarding the adoption of digital payment
systems during the period of demonetization and what are the implications for the
future of digital payment systems?
The above research question was answered by using the technology adoption unified theory
of acceptance and use of technology (UTAUT 2) model and innovation resistance theory
(IRT). By conducting a primary survey, the empirical findings of this survey were analyzed,
and their implications to adoption, resistance and actual usage (AU) of digital payment
systems in India are discussed. This research focuses on the adoption, resistance and AU of
digital payment systems by the citizens in the era of demonetization. The results can be used
GoI, policymakers and digital payment system service providers to formulate strategies for
improving the acceptance and adoption of digital payment systems.
The previous technology adoption studies are influenced by various technology
acceptance models (TAMs) and theories such as social cognitive theory, innovation
diffusion theory (IDT) and TAM. Though the above theories were useful in explaining
adoption of different information technologies, however, those theories have explained
adoption based on system perceptions, mainly behavioral and attitudinal link (Venkatesh
et al., 2012). These theories were mainly criticized because of their incapability to broadly
describe the essentials of task technology environment (Benbasat and Barki, 2007). To
surmount the criticism of previous theories, the UTAUT was developed (Venkatesh et al.,
2003). The UTAUT model is suggestive to information technology-based perception of the
TAM (Venkatesh et al., 2003), and to overcome the criticism of previous theories, UTAUT
was further modified by including more contextual factors such as habit and price value
(PV) to form the UTAUT 2 (Venkatesh et al., 2012). UTAUT 2 model was validated by many
empirical studies in different disciplines and task environments (Kim et al., 2008; Li et al.,
2011). To conduct this research on the adoption and acceptance of digital payment systems,
the UTAUT 2 model is considered.
The earlier literature of innovation diffusion has experienced the pro-change bias (Ram,
1987; Sheth, 1981; Rogers, 2003). It was considered that all innovations should be adopted, as
they were always good for everyone (Rogers, 2003). It was examined by Sheth (1981) that
consumers do not have the desire to change and argued to concentrate on innovation
resistance (IR) rather than on reasons for adoption. He studied the IR psychology of the
consumers and argued that habit toward existing behavior and perceived risk of adoption of
innovation are important constructs of IR. Further, Ram and Sheth (1989) developed
functional and psychological barriers to innovation adoption. The functional barriers were
JSTPM divided into usage, value and risk barriers (RB), and psychological barriers were divided
into tradition and image barriers (IB). With this work of Ram and Sheth (1989), the theory of
adoption is linked with the theory of IR. So this study considers the IRT with reference to
Ram and Sheth (1989) to understand the IR to adoption of digital payment systems during
the demonetization period in India.
2. Underpinning theories
The objective of this research is to examine the behavioral intention (BI) and AU of the
digital payment systems with respect to the Indian citizens at the time of demonetization.
The term digital payment system means the type of payment which is done through the
digital mode. In digital payments, hard cash is not involved, as both payee and payer use
digital mode to complete the transaction and receipt of payment. This is a new trend,
triggering a paradigm shift in India’s economic culture, and hence, consumer acceptance
needs to be studied. This research uses the UTAUT 2 model to study the consumer adoption
of digital payment systems and IRT to map the apprehensions of the consumers. This study
integrates the UTAUT 2 and IRT as the single integrated framework to study and find out
the solution to the research question.
2.1 Unified theory of acceptance and use of technology 2

Acceptance of digital or IT is the most discussed area of research. There are many
competing models with different determinants for explaining TAM. After an extensive
research of previous studies regarding the technology adoption models, it has been found
that the UTAUT model (Venkatesh et al., 2003) is the contemporary model, and it has four
constructs: performance expectancy (PE), effort expectancy (EE), social influence (SI) and
facilitating conditions (FC). Many prior studies have confirmed that the UTAUT model has
been mainly utilized for technology adoption research in the domains of e-banking,
e-learning, e-commerce and e-government ( Jain, 2016).
The UTAUT model is tested and used in many previous studies. The UTAUT model
was confirmed as a comprehensive model for acceptance and use of technology; however, it
has some constraints (Negahban and Chung, 2014). Considering the UTAUT model
limitations, the UTAUT 2 model was developed by Venkatesh et al. (2012) which has a
detailed framework and includes seven constructs – PE, EE, SI, FC, hedonic motivation
(HM), PV and habit (HA). The UTAUT 2 (Venkatesh et al., 2012) model was tested with
reference to earlier studies on mobile payment adoption (Slade et al., 2014; Dahlberg et al.,
2015; Baptista and Oliveira, 2017; Morosan and DeFranco, 2016). Hence, this study considers
the UTAUT 2 model for understanding adoption and usage of digital payment systems.
UTAUT 2 is considered with six constructs: PE, EE, SI, FC, HM and HA, to discuss the
BI to use the digital payment systems. The PV construct is not considered in this study, as
the transactions using the digital payment systems during the demonetization period were
free because of GoI incentives.
2.2 Innovation resistance theory

The digital payment systems are innovative and also involve technology. Innovation
acceptance is challenging not only for organizations but also for individuals. Most of the
commercial companies develop innovative products which are consumer centric and make
conscious efforts for consumer adoption. Still companies are facing failure in innovation
acceptance by consumers (Danneels, 2003; Moore, 2002). Before the adoption or the eventual
rejection decision by the consumers, they exhibit some resistance (Kuisma et al., 2007).
However, resistance and adoption of an innovation can also coexist (Ram, 1987). It is the
conscious choice of a consumer to resist the innovation offered by the companies (Szmigin Adoption of
and Foxall, 1998). digital
The meaning of IR is the resistance by the consumers due to possible changes in
current satisfactory state or difference from their idea of innovation (Ram and Sheth,
payment
1989). The problem with innovation acceptance is that consumers are not easily ready systems
for trying the innovation (Ram and Sheth, 1989; Nabih et al., 1997; Szmigin and Foxall,
1998). However, IR is mainly resistance to innovation or not accepting the innovation
easily. The IRT is tailored from the IDT (Rogers, 2003) and the psychology that
discusses the reasons of IR, though innovations are considered to be desirable and
necessary. The constructs of IRT consists of dimensions such as RB, value barrier (VB),
usage barrier (UB), IB and traditional barrier (TB) (Ram and Sheth, 1989; Laukkanen
et al., 2007). Resistance to innovation by consumers can be in three incremental stages
such as postponement of innovation, rejection to innovation or opposition to
innovation.
During the period of demonetization, though citizens faced cash crunch, adoption of
digital payment systems was still a challenge due to involvement of technology and
existence of different digital payment systems such as USSD, IMPS, NEFT, RTGS, PPI,
UPI, mobile banking, mobile wallets, AEPS, BHIM app, Credit Card and Debit Card.
Adoption of technology in today’s era is dependent on social opinions; it is no more the
choice of individual. With reference to this, study of behavior intention (Miltgen et al.,
2013) is also an important variable to be considered.
3. Research objective
The study focuses on AU of digital payment systems during the demonetization period. It
has the following objectives:
to develop a theoretical model linking BI to use, IRT and AU of digital payment
systems; and
to empirically validate the theoretical framework.
4. Theoretical background and hypotheses development

The integration of UTAUT 2 and IRT is used to support the theoretical model. The UTAUT
model was used as it was a good predictor of acceptance of information technology (Martins
et al., 2014) till the UTAUT 2 model was discussed (Venkatesh et al., 2012). The UTAUT 2
model is considered in this study, as it is more explanatory compared to earlier models to
predict the BI and use of technology.
There are many innovations adopted by the consumers. There were also cases where
some innovations have faced failure in acceptance by the consumers (Danneels, 2003; Moore,
2002), as resisting the innovation is the consumer’s conscious decision (Szmigin and Foxall,
1998). In consideration with the consumer’s resistance to innovation, this study integrates
the IRT with the UTAUT 2 model to study the adoption and resistance of innovation for the
digital payment systems.
During the period of demonetization, it has been observed that consumers were
confused and anxious. There were long queues in front of banks and ATMs to
withdraw cash and deposit old notes. Consumers were not much aware of digital
payment systems, and they had a number of apprehensions about it. Keeping this in
mind, the IRT was used in the theoretical model to understand the determinants of
resistance (Figure 1).
JSTPM
Performance expectancy (PE) Sckiness (ST)
H1+
to use Cash
Effort expectancy (EE) H2+ Payment
Systems
H3+ Behavioral
Social Influence (SI)
Intenon (BI)
H4+ to use Digital H12+ H14–
Facilitang Condion (FC) payment
H5+ systems
Hedonic Movaon (HM)
Actual Usage
Habit (HA) (AU) of Digital
payment
systems
Usage Barrier (UB) H7+
H8+
Innovaon H13–
Value Barrier (VB) Resistance (IR)
to use Digital
H9+
payment
Risk Barrier (RB)
systems
H10+
Figure 1. Tradional Barrier (TB)
Hypothesized H11+
conceptual
Image Barrier (IB)
framework
4.1 Hypotheses development

4.1.1 Relationship between performance expectancy and behavioral intention to use digital
payment systems. PE is the extent of an individual’s belief that using the technology will be
useful to increase the job performance (Venkatesh et al., 2003). With reference to mobile
banking, PE is the benefit that the consumer gets such as economic benefits, personal image,
satisfaction and convenience (Taylor and Tood, 1995a, 1995b; Rogers, 1995). PE is one of the
vital factors which directly impacts BI to use mobile banking (Luo et al., 2010; Hongxia et al.,
2011; Wang and Yi, 2012; Yu, 2012; Oliveira et al., 2014). PE is strongly associated with BI to
use internet banking (Tarhini et al., 2016):
H1. PE positively influences BI to use digital payment systems
4.1.2 Relationship between effort expectancy and behavioral intention to use digital payment
systems. EE is defined as the ease of use which the customers experience while using the
technology (Venkatesh et al., 2003), and it impacts the customer’s BI to use technology
(Venkatesh et al., 2012). Earlier literature confirms that cognitive efforts required for
learning and using the information technology impacts the BI to use technology during the
initial phase of use of technology (Gefen, 2003; Venkatesh and Davis, 2000). When customers
are at ease while using mobile banking, it increases their expectations for expected
performance (Zhou et al., 2010; Hongxia et al., 2011; Thakur, 2013; Mohammadi, 2015;
Koksal, 2016; Martins et al., 2014), confirming the significant positive association between
EE and BI to use internet banking. It is clear that if there is less effort required, the customer
will surely have intention to use any kind of technology. So, the below hypothesis was Adoption of
formed: digital
H2. EE positively influences BI to use digital payment systems. payment
systems
4.1.3 Relationship between social influence and behavioral intention to use digital payment
systems. SI means the perception of the consumer regarding the belief of friends, family
members and other consumers toward the use of technology (Venkatesh et al., 2003, 2012).
Consumers develop favorable image toward the use of technology when they build up the
belief that they can gain social status and image in their reference groups (Venkatesh and
Morris, 2000; Venkatesh and Davis, 2000). SI has an impact toward BI to use mobile
technology (Sreenivasan and Noor, 2010) and mobile payment and banking (Püschel et al.,
2010; Hongxia et al., 2011; Yang et al., 2012) SI has strong association with BI for use of
technology (Tarhini et al., 2014; Venkatesh and Zhang, 2010):
H3. SI positively influences BI to use digital payment systems.

4.1.4 Relationship between facilitating conditions and behavioral intention. Facilitating
comprises software resources, hardware, technical support and knowledge of information
technology (Taylor and Todd, 1995a, 1995b). When it comes to use of any technology, the FC
are guidance, help and training provided to use. As per Venkatesh et al. (2012), FC means the
perception of the consumer toward the support and resources available to conduct behavior.
Consumers adopt the use of electronic banking transactions when they are easily able to
access and use internet and computer (Joshua and Koshy, 2011). FC has a positive
association with intention to use mobile communication technology (Park et al., 2007) and
mobile payment (Zhou et al., 2010; Yu, 2012)
H4. FC positively influences BI to use digital payment systems.
4.1.5 Relationship between hedonic motivation and behavioral intention. HM means the
enjoyment, fun and pleasure a consumer derives by the use of technology, and it also
contributes to BI to use technology (Venkatesh et al., 2012). Consumers enjoy using
technology when technology is fun and pleasurable to use (Lee, 2009; Leong et al., 2013). The
association between HM and BI to use information systems is confirmed (Kim et al., 2008).
Thus, following hypothesis was formed:
H5. HM positively influences BI to use digital payment systems.
4.1.6 Relationship between habit and behavioral intention. Habit is discussed as consumer’s
repeated behavior due to learning (Venkatesh et al., 2012). The study of Nikou and Bouwman
(2014) suggests that habit influences the use of mobile social networking sites. Earlier research
conceptualizes that habit is separate from behavior (Khalifa and Liu, 2007). Prior research
confirms that habit contributes to BI to use Information technology (Lankton et al., 2010; Aarts
and Dijksterhuis, 2000). It was also found that habit has an impact on BI to use mobile payment
(Dahlberg and Oorni, 2007). Considering this, the following hypothesis was formed:
H6. Habit positively influences BI to use digital payment systems.
4.1.7 Relationship between usage barrier and innovation resistance. When any new
innovation is not well-matched with current systems, habits and practices, consumers resist
the innovation, and it is called as UB (Ram and Sheth, 1989). Previous studies confirmed the
existence of resistance by consumers with regards to banking technology and suggest
customer education (Laukkanen et al., 2009). The UB is mainly due to the usability of an
JSTPM innovation. UB affects the IR of consumers to use digital payment systems; so, the following
hypothesis was formed:
H7. UB positively influences the IR to use digital payment systems.
4.1.8 Relationship between value barrier and innovation resistance. The value brought by
the innovation with regards to the monetary value and performance is considered as the VB
(Ram and Sheth, 1989). The consumer’s opinion toward the innovation that it adds value to
their performance is considered as VB (Davis et al., 1989). Sometimes innovations fail to
provide better performance as compared to the substitutes available; so, consumers do not
find value in the new innovation (Ram and Sheth, 1989). Sometimes consumers also perceive
that online banking does not provide the services and functions which previous services in
banking were offered by banks (Fain and Roberts, 1997). Hence, the following hypothesis
was formed.
H8. VB positively influences IR to use digital payment systems.
4.1.9 Relationship between risk barrier and innovation resistance. The degree of risk
involved in an innovation is considered as RB (Ram and Sheth, 1989), and risk may be
related to causing damage to individual or his property. With reference to online
transactions, the perceived risk by the consumer is risk associated with psychological,
financial, social or physical risk (Forsythe and Shi, 2003). In mobile banking and internet
banking, PIN codes may create the risk, and also, there are crucial security and privacy
concerns (Kuisma et al., 2007; Luarn and Lin, 2005; Thakur and Srivastava, 2014). Some
customers feel insecure that their PIN numbers will be hacked by hackers (Poon, 2008;
Laukkanen and Lauronen, 2005). There is risk perceived by the consumers with any type of
digital payment systems. When it comes to perceived security with reference to internet
banking the main concern is confidentiality (Liao and Cheung, 2002). In consideration with
above, the below hypothesis was formed:
H9. RB positively influences IR to use digital payment systems.
4.1.10 Relationship between traditional barrier and innovation resistance. Consumers tend
to show barriers due to norms, traditions and any kind behavior that contradicts the family,
society or group norms (Herbig and Day, 1992). Ram and Sheth (1989) suggested that
societal disapproval leads to IR. TB may occur as consumers are not familiar of paying bills
using electronic medium (Fain and Roberts, 1997). So, they may prefer to deal with bank
clerks rather than paying bills through electronic medium (Forman and Sriram, 1991). The
previous research confirms the relationship between TB and IR (Kleijnen et al., 2009). The
following hypothesis is formed:
H10. TB positively influences IR to use digital payment systems.
4.1.11 Relationship between image barrier and innovation resistance. It is difficult to
observe the product functioning or characteristics of an innovation. The images generally
result from the different types of information, rumors and stereotypes (Ram and Sheth,
1989). As per Fortin and Renton (2003) the negative perception of the image of innovation
may occur due to negative media coverage (Ram, 1989), which results in resistance. As
suggested by Fain and Roberts (1997), the image of electronic and mobile services is
considered negative and hard to use. Consumers perceive that technology is difficult to use,
so it has a negative image:
H11. IB positively influences IR to use digital payment systems.
4.1.12 Relationship between behavioral intention and actual usage of digital payment Adoption of
systems. BI suggests the individual willingness to perform a particular behavior and BI is an digital
antecedent of usage behavior. As per Ajzen (1991), the usage or AU behavior noticeable, is
the evident response in a provided situation with regards to the given target. The previous
payment
information technology acceptance studies discuss the positive relationship between BI and systems
AU of information technology (Venkatesh and Zhang, 2010; Venkatesh et al., 2003, 2012;
Tarhini et al., 2013, 2016):
H12. BI to use digital payment systems positively influences AU of digital payment
systems.
4.1.13 Relationship between innovation resistance and actual usage of digital payment
system. The negative response of the consumer dependent on the conscious choice is called
as IR (Szmigin and Foxall, 1998). When it comes to innovation adoption and usage, it is
found that consumers often implicitly develop a consolidated image with relational benefits
(Rogers, 2003). Most of the research regarding innovation adoption provides emphasis on
the advantage of innovation as a key driver to consumer adoption and usage. However,
there are many evidences discussed regarding the resistance to innovation (Molesworth and
Suortti, 2002; Garcia and Atkin, 2002). Companies try to create consumer centric innovation
to value add to the consumer, but many companies still experienced innovation failure
(Danneels, 2003; Moore 2002). With this, the below hypothesis was formed:
H13. IR to digital payment systems negatively influences the AU of digital payment
system.
4.1.14 Moderation relationship of consumer stickiness to cash payment between behavioral
intention to use and actual usage of digital payment systems. The stickiness is defined as the
capability of any website to capture and retain the user attention (Demers and Lev, 2001;
Maciag, 2000). It discussed that stickiness is the intangible ability which provoke customers
to visit frequently and for longer period of time. With reference to this research, digital
payment systems are new; so, stickiness is considered for using the cash payment. As per
Hsu and Lin (2016) stickiness significantly influences a user’s intention to purchase in-app
for mobile banking. With regards to e-commerce, the user’s stickiness to website is in strong
association with her/his intention to transaction (Lin, 2007). In consideration with the above,
the following hypothesis was formed:
H14. Consumer stickiness to cash payment moderates the relationship between
behavior intention and AU of digital payment systems.
5. Research methodology
5.1 Measures
The literature review was conducted regarding the UTAUT 2 model and IRT to study the
consumer resistance, BI to use and AU of digital payment systems to prepare the survey
instrument. The research conducted the survey using the following measures to test the
hypotheses.
5.2 Research instrument design

This study used the research instrument from the previous studies conducted with reference
to the acceptance of technology and modified for the subject of digital payment systems.
The study has mainly adopted the items from previous studies (Venkatesh et al., 2012; Zhou
JSTPM et al., 2010; Laukkanen et al., 2007; Ram and Sheth, 1989) regarding the UTAUT 2 model and
IRT. As per Fornell and Larcker (1981), it is imperative to establish the validity of the
constructs and reliability of the scale; so, this study verified the scale for each of above
constructs.
Prior to the data collection process, to establish face validity, five subject matter experts
were identified and exposed to the overall scope and objectives of the study. After
incorporating the suggestion and feedback regarding the suitability of all constructs, the
questionnaire for the pre-test was finalized. To measure the constructs operationalized in
this study, a five-point Likert scale was used. To assess the research instrument’s validity
and reliability, a pre-test and pilot test was conducted. A total of 30 questionnaires were
distributed for the pre-test among the target respondents. As per their feedback, the
questionnaires were modified to ensure that all the questions were well understood and easy
to follow. To evaluate the reliability and internal consistency of the data, Cronbach’s alpha
was used. The researcher carried out a pilot test (N = 150), and the data were analyzed using
partial least squares (PLS)-structural equation modeling (SEM). The main data collection
was carried out after satisfactory results were obtained in the pilot test (The data set from
the pre-test and pilot-test were not included in the final data analysis). The operationalized
constructs used in this study are as shown in Table II.
5.3 Sampling and data collection

The PLS path modeling technique has the benefit that it is not affected by small sample size.
To ascertain the adequate sample size required for this study the thumb rule (Gefen et al.,
2000) was considered. For assessing the required sample size, ten times the number of items
of the biggest construct in the research model was used. Hence, the required sample size for
this study is 240 respondents. The primary data collection was done using a structured
questionnaire (Table II) which was administered to the respondents. The target respondents
selected for this study were consumers using any form of digital payment systems during
the demonetization period using the convenience sampling method in Pune city and its
suburbs. The respondents included people in restaurants, cafes, markets, bus stands,
railway stations, airport, shopping malls, auto rickshaw and cab drivers, small vendors,
shopkeepers, rickshaw pullers, handcart vendors, retail store owners, house wives, students,
working professionals, contract workers along with the common citizens and consumers.
During the demonetization period, every consumer was affected to a certain extent and
triggered to migrate and embrace some form of digital payment system; so, the respondent
chosen for this study were appropriate.
5.4 Non-response bias

In survey methods, non-response bias is considered a serious concern, as it limits the
generalization of the findings (Michie and Marteau, 1999). Hence, it needs to be addressed by
the researchers (Lewis et al., 2013). When the response of the individuals to a survey differs
systematically from those who were invited to participate but did not respond, it results in
response bias (Menachemi, 2010). Hence, appropriate steps were taken by the researcher to
ensure that non-response is not an issue for this study. This was done by dividing the data
into two data sets (early respondents vs late respondents) by performing the wave analysis.
The comparison of the early and late wave responses was done to test for non-response bias
(Armstrong and Overton, 1977). The t-test analysis showed no significant differences (p =
0.49) between the early wave (410) and late wave (356) groups, indicating that non-response
bias does not affect this study. Finally, 766 responses were found fit for analysis in all
respects.
Adoption of
Main Type (Reflective
constructs or formative) Measures Reference
digital
payment
UTAUT 2 model
PE Reflective PE1: I find time to use digital payment systems Zhou et al. (2010)
systems
PE2: Digital payment systems optimize the financial
transactions
PE3: Digital payment systems help me to make my
payments faster
PE4: Digital payment systems help me to advance my
earnings
EE Reflective EE1: Digital payment systems are simple to learn Zhou et al. (2010)
EE2: It is easy to interact with digital payment systems
EE3: Digital payment systems are simple to use
proficiently
EE4: I am doubtless and confident when I am doing
transactions using the digital payment systems

SI Reflective SI1: Use of digital payment systems is valued in my Zhou et al. (2010)
family and friends circle
SI2: The people around, trigger me to use digital
payment systems
SI 3: I find digital payment systems trendy
SI4: I get professional image in society due to the use of
digital payment systems
FC Reflective FC1: I am equipped with the essential resources to use Zhou et al. (2010)
FC2: I am proficient in use digital payment systems
FC3: My doubts regarding the use of digital payment
systems are solved with the help of support line
FC4: My doubts are solved on time as help is provided
by account managers for use of digital payment
systems
HM Reflective HM1: Use of digital payment systems is fun filled Venkatesh et al.
activity (2012)
HM2: I enjoy the use of digital payment systems
HM3: I feel entertained to use of digital payment
systems
HA Reflective HA1: I am habitual to use digital payment systems Venkatesh et al.
HA2: I am dependent on digital payment systems for (2012)
financial transactions
HA3: I should use digital payment systems always
HA4: For me, it is normal to use digital payment
systems
BI Reflective BI1: I am deliberate to make payments with use of Kim et al. (2008)
BI2. I am deliberate do all my financial transaction
using the digital payment systems
BI3. I am interested in digital payment systems
BI4. I am deliberate to manage my accounts with the
help of digital payment systems
BI5. I am deliberate to make payment transfers with the
help of digital payment systems Table II.
BI6. I am inquisitive for about digital payment systems Operationalization of
(continued) constructs
JSTPM
Main Type (Reflective
constructs or formative) Measures Reference
UB Reflective UB1: I feel that digital payment systems are not simple Laukkanen et al.
for use (2007), Kuisma
UB 2: I feel that the use of digital payment systems is et al. (2007)
not user friendly
UB 3 I feel that digital payment systems are not quicker
to use
UB 4: I feel that development of digital payment
systems is not understandable
UB5: I feel that changing PIN codes digital payment
systems is not convenient
VB Reflective VB1: The use of digital payment systems is Laukkanen et al.
uneconomical (2007), Kuisma
VB2: I feel that digital payment systems are not et al. (2007)
suitable for financial transaction as compared to other
means of financial transactions
VB3: I feel that the use of digital payment systems is
unable to improve my capability to manage my
financial transactions on my own
RB Reflective RB1: When I do my financial transaction using digital Laukkanen et al.
payment system, I am worried about the accuracy of (2007), Kuisma
the input information which might result in mistakes et al. (2007), Liao
RB2: While using digital payment systems, I am and Cheung
anxious about loss of connection (2002)
RB3: When I use digital payment systems, I am
doubtful of wrongly tapping the bill information
RB4: I have insecurity while using digital payment
systems regarding the loss of PIN codes which might
reach wrong hands
RB5: I am fearful while using digital payment systems,
as third party might get access to my account
information
TB Reflective TB1: Patronizing in the bank and conversing with Laukkanen et al.
cashier is good moment (2007), Forman
TB2: I prefer self-service over traditional customized and Sriram
personal services (1991), Heinonen
(2004)
IB Reflective IB1: I do not have very positive image of digital Heinonen (2004),
payment systems Forman and
IB2: In my opinion, new technology of digital payment Sriram (1991),
systems is often too complex to use Laukkanen et al.
IB3: I feel that digital payment systems are hard to use (2007)
IR Reflective IR1: I might use digital payment systems but not now Ram (1987), Ram
IR2: I will never use digital payment systems and Sheth (1989);
IR3: I am totally against using digital payment systems Kleijnen et al.
(2009)
Table II. (continued)
Adoption of
Main Type (Reflective digital
constructs or formative) Measures Reference payment
AU Reflective AU1: I use digital payment systems Goodhue and systems
AU2: I use digital payment systems to manage my Thompson
accounts (1995), Zhou et al.
AU3: I use digital payment systems to do transactions (2010)
AU4: I sign up for financial services that are specially
designed for digital payment systems
ST Reflective ST1: I would use cash payment system for longer time Lin(2007), Hsu
than any other payment system and Lin (2016)
ST2: I often use cash payment system as I can
ST3: I always use cash payment system when I am
online Table II.
5.5 Common method bias

A survey-based method for data collection was used to test the research hypothesis in this
work. When the response data are collected from multiple sources, it may suffer from the
risk of presence of common method bias (Mackenzie and Podsakoff, 2012; Podsakoff et al.,
2003; Podsakoff and Organ, 1986). The researcher conducted the single factor Harman test
(Podsakoff and Organ, 1986) to examine the occurrence of common method bias in this
work. On performing the analysis of the research framework, the results from this test show
that 14.43 per cent of the variance is explained by a single factor which is less than 50
per cent. This proves that common method bias is not a concern in this research.
With reference to the above criteria, there are sufficient evidences of validity and
reliability in the measures of this study.
5.6 PLS-SEM
As the PLS-SEM path modeling technique has the capability to represent the latent variable
constructs in this work, it is used to test the conceptual research framework and assess the
causal relationship between the indicators and latent constructs (Gudergan et al., 2008).
When the objective of the research is to extend the existing theory (Hair et al., 2011), PLS-
SEM is preferred over maximum likelihood, as it is a flexible technique to model the
research constructs (Henseler, 2010). So, the smart PLS software (Ringle et al., 2005) was
used for data analysis.
6. Results
The demographic profile of the respondents is shown in Table III.
6.1 Measurement model

The multi-item reflective constructs in the hypothesized framework was used to calculate
the measurement properties in the final measurement model. The indicator’s factor loadings
were more than 0.5 (Hair et al., 2006). The reliability of the measure was established as the
Cronbach’s alpha for all the constructs were more than 0.7. This shows high internal
consistency of all the research constructs used (Nunnally, 1978).
The outer item loadings and composite reliability (CR) was checked to evaluate the
reflective measurement items. To check the convergent validity, the average variance
extracted (AVE) was calculated. The outer loadings for all the items were more than the
JSTPM Demographic Characteristics Frequency (%)
Gender Male 445 58

Female 321 42
Age Below 25 184 24
26 to 35 282 37
36 to 45 199 26
Above 45 101 13
Education No college degree 112 15
Diploma 195 26
Graduate degree 254 33
Post graduate/Masters 205 26
Monthly income Less than Rs 25,000 180 23
Rs 25,000-50,000 280 37
Rs 50,000 to 1 Lac 230 30
Rs 1 to 1.5 Lacs 76 10
Prior experience of any digital payment Yes 344 45

system (before demonetization) No 422 55
Type of digital payment system used (Can USSD *99# 94 12
select more than one) IMPS 176 23
NEFT 348 45
RTGS 198 26
PPI 188 25
UPI 249 32
Mobile banking 347 45
Mobile wallets 328 43
AEPS 133 17
BHIM 299 39
Credit card/debit card 548 71
Frequency of usage of digital payment Once or more than once 120 16
systems in a day
Table III. 2 to 3 days once 220 29
Respondent 4 to 6 days once 185 24
demographic profile Weekly once 176 23
(N = 766) Monthly once 65 8
minimum threshold value of 0.6, and all the research constructs show high levels of internal
consistency/reliability shown by the CR values as displayed in Table IV. The convergent
validity for all the constructs are confirmed as the AVE values are more than the minimum
threshold value of 0.5 (Hair et al., 2006).
The assessment of the discriminant validity of the research constructs was done using
the Fornell and Larcker (1981) criterion. The discriminant validity of the constructs is
verified by the off-diagonal values in Table V showing the correlation between the latent
constructs. The comparison of the construct inter-correlations with AVE was done to prove
the discriminant validity as shown in Table V. Discriminant validity was ascertained as the
shared variance values were less than the corresponding AVE (Fornell and Larcker, 1981).
Hence, discriminant validity between the research constructs is verified.
6.2 Structural model

After the evaluation of the measurement model, it was found to be reliable and valid. Hence,
the path analysis was carried out to assess the structural model relationships among the
constructs using PLS-SEM by calculating the path coefficients and its significance. It
Adoption of
Second-order
construct First-order construct Item Outer loading AVE CR Cronbach’s alpha
digital
payment
PE PE1 0.783 0.762 0.886 0.832
PE2 0.874
systems
PE3 0.793
PE4 0.803
EE EE1 0.835 0.786 0.897 0.847
EE2 0.839
EE3 0.829
EE4 0.811
SI SI1 0.911 0.720 0.911 0.874
SI2 0.780
SI3 0.788
SI4 0.906
FC FC1 0.847 0.774 0.932 0.894
FC2 0.915
FC3 0.852
FC4 0.903
HM HM1 0.836 0.730 0.890 0.815
HM2 0.855
HM3 0.872
HA HA1` 0.933 0.865 0.962 0.848
HA2 0.921
HA3 0.942
HA4 0.925
BI NA BI1 0.950 0.840 0.969 0.861
BI2 0.919
BI3 0.910
BI4 0.889
BI5 0.940
BI6 0.890
UB UB1 0.868 0.759 0.906 0.869
UB2 0.870
UB3 0.816
UB4 0.780
UB5 0.717
VB VB1 0.969 0.941 0.978 0.868
VB2 0.975
VB3 0.967
RB RB1 0.809 0.740 0.899 0.860
RB2 0.759
RB3 0.862
RB4 0.803
RB5 0.765
TB TB1 0.800 0.702 0.824 0.879
TB2 0.874
IB IB1 0.883 0.722 0.886 0.809
IB2 0.861
IB3 0.803 Table IV.
(continued) Construct validity
JSTPM
Second-order
construct First-order construct Item Outer loading AVE CR Cronbach’s alpha
IR NA IR1 0.827 0.731 0.891 0.816

IR2 0.901
IR3 0.837
ST ST1 0.982 0.951 0.983 0.874
ST2 0.972
ST3 0.973
AU NA AU1 0.854 0.841 0.921 0.817
AU2 0.887
AU3 0.820
AU4 0.874
AU5 0.884
Notes: 1. Average variance extracted (AVE) = (summation of the square of the factor loadings)/
{(summation of the square of the factor loadings) þ (Summation of the error variance)} 2. CR = (Square of
the summation of the factor loadings)/{(Square of the summation of the factor loadings) þ (square of the
Table IV. summation of the error variance)}
implies the hypothesized relationships between the various research constructs, the
assessment of level of R2 values and predictive relevance Q2 (Table VI), f 2 and q2 effect size
(Tables VII and VIII) (Figure 2).
H1 tested whether BI to use digital payment systems is explained by PE. As per the
results of the path analysis, PE (path coefficient = 0.293, t-statistics = 3.321) significantly
predicts BI to use to use digital payment systems. Hence, the H1 was supported, and it is in
line with previous studies (Hongxia et al., 2011; Wang and Yi, 2012; Yu, 2012) on mobile
payment. This result implies that during demonetization, due to the non-availability of cash,
digital payment systems offered convenience and performance benefits to the consumers to
perform their daily financial transactions.
H2 tested whether BI to use digital payment systems is explained by EE. As per the
results of the path analysis, EE (path coefficient = 0.320, t-statistics = 4.756) significantly
predicts BI to use to use digital payment systems. Hence, the H2 was supported, and it also
confirms the extant literature (Zhou et al., 2010; Hongxia et al., 2011; Thakur, 2013;
Mohammadi, 2015; Koksal, 2016; Martins et al., 2014). This implied that during
demonetization, less effort was required by the consumers to use digital payment systems
rather than standing in long queues outside the banks and ATMs.
H3 tested whether BI to use digital payment systems is explained by SI. As per the
results of the path analysis, SI (path coefficient = 0.329, t-statistics = 5.004) significantly
predicts BI to use to use digital payment systems. Hence, the H3 was supported and
confirms the previous studies (Tarhini et al., 2014; Venkatesh and Zhang, 2010; Püschel
et al., 2010; Hongxia et al., 2011; Yang et al., 2012). The result indicated that SI of family
members, friends and other consumers during demonetization period triggered the BI to use
H4 tested whether BI to use digital payment systems is explained by FC. As per the
results of the path analysis, FC (path coefficient = 0.303, t-statistics = 3.917) significantly
predicts BI to use to use digital payment systems. Hence, the H4 was supported and aligns
with the studies conducted on mobile payment adoption (Zhou et al., 2010; Yu, 2012). The
results show that during demonetization period, the GoI provided resources and support to
Research
construct PE EE SI FC HM HA UB VB RB TB IB BI IR AU ST
PE 0.873
EE 0.120 0.886
SI 0.130 0.267 0.848
FC 0.304 0.354 0.590 0.879
HM 0.297 0.274 0.644 0.466 0.854
HA 0.363 0.415 0.490 0.182 0.774 0.930
UB 0.409 0.52 0.18 0.12 0.18 0.68 0.871
VB 0.410 0.57 0.26 0.33 0.67 0.55 0.137 0.969
RB 0.497 0.59 0.33 0.23 0.38 0.11 0.264 0.643 0.842
TB 0.292 0.26 0.32 0.306 0.15 0.78 0.243 0.481 0.264 0.837
IB 0.397 0.41 0.38 0.60 0.71 0.66 0.544 0.542 0.482 0.586 0.849
BI 0.652 0.307 0.260 0.393 0.406 0.286 0.29 0.42 0.36 0.27 0.59 0.916
IR 0.192 0.14 0.58 0.37 0.21 0.20 0.385 0.252 0.316 0.259 0.241 0.23 0.854
AU 0.705 0.689 0.301 0.560 0.425 0.686 0.69 0.81 0.61 0.48 0.54 0.812 0.79 0.917
ST 0.184 0.165 0.166 0.448 0.105 0.109 0.128 0.119 0.346 0.586 0.214 0.520 0.424 0.192 0.975
Notes: The off-diagonal values in the above matrix are the correlations between the latent constructs and diagonals are square root of AVE; italic data indicates
the square roots of AVE
Table V.
digital
criteria)
Discriminant validity
Adoption of
(Fornell–Larcker
systems
payment
JSTPM the consumers in terms of guidance, help and training commercials to increase the use of
H5 tested whether BI to use digital payment systems is explained by HM. As per the
results of the path analysis, HM (path coefficient = 0.422, t-statistics = 6.103) significantly
predicts BI to use to use digital payment systems. Hence, the H5 was supported and is in
line with previous studies (Kim et al., 2008; Baptista and Oliveira, 2015). The result proves
that during demonetization period, use of digital payment systems provided an element of
pleasure and enjoyment to the consumers.
H6 tested whether BI to use digital payment systems is explained by HA. As per the
results of the path analysis, HA (path coefficient = 0.385, t-statistics = 5.645) significantly
predicts BI to use to use digital payment systems. Hence, the H6 was supported and
validates existing studies (Lankton et al., 2010; Aarts and Dijksterhuis, 2000). During the
demonetization period, the repetitive use of digital payment systems by consumers proved
that HA influences BI to use digital payment systems.
H7 tested whether IR to digital payment systems is explained by UB. As per the results
of the path analysis, UB (path coefficient = 0.370, t-statistics = 5.100) significantly predicts
IR to digital payment systems. Hence, the H7 was supported. The results show that due to
the complexity and lack of comfort with the use of digital payment systems during the
Endogenous latent constructs R2 Q2
BI to use DPS 0.609 0.510

Table VI. IR to DPS 0.440 0.322
Results of R2 and AU of DPS 0.687 0.230
predictive relevance
Q2 Notes: Assessment of predictive relevance (Q2); Value - 0.02, 0.15, 0.35 : Effect size - Small, Medium, Large
Path Standard
Hypothesis Path coefficient error t statistics Decision
H1 PE ! BI to use digital payment systems 0.293 0.088 3.321*** Supported

H2 EE ! BI to use digital payment systems 0.320 0.067 4.756*** Supported
H3 SI ! BI to use digital payment systems 0.329 0.065 5.004*** Supported
H4 FC ! BI to use digital payment systems 0.303 0.077 3.917*** Supported
H5 HM ! BI to use digital payment systems 0.422 0.069 6.103*** Supported
H6 HA ! BI to use digital payment systems 0.385 0.068 5.645*** Supported
H7 UB ! IR to digital payment systems 0.370 0.072 5.100*** Supported
H8 VB ! IR to digital payment systems 0.322 0.087 3.668*** Supported
H9 RB ! IR to digital payment systems 0.364 0.070 5.158*** Supported
H10 TB ! IR to digital payment systems 0.168 0.082 2.046** Supported
H11 IB ! IR to digital payment systems 0.239 0.090 2.245** Supported
H12 BI ! AU of digital payment systems 0.571 0.096 3.951*** Supported
Table VII. H13 IR ! AU of digital payment systems 0.114 0.056 2.038** Supported
Structural H14 BI ST ! AU of digital payment systems 0.112 0.079 1.722* Supported
relationships and Notes: t-values for two-tailed; ***t-values 2.58 (sig. level = 1%); **1.96 (sig. level = 5%); and *t-values
results of hypothesis 1.65 (sig. level = 10%)
testing Source: Hair et al. (2011)
Endogenous
constructs! BI to use DPS IR to use DPS AU of DPS
Exogenous Path f 2 Effect q2 Effect Path f 2 Effect q2 Effect Path f 2 Effect q2 Effect
constructs ; coefficient size size coefficient size size coefficient size size
PE 0.293 0.204 0.136

EE 0.320 0.258 0.171
SI 0.329 0.273 0.181
FC 0.303 0.230 0.153
HM 0.422 0.434 0.289
HA 0.385 0.365 0.245
UB 0.370 0.221 0.137
VB 0.322 0.178 0.110
RB 0.364 0.232 0.141
TB 0.168 0.050 0.032
IB 0.239 0.101 0.071
BI 0.571 0.624 0.673
IR 0.114 0.182 0.138
ST 0.112 0.148 0.121
Notes: Assessing q2 and f 2 Value - 0.02, 0.15, 0.35 : Effect size - Small, Medium, Large
Table VIII.
digital
effect size
Results of path
Adoption of
coefficients, q2 and f2
systems
payment
JSTPM
Performance expectancy (PE) Sckiness (ST)
H1 (β = 0.293***) to use Cash
Payment
Systems
Effort expectancy (EE) H2 (β = 0.320***)
Behavioral
H3 (β = 0.329***) Intenon (BI)
Social Influence (SI)
to use Digital H14 (β = –0.112*)
H4 (β = 0.303***)
payment
Facilitang Condion (FC) systems
Hedonic Movaon (HM) H6 (β = 0.422***)
H12 (β = 0.571***)
Habit (HA)
H6 (β = 0.385***) Actual Usage
(AU) of Digital
payment
systems
Usage Barrier (UB) H7 (β = 0.370***)
H8 (β = 0.322***)
Value Barrier (VB) Innovaon
Resistance (IR) H13 (β = –0.114**)
H9 (β = 0.364***)
to use Digital
Risk Barrier (RB) payment
H10 (β = 0.168***) systems
Tradional Barrier (TB)
H11 (β = 0.239***)
Image Barrier (IB)
Figure 2.
Results of PLS-SEM
model
Notes: Direct effect, *p < 0.10; **p < 0.05; ***p < 0.01
demonetization period, consumers experienced UB which influenced the IR to digital

payment systems.
H8 tested whether IR to digital payment systems is explained by VB. As per the results
of the path analysis, VB (path coefficient = 0.322, t-statistics = 3.668) significantly predicts
IR to digital payment systems. Hence, the H8 was supported. The transactions using digital
payment systems during demonetization period were free due to the Indian government
initiatives. However, the consumers were aware that post-demonetization period, digital
transactions would be charged as the incentives would be withdrawn by the Indian
government. This led to the VB to AU of digital payment systems.
H9 tested whether IR to digital payment systems is explained by RB. As per the results
of the path analysis, RB (path coefficient = 0.364, t-statistics = 5.158) significantly predicts
IR to digital payment systems. Hence, the H9 was supported. The result implies that during
demonetization period, consumers had security, privacy and confidentiality concerns during
the use of digital payment systems.
H10 tested whether IR to digital payment systems is explained by TB. As per the results
of the path analysis, TB (path coefficient = 0.168, t-statistics = 2.046) significantly predicts
IR to digital payment systems. Hence, the H10 was supported. The result implies that the
tradition of the consumer to use cash is deep rooted in the psyche and ethos of the Indian Adoption of
culture, which acts as TB and offers IR to use digital payment systems. digital
H11 tested whether IR to digital payment systems is explained by IB. As per the results
of the path analysis, IB (path coefficient = 0.239, t-statistics = 2.245) significantly predicts IR
payment
to digital payment systems. Hence, the H11 was supported. The result show that lack of a systems
positive image among the consumers due to loss of anonymity and presence of a digital trail
of disclosure of all transactions with service providers, act as IB and offers IR to use digital
payment systems
H12 tested whether AU of digital payment systems is explained by BI. As per the results
of the path analysis, BI (path coefficient = 0.571, t-statistics = 3.951) significantly predicts
AU of digital payment systems. Hence, the H12 was supported, and it is confirms with
extant studies (Venkatesh and Zhang, 2010; Venkatesh et al., 2003, 2012; Tarhini et al., 2013,
2016). During demonetization, BI to use digital payment systems among consumers
influenced the AU of digital payment systems.
H13 tested whether AU of digital payment systems is explained by IR. As per the results
of the path analysis, IR (path coefficient = 0.114, t-statistics = 2.038) significantly predicts
AU of digital payment systems. Hence, the H13 was supported. The negative value of the
path coefficient indicates that IR hinders the AU of digital payment systems. This confirms
that during demonetization, there was IR to the AU of digital payment systems and
supports the existing studies (Molesworth and Suortti, 2002; Garcia and Atkin, 2002; Ram
and Sheth, 1989)
Next addressing H14, the moderating effect of stickiness to cash payment (ST) on AU of
digital payment systems was evaluated using the interaction effect in path analysis of SEM.
Hence, value shows a significant moderating effect on the path connecting BI and AU (path
coefficient = 0.112, t-statistics = 1.722) which supports H14. The negative value of the
path coefficient signifies that stickiness to cash payment acts as an inhibitor to AU of digital
payment systems. Stickiness to cash payments emerged as an important factor affecting the
AU of digital payment systems in the era of demonetization and it also confirms the
previous research on mobile banking and e-commerce (Hsu and Lin, 2016; Lin, 2007)
The overall results show that AU of digital payment systems during demonetization is
negatively affected by the IR and stickiness to cash payments.
The R2 values of and the predictive relevance Q2 of the endogenous latent constructs BI,
IR and AU of digital payment systems are as shown in Table VII.
The change in the R2 value, when the specified exogenous construct is omitted from the
model is measured by the f 2. Finally, the f 2, as a measure of the impact of a specific
predictor variable on the endogenous construct are presented in addition to the R2 values of
all endogenous constructs (BI, IR and AU) in Table VIII.
7. Discussion
On the basis of the results obtained after PLS-SEM analysis, it is found that the research
constructs PE, EE, SI, FC, HM and HA have a significant positive influence on BI to use
PE has significant influence on BI to use digital payment systems which is in line with
earlier research work (Venkatesh et al., 2003; Oliveira et al., 2014; Tarhini et al., 2016). This
shows that consumers use digital payment systems, as it provides benefits to enhance their
daily financial transactions. EE has significant effect on BI to use digital payment system
and confirms with earlier research (Venkatesh et al., 2012; Zhou et al., 2010; Martins et al.,
2014). The result also confirms that SI has significant influence on BI to use digital payment
systems which are similar to the previous research (Venkatesh and Morris, 2000; Venkatesh
JSTPM and Davis, 2000; Tarhini et al., 2014; Venkatesh and Zhang, 2010). HM has effect on the BI to
use digital payment systems as per earlier studies (Kim et al., 2008). HA significantly
influences the BI to use digital payment system which verify previous research (Lankton
et al., 2010; Aarts and Dijksterhuis, 2000).
As per the results, IR constructs also impact the IR to digital payment systems. UB, VB,
RB, TB and IB have significant influence on IR to digital payment systems which is
confirms to previous studies (Ram and Sheth, 1989; Laukkanen et al., 2009; Fain and
Roberts, 1997; Poon, 2008; Laukkanen and Lauronen, 2005; Fain and Roberts, 1997; Kleijnen
et al., 2009). There are barriers to use digital payment systems such as habits to use,
insecurity and traditional method of payment, that is use of cash. The challenges of digital
literacy among the consumers along with the required supporting infrastructure are the
major barriers in adoption of digital payment systems.
The results suggest that BI influences the AU of digital payment systems and confirms
the earlier research (Venkatesh and Zhang, 2010; Venkatesh et al., 2003, 2012; Tarhini et al.,
2013, 2016). The reach and penetration of the digital payment systems increased during the
demonetization period. This resulted in increase in the average time spent by the consumer
and the usage frequency of digital payment systems.
IR has negative effect on the AU of digital payment systems due to various barriers like
UB, VB, RB, TB and IB, and it is alike with earlier studies (Molesworth and Suortti, 2002;
Garcia and Atkin, 2002). Lack of high speed internet access, low digital literacy rate among
the consumers and lack of regular electricity supply posed severe challenges to the adoption
of digital payment systems. Digital payments leave a trail of disclosure giving access to the
private lives of the consumers as banks and digital service providers have information of all
the consumer transactions. This issue of privacy and confidentiality was a primary source
of concern among the consumers which acts as a hindrance in the adoption process. During
the period of demonetization, commission and service charges were waived off as an
incentive to trigger migration of consumers to digital payment systems. However, post
demonetization these charges will be applicable to digital payment systems which would act
as an obstacle. This shows that consumers have resistance to use digital payment systems
due to above barriers.
As discussed above, UTAUT is superior predictive model for technology adoption than
other competing models like TAM, TPB and IDT. This study integrated the IRT model to
study the IR and UTAUT model to study the reasons for adoption of digital payment
systems which is a unique theoretical contribution.
In this study, ST to use cash payment shows the significant moderation between BI and
AU to use digital payment systems, and it is in line with earlier study (Hsu and Lin, 2016;
Lin, 2007). Indian consumers are habitual of cash usage, as it is deeply rooted in the Indian
economic culture. A great level of trust is attached to cash-based payment systems, as it is
most preferred by citizens for buying and selling goods and services. Prior to the
demonetization, 98 per cent of transactions by volume were done by cash (Jain, 2016). Cash
payments have assurance of anonymity, more cultural acceptance in the Indian context and
have dominated the spending habits of the consumers. Considering the abovementioned
facts, the researcher considers stickiness to cash payment as moderator which is a unique
contribution of this study. Post demonetization, due to change in situational factors like
higher availability of cash and removal of cash withdrawal limits from ATMs and bank
accounts, stickiness to cash payments will actually reflect whether the adoption of digital
payment systems was on a temporary basis or permanent, due to change in consumer
behavior. Stickiness to cash payments was considered in this study, as it highlights the
tendency of the consumers to revert back to cash based systems. This requires a paradigm
shift in the mentality of the consumers from cash to digital, which needs to be education- Adoption of
driven and not simply by demonetization. This would ensure a long term and sustainable digital
usage of digital payment systems taking India toward a cashless society.
payment
8. Theoretical contributions
systems
UTAUT 2 is a well-accepted, empirically tested and valid research model that predicts the
behavioral intentional and AU of technology. This model is widely used due to its
robustness and simplicity compared to other adoption models. (Venkatesh et al., 2012, 2003;
Foon and Fah, 2011; Tarhini et al., 2015; Venkatesh and Zhang, 2010). The UTAUT 2 model
is extensively examined in the literature of technology adoption in developing countries
(Kamoun and Almourad, 2014; Al-Ajam and Nor, 2013; Tarhini et al., 2014; Zhao et al., 2012).
In this study, the UTAUT 2 model explained 60.9 per cent of the BI to use digital payment
systems and this is the contribution of this research to exhibit the generality and validity of
the UTAUT 2 model with reference to digital payment systems.
This research used the IRT to study the resistance of customers to adopt digital payment
systems. The theoretical model explained 44 per cent IR of customers to use digital payment
systems. Previous research studied the resistance with reference to mobile banking and
internet banking, regarding crucial security and privacy concerns (Kuisma et al., 2007;
Luarn and Lin, 2005; Thakur and Srivastava, 2014). This study adds value to the existing
theory by integrating IRT with UTAUT 2 and generalizing it with the adoption of digital
payment systems in the context of a developing country like India. The integration of
UTAUT 2 and IRT explains the AU of 68.7 per cent of digital payment systems which is the
unique contribution of this study. This research has considered the different types of
respondents to study the AU of digital payment systems, and this study is unique in nature
as it examined the adoption and AU of digital payment systems during the demonetization
period.
9. Implications
This study extends the existing literature by incorporating stickiness to cash payments
as the moderator between BI and AU of digital payment systems. This work integrates
two theories – UTAUT 2 and IR to explain the AU of digital payment systems. The
unique theoretical contribution of this study is the integration of the UTAUT 2 adoption
theory along with the IRT. Although the various factors of adoption and determinants of
resistance have been studied independently in earlier studies, there exists no study that
investigates the adoption and resistance factors related to digital payment systems in a
single integrated framework. The valuable insights provided by this study may be
considered by researchers in the areas of adoption of all future technologies.
The digital payment service providers need to ensure that the various barriers such as
UB, VB, RB, TB and IB need to be overcome by making the technology of digital payment
systems more user-friendly. They need to minimize the privacy and security risk concerns
involved in digital payment systems and provide timely help and support regarding issues
faced with digital payment systems. They should play an active role in facilitating digital
literacy and spread awareness among the consumers by running promotional campaigns
highlighting the benefits of cashless digital payment systems.
The results of this study have valuable implications for economist and policymakers. As
demonetization is a rare phenomenon which occurs in any economy, the results of this study
provide valuable insights to economists to systematically design a transition matrix for
smooth migration from cash based systems to cashless digital payment systems. They need
to consider stickiness, as it is crucial for long term sustainable adoption of digital payment
JSTPM systems. It suggests that government has a crucial role by creating more awareness and
digital literacy among the citizens, facilitate the pace of adoption by greater capacity
building and providing supporting infrastructure. This will enable smooth migration from
traditional cash-based systems to digital payment systems.
This study has policy implications with reference to digital payment systems as the GoI
is promoting the “Digital India” program. The results of this study can be used by
policymakers to understand the deterrents for people to adopt digital technologies and
digital payment systems. This work provides key insights to study the adoption of different
technologies promoted under the “Digital India” program in future. The policymakers need
to study the barriers to digital payment systems and need to formulate policies to remove
these hindrances. The policymakers may direct the digital payment service providers to
provide more secure digital payment services. GoI is already promoting the Bharat Interface
for Money (BHIM) mobile app for digital payments in India, and this study has high
implications for policymakers of BHIM too, as outcome of this study can be considered for
the adoption of the BHIM mobile app. The results of this study shall be useful for designing
and optimizing the policies regarding the electronic payment framework for digital
payments and receipts for government to government, government to business, government
to citizens, government to employee and citizens to government. A paradigm shift in the
mindset of the citizens is required regarding the usage of digital payment systems apart
from awareness and training; so, the policymakers can consider the outcomes of this study
and develop policies accordingly.
10. Limitations and future research directions

This study surveyed the consumers in Pune city and its suburbs in India. Due to the
geographic limitations, caution needs to be exercised while generalizing this study in other
countries and cultural contexts. Other research constructs like government support,
perceived value, trust and loyalty may be incorporate in further studies. The effects of socio-
demographic moderating variables like gender, occupation, income and education level may
be considered by future researchers. This research is delimited by the factors of UTAUT 2
and IR theory to explain AU of digital payment systems. Future research may consider
other technology adoption models.
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Corresponding author
Brijesh Sivathanu can be contacted at: brij.jesh2002@gmail.com
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Demonetization triggered millions of citizens to shift and embrace digital payment

Sr. No. Type of digital payment system Description

2.1 Uniﬁed theory of acceptance and use of technology 2

2.2 Innovation resistance theory

4. Theoretical background and hypotheses development

Hedonic Movaon (HM)

Usage Barrier (UB) H7+

4.1 Hypotheses development

H3. SI positively inﬂuences BI to use digital payment systems.

5.2 Research instrument design

5.3 Sampling and data collection

5.4 Non-response bias

transactions using the digital payment systems

5.5 Common method bias

6.1 Measurement model

Gender Male 445 58

Prior experience of any digital payment Yes 344 45

6.2 Structural model

IR NA IR1 0.827 0.731 0.891 0.816

Endogenous latent constructs R2 Q2

BI to use DPS 0.609 0.510

H1 PE ! BI to use digital payment systems 0.293 0.088 3.321*** Supported

PE 0.293 0.204 0.136

Hedonic Movaon (HM) H6 (β = 0.422***)

Usage Barrier (UB) H7 (β = 0.370***)

Tradional Barrier (TB)

demonetization period, consumers experienced UB which inﬂuenced the IR to digital

10. Limitations and future research directions

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