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THE IMPACT OF COVID -19 ON DIGITAL PAYMENT SYSTEM WITH REFERENCE

TO CHENNAI CITY

Article · September 2021

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UTKAL HISTORICAL RESEARCH JOURNAL, VOL.34(XXI), 2021
ISSN : 0976-2132

THE IMPACT OF COVID – 19 ON DIGITAL PAYMENT SYSTEM WITH

REFERENCE TO CHENNAI CITY

Dr. SRIDEVI SARAVANAN

Assistant Professorǡ Department of Commerceǡ Loyola College – Chennai
sridevi@loyolacollege.edu

MARIYAPPAN N
M.com Studentǡ Department of Commerceǡ Loyola College – Chennai
gananathan1160@gmail.com

ABSTRACT
The covid-19 pandemic can hasten the world’s transition to digital payments. Payment systems have proven to be
dependable and long-lasting, and the general public continues to have a high degree of confidence in them. However,
the lockdown and the closing of many businesses have resulted in lower average transaction volumes. People also felt
many inconvenience toward transaction of money among peers and other purpose. It is critical for the digital payments
ecosystem to develop quickly and help form the post-covid period in order to assist recovery and lead the emergence
into this new normal. The numerous digital payment methods used in the pandemic situation are presented in this
paper.
Keywords: Digital payment, Covid – 19, Lockdown, Pandemic, Transaction.

INTRODUCTION
The Digital India programme is the Indian government’s flagship initiative, with the aim of transforming India into
a digital society and information economy. One of Digital India’s claims is that it is “paperless, faceless and cashless.”
Various digital payment methods are available as part of fostering cashless transactions and transforming India into
a cash-less economy. The Indian economy’s demonetization is likely to be viewed as a game changer. Demonetization,
on the other hand, is causing a surge in cashless transactions. All payments will be made with contactless cards, cell
phone apps, and other electronic means in this futuristic era, with notes and coins being phased out. Denmark is said
to be at the forefront in this regard, with a recent proposal prohibiting paper money transactions except in places like
hospitals for the time being. The Danish central bank will no longer print money and banks will no longer hold cash. In
Sweden, it is now common practice for parents to electronically pay their children’s pocket money. Covid -19 is raising
the need for E-cash transactions in a world where everybody is paralyzed at home. The statement “bought through
video” is recently being used. This would aid in the expansion of electronic transactions. During this time, the number
of digital transactions has increased. According to the Reserve Bank of India’s latest data, total transaction value fell by
46 percent in April compared to March, owing to a decline in various payment methods, with the exception of direct
transfer payments of government benefits through Aadhar platforms, which increased by 138 percent.

IDENTIFIED PROBLEM
We have a strong cash economy; in reality, after China, India is the world’s second-largest producer and user of currency.
In currency management, cost and durability are critical factors to consider. It is costly to produce such a vast amount
of currency. Both the government and the RBI are working to move India away from a cash economy by encouraging
citizens to use electronic payments instead of cash for all transactions. In all transactions, digital payments ensure
transparency. All is digitally registered, so transactions can always be verified and tracked. It can be difficult to keep
someone accountable for any extra costs while using cash payments. Though India must completely accept cashless
transactions in order to make the transition to a super economy in the coming years, it still faces some challenges.
With IoT and AI, it’s also crucial to have a long-term and successful business model that caters to the emerging digital
ecosystem while maintaining a solid cyber protection infrastructure. Despite the numerous challenges, the government
has made a strong start and is already planning for a better and brighter future without resources.

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ISSN : 0976-2132

REVIEW OF LITERATURE

●● G
 .Sudha and M.Thangajesu Sathish (2020)[1] article is revealed that Retailers can move to digital payment
methods after demonetization. The researcher looked at payment methods before and after demonetization to
see if they changed. The majority of retailers accepted payments through a variety of apps.
●● M
 .Thangajesu Sathish, R.Sermakani, and G.Sudha (2020)[2] this study is revealed that Card or e-payment
systems cannot fully replace the conventional cash transaction system. People can use their mobile wallets to
make payments, move funds, buy groceries, and pay bills, among other things. The study found that confidence
is the most important factor influencing users’ satisfaction and that it has an effect on many users’ intentions
to use mobile wallets.
●● A
 deoti, O.O and Oshotimehin, (2011) [3]. In their article showed A pre-tested, standardised questionnaire
on electronic payment system adoption was used to collect primary data for this report. A multistage sampling
technique was used for this analysis. The probit model is used to conduct the research. The study looked into
the impact of motivational factors on customers’ decisions to use point-of-sale terminals. The study finds that
nativity, security, ease of use, availability, convenience, intention to use, and technology complexity are among
the factors influencing the use of Point of Sale (POS) terminals, using a probit model.
●● S
 anghita Roy, Dr. Indrajit Sinha (2014) [4]. stated that In India, the E - payment system has seen tremendous
development, but there is still much work to be done to increase its use. Cash also accounts for 90% of all
transactions. The Technology Acceptance Model was used in this analysis. They discovered that four factors
contribute to the E-payment system’s strength: innovation, motivation, consumer comfort, and legal structure.
●● B
 amasak O (2011) [5] carried out study in Saudi Arabia found that M-payments have a promising future.
Users of mobile phones expressed considerable concern about the security of mobile payment transactions
and the illegal use of mobile phones to make payments. Consumers’ main worries about security
and privacy have hampered the acceptance of digital payment solutions.

OBJECTIVES OF STUDY

●● To find out the effect of Covid-19 on Digital payment systems in Chennai city
●● To compare the respondents who are using digital payment mode before lockdown and during the lockdown.
●● To analyse the mode of payment done by the respondents before lockdown and during lockdown.
●● To find the online payment application frequently used by the respondents.
●● To analyse the problems faced by them while during online payment

RESEARCH METHODOLOGY
The questionnaire was administered to 112 respondents who were chosen using a simple random sampling process.
Both primary and secondary data were used in this analysis. The research relies heavily on primary data. Secondary
data was also gathered from a variety of sources, including newspapers, magazines, and websites. The information
gathered is analysed using SPSS 20 software. Statistical tools like chi – square test and correlation test have been used.

LIMITATION OF THE STUDY

●● T
 he study is done with reference to Chennai city so it is difficult to study the impact of COVID – 19 of large
population.
●● The sample size is limited to 112 responses due to time constrain.
●● The data is collected only from consumers who consume the E – payment services offered by respective banks.

HYPOTHESIS OF THE STUDY:

●● H
 0 – There is no significant difference between frequency to use digital payment modes and utilities received
from digital payment system through money transaction among peers.

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ISSN : 0976-2132

●● H0 = There is no association with income and cost effective payment methods

●● H0 = There is no significant relationship between frequency to use digital payment modes and
the reasons to choose digital payment system during COVID – 19 lockdown
●● H0 = There is no significant relationship between frequency to use digital payment modes and the
reasons to choose digital payment system during COVID – 19 to save time and energy

DATA ANALYSIS

Table 1 DEMOGRAPHIC VARIABLE OF RESPONDENTS

Demographic factors Options Frequency Percent

Age 15-25 72 64.3
25 -35 24 21.4
35 -55 16 14.3
Qualification 12th 33 29.5
UG 37 33
PG 42 37.5
Income 50000 – 100000 44 39.3
100000 – 150000 31 27.7
150000 – 200000 22 19.6
200000 - 500000 15 13.4
Gender Male 61 54.5
Female 51 45.5
Occupation Student 53 47.3
Employee 36 32.1
Business man 15 13.4
Home maker 08 7.1
Primary data
Table 1 shows that majority (64.3 per cent) of the respondents belong to the age group of between 15 – 25 years,
majority (54.5 per cent) of the respondents are male, majority (37.5 per cent) of the respondents are finished their Post
Graduate degree, majority (47.5 per cent) of the respondents are student, majority (39.3percent) of the respondents
earn income between 50000 – 100000.

FREQUENCY OF USING DIGITAL PAYMENT SYSTEM DURING LOCKDOWN

Table 2 FREQUENCY TO USE DIGITAL PAYMENT SYSTEM

Particulars Frequency Percent Valid percent Cumulative

percent
Always 37 33 33 33
Sometimes 54 48.2 48.2 81.2
Hardly ever 16 14.3 14.3 95.5
Never 5 4.5 4.5 100
Total 112 100 100

Chart 2

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ISSN : 0976-2132

DISADVANTAGES OF DIGITAL PAYMENT SYSTEM

Table 3 DISADVANTAGES IN DIGITAL PAYMENT SYSTEMS

Cumulative
Disadvantages Frequency Percent Valid percent percent
Vulnerability to cybercriminals 72 64.3 64.3 64.3
High transaction cost 19 18.8 18.8 83.1
Technical problem 21 17 17 100
Total 112 100 100

Chart 3

DISADVANTAGES OF VISITING A BANK BRANCH DURING COVID – 19

Table 4 DISADVANTAGE OF VISITING BANK BRANCH

Disadvantages Frequency Percent Valid percent Cumulative percent

The fear of COVID – 19 48 42.9 42.9 42.9
Rush in banking hours 42 38.4 38.4 81.3
Security reasons 11 9.8 9.8 91.1
Distance 10 8.9 8.9 100
Total 112 100 100

Chart 4

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UTKAL HISTORICAL RESEARCH JOURNAL, VOL.34(XXIII), 2021
ISSN : 0976-2132

Disadvantage of visiting bank branch

Chi – square test for frequency to use digital payment modes and utilities received from digital payment system
H0 = There is no significant difference between frequency to use digital payment modes and utilities
received from digital payment system through money transaction among peers
H1 = There is a significant difference between frequency to use digital payment modes and utilities received
from digital payment system through money transaction among peers

TABLE 5 Chi-Square Tests

Value df Asymp. Sig. (2-sided)

Pearson Chi-Square 5.789a 6 .447
Likelihood Ratio 5.990 6 .424
Linear-by-Linear Association .289 1 .591
N of Valid Cases 112

a. 5 cells (41.7%) have expected count less than 5. The minimum expected count is 1.07. Crosstab

What kind of utilities you obtained more Total

through digital payment applications
during
COVID - 19 [Transaction money among
peers]
Yes No Maybe
Count Always 9 24 4 37
Expected Count 7.9 21.1 7.9 37.0
Count 9 29 16 54
How frequently you use Sometimes
Expected Count 11.6 30.9 11.6 54.0
digital payment system
Count 5 8 3 16
during COVID - 19 lockdown Hardly ever
Expected Count 3.4 9.1 3.4 16.0
Count 1 3 1 5
Never
Expected Count 1.1 2.9 1.1 5.0
Total Count 24 64 24 112
Expected Count 24.0 64.0 24.0 112.0

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INTERPRETATION
The significant value 0.447 is more than 0.05 which is significant at 5% level. It infers that the null hypothesis is
accepted and the alternative hypothesis is rejected. There is no significant difference between frequency to use digital
payment system and the utilities obtained from the digital payment system through money transaction among peers.
6. Chi – square test for income and cost effective payment methods H0 = There is no association with income and
cost effective payment methods
H1 = There is a significant difference between income and cost effective payment methods

TABLE 6 Family annual income * which payment system is more useful and cost effective during lock down Cross
tabulation

which payment system is more Total

useful and cost effective during
lock down
Digital payment offline payment
(online)
Count 37 7 44
Expected Count 31.0 13.0 44.0
Count 18 13 31
100000 - 150000
Expected Count 21.9 9.1 31.0
Family annual income
Count 14 8 22
Expected Count 15.5 6.5 22.0
Count 10 5 15
200000 - 500000
Expected Count 10.6 4.4 15.0
Count 79 33 112

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UTKAL HISTORICAL RESEARCH JOURNAL, VOL.34(XXIII), 2021
ISSN : 0976-2132

Total
Expected Count 79.0 33.0 112.0
Chi-Square Tests
Value df Asymp. Sig. (2-sided)
Pearson Chi-Square 6.822a 3 .078
Likelihood Ratio 7.142 3 .068
Linear-by-Linear Association 2.840 1 .092
N of Valid Cases 112

a. 1 cells (12.5%) have expected count less than 5. The minimum expected count is 4.42.

INTERPRETATION
The significant value 0.078 is more than 0.05 which is significant at 5% level. It infers that the null hypothesis is
accepted and the alternative hypothesis is rejected. There is no significant difference between income and cost effective
payment methods. Hence, we conclude that income and the cost effectiveness of payments modes have no association.
Correlation test for frequency to use digital payment modes and reasons to choose digital payment system
during lockdown.
H0 = Th ere is no significant relationship between frequency to use digital payment modes and the reasons to choose
digital payment system during COVID – 19 lockdown
H1 = There is a significant relationship between frequency to use digital payment modes and the reasons to choose
digital payment system during COVID – 19 lockdown

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TABLE 7 Correlations

How frequently you Reason for choosing

use digital payment online payment during
system during COVID - 19 [Due to
COVID -19 lockdown lockdown]
Pearson Correlation 1 -.083
Sig. (2-tailed) .038
How frequently you use
Sum of Squares and Cross- digital payment system
products 71.920 -6.348

during COVID - 19 lockdown

Covariance .648 -.057
N 112 112
Pearson Correlation -.083 1
Sig. (2-tailed) .038
Reason for choosing online
Sum of Squares and Cross- payment during COVID -
19 products -6.348 80.491
[Due to lockdown]
Covariance -.057 .725
N 112 112

INTERPRETATION
The significant value of 0.038 is less than 0.05 which is significant at 5% level. It infers that the null hypothesis is
rejected and the alternative hypothesis is accepted. There is a significant relationship between frequency to use
digital payment system and reason to choose digital payment system during lockdown. Therefore, we conclude that
consumers frequently use digital payment mode due to lock
Correlation test for frequency to use digital payment modes and reasons to choose digital payment system during
lockdown to save time and energy
H0 = There is no significant relationship between frequency to use digital payment modes and the reasons to
choose digital payment system during COVID – 19 to save time and energy
H1 = There is a significant relationship between frequency to use digital payment modes and the reasons to choose
digital payment system during COVID – 19 to save time and energy

TABLE 8 Correlations

How frequently you use digital Reason for choosing online

payment system during COVID - payment during COVID - 19
19 lockdown [Save time]
Pearson Correlation 1 -.072

Sig. (2-tailed) .454

How frequently you use
Sum of Squares and Cross- digital payment system 71.920 -4.839
products
during COVID - 19 lockdown
Covariance .648 -.044

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UTKAL HISTORICAL RESEARCH JOURNAL, VOL.34(XXIII), 2021
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N 112 112
Pearson Correlation -.072 1

Sig. (2-tailed) .454

Reason for choosing online
Sum of Squares and Cross- payment during COVID - 19 -4.839 63.679
products

[Save time]
Covariance -.044 .574

N 112 112

INTERPRETATION
The significant value of 0.454 is more than 0.05 which is significant at 5% level. It infers that the null hypothesis is
accepted and the alternative hypothesis is rejected. There is no significant relationship between frequency to use
digital payment system and reason to choose digital payment system in terms of saving time. Therefore, consumers do
not consider that digital payment mode help to save time and energy.

FINDINGS

●● T
 his study reveals that visiting bank branch was more inconvenient and not safe due to the fear of COVID –
19 and for the same the response was given by consumers was 42.9%. At today’s scenario, apart from COVID
spreading, some of the reasons also make the consumers to feel inconvenient to visit bank branch personally
like rush in banking hours (38.4%), security reasons (9.8%), distance (8.9%).
●● T
 he study shows that the main disadvantage to the digital payment system is cybercriminals attacks and the
response for the same was 64.3%. High transaction cost and technical problems are also affecting the digital
payment systems drastically and the responses were 17% and 18.8% respectively.
●● T
 his study gives a clear picture of the table showing that majority of the respondents use digital payment
systems sometimes through online with 48.2% and always with 33%. Therefore, the analyses show that
consumers prefer digital payment system sometimes depending on the money transaction.

BY APPLYING CHI – SQUARE TEST

●● T
 here is no significant difference between frequency to use digital payment system and the utilities obtained
from the digital payment system through money transaction among peers.
●● T
 here is no significant difference between income and cost effective payment methods. Hence, we conclude
that income and the cost effectiveness of payments modes have no association.

BY APPLYING CORRELATION TEST

●● T
 here is no significant relationship between frequency to use digital payment system and reason to choose
digital payment system in terms of saving time. Therefore, consumers do not consider that digital payment
mode help to save time and energy.
●● T
 here is a significant relationship between frequency to use digital payment system and reason to choose
digital payment system during lockdown. Therefore, we conclude that consumers frequently use digital
payment mode due to lockdown for money transaction.

CONCLUSION
Due to technological advancements, the banking industry (nationally and globally) has changed rapidly in recent
decades. The shift is due to advances in internet banking, e-payment technologies, and information exchanges,
which have resulted in lower back-office costs. The future of electronic payments is promising, thanks to a rise in
the contribution of E-payments to GDP and the use of E-payment items. The government is increasingly relying on

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technology to help with financial inclusion and thereby improve financial access. Increased competition, increasing
consumer expectations, declining customer loyalty, the pressure of high transaction costs, keeping itself informed
by the cutting prefer to be offered a mix of technical and conventional services are all challenges that the Indian
digital payment system faces. Rising economy, increased client borrowing, money supply and number of banks,
and low government credit rates are all opportunities for the Indian digital payment system. The study found that
digital payment is both beneficial and harmful. Technological challenges, data abuse, insufficient knowledge about
E-services, and cybercrime are all barriers to the advancement of digital payments. These roadblocks can be turned
into opportunities for future development. Banks should provide customers with satisfying and secure services.

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