A Study On Digital Payment System

Prahladrai Dalmia Lions College of Commerce & Economics
CHAPTER NO 1
INTRODUCTION 1.1
Introduction India is the seventh largest economy of the world with GDP of USD $
2.3 trillion, for an economy of this size India is predominantly cash driven economy.
Total currency in circulation in India as on March 2016 was Rs. 16,415 billion which
constitutes about 12.04% of GDP compared to Brazil (3.93%), Mexico (5.32%) and
China (8.8%). High dependence on cash brings its own set of problems of production,
storage and cash management cost of currency.
CASHLESS transaction is growing fast in our society. There are various ways for
cashless transactions. It can be done through cards like debit card, credit cards or
various other payment means. Reserve Bank of India (RBI) has taken systematic steps
to promote digital payments in India and created National Payment Corporation of
India (NPCI) as an umbrella organization to develop low cost retail digital payment
systems. In August 2016, NPCI launched Unified Payment Interface (UPI), a next
generation mobile based payment system which enables real time bank payments. UPI
leverages high tele density in India to make mobile phone as a primary payment
device for both consumers and merchants and to universalize digital payments in the
country. The purpose of the paper is to study in detail the technology behind UPI and
the value addition that UPI brings with respect to the existing digital payment
systems. UPI has witnessed rapid growth that can be attributed to the expanding
ecosystem promoted by banks and increasing adoption by the users but primary usage
for these early adopters has been to make person-to-person remittances. For UPI to
reach its full potential, it is critical to develop merchant centric UPI payments
solutions. This paper helps to decode the technical architecture, transactional
processes and security systems of UPI which can help to develop innovative business
solutions. India currently has inadequate digital payment acceptance infrastructure for
merchants and merchant centric UPI solutions have the potential to fill this gap in a
cost-effective manner. UPI can be case study for both developing and developed
countries to enable universal, low cost digital payment system. Various applications
like Paytm, Mobikwik etc. applications can be used for cashless transactions on smart
phones. Mobile applications are becoming easier for people for making payments due
to the availability of internet. There are different 2 banking methods which are used in
1 | A study on digital payment system

various sector of our society. Different banking methods has different procedures
depends on a method which people uses, that can be credit cards, debit cards, or ACH
(automated clearing house) network for making transactions. It is an electronic
payment method. Electronic payment can be done using credit card, debit card or
electronic checks (e-checks). This method is generally used for online shopping on e-
commerce website like Amazon. This method is called onetime customer-to vendor
payment. Another method is automatic bank-to-vendor payment, to use this method
users bank should offer services called online bill payment. For this user have to login
into banks web site, if they wish to make a bill payment, they have to enter a vendor’s
information to whom user want to pay and that information will be authorized with
bank for electronic transaction. This is a manual process for bill payment. Users can
also pay bills automatically, for that user has to enter detail of bill, so every month on
a same date that bill will get paid from the user’s account automatically. NEFT or
National Electronics Funds Transfer, RTGS or Real Time Gross Settlement, IMPS or
Immediate Payment Service these are all the types of electronically transferring funds.
There are various mobile applications which provide services of mobile banking. As
Mobile banking applications is also a one method of banking like Paytm, Mobikwik,
E-wallet etc. To use these mobile banking applications users, have to enter their bank
account details for transaction. It is not mandatory that users have to use same account
every time for making payments by using these applications. But this facility is not
available in net banking application. Users have to pay from same account for which
net banking services is been activated from bank. Net banking is also method of
online banking applications. This study is been done due to the increasing usage of
mobile banking applications in various sectors of society. As mobile banking provides
various facilities to the customer, they can easily make online payments and it
eliminates the usage of paper cash.
Demonetization is also a reason behind for fast increasing usage of mobile banking
application. Demonetization has switched the people from using paper cash to mobile
bankng. Initially, when there were no such online mobile banking facilities people use
to visit to a bank for transferring money, depositing money, withdrawing money. And
for transaction they used paper cash everywhere. Gradually with a time banking
system started changing. After enhancement of technology bank started providing
facilities for debit cards, credit cards, online banking etc. which came to into

existence. But its 3 facilities limit to some extent. People started using bank websites
for doing online banking. Where customer have to login to use various services
offered by bank on their website, like payment of insurance, bills, etc. and after that
with the time of developing technology bank offered a service of net banking which
user can use on their smartphones. From net banking user would able to do
transactions like depositing money into account, online payment for bills, booking
online tickets, checking account status etc. Debit cards, credit cards were started using
for making payment for online payments or making electronically payments while
swapping cards in a swap machine. After this, advancement of technology leads to
various mobile banking applications like Paytm, Mobikwik, Freecharge, E-wallet, etc.
These various mobile banking applications have different features. In this paper this
study is done to know which applications are used more in a society and what are the
variations in usage of these applications. For the study, we have done a survey to
collect the information related to the usage of various mobile applications. Different
research study on cashless payments which creates impact on demonetization,
country’s economic development is already going on. There are various alternative
research paper and studies done on mobile banking application in different aspects. In
the Mobile banking: proposition of an integrated adoption intention framework is the
research done in Brazil to know the adoption intention of mobile banking technology
in Brazil. Proposed solution for an individual how they do their utilities payment
using online application and also why people found that particular application saves
their time than other method for making payments is identified
Cashless payments survey is an online form having some questions related to

cashless payment on which individual’s response is collected for survey. In the effect
of trust level on mobile banking satisfaction: a multi-group analysis of information
system success instruments is a study done by Namho Chung and Soon Jae
Kwonwhich focuses a trust whether mobile banking influence the relationship
between customer satisfaction and the system quality, information presentation and
information quality. This study is to find how this type of services like system quality,
information presentation and information quality of mobile banking by trust will
influence the customer satisfaction. Implications and positioning of mobile banking
services in different market is examined in. This examined the future of mobile
banking in market. Because technology mobile phones and internet usage has

increased in last decade and mobile banking is the first commercial transaction
application on wireless devices. A study done to analyze the customer needs and
expectations from mobile applications and banking views so that requirements can be
identified of a customer is described in. This study had identified the reasons for the
failure of application and the opportunities for the upcoming mobile banking
applications. In our paper we study usage and expectations of different sectors of
application users using a survey.
1.2 History of Online Payments Apps
Electronic payments have their roots in the 1870s, when Western Union debuted the
electronic fund transfer (EFT) in 1871. Since then, people have been enamored with
the idea of sending money to pay for goods and services without necessarily having to
be physically present at the point-of-sale. Technology has been a driving factor in the
development of electronic payments. Today, making a purchase is as easy as tapping
a button on your smartphone. Work with streamlining payment methods has been
hardwon. From the 1870s until the late 1960s, payments underwent a slow but gradual
transformation. In the 1910s, the Federal Reserve of America began using the
telegraph to transfer money. In the 1950s, Diner’s Club International established itself
as the first independent credit card company, soon followed by American Express. In
1959, American Express introduced the world to the first plastic card for electronic
payments. Entering the 1970s, people became more reliant on computers as part of the
buying process. In 1972, the Automated Clearing House (ACH) was developed to
batch process large volumes of transactions. NACHA established operating rules for
ACH payments just two years later. An e-commerce payment system (or an electronic
payment system) facilitates the acceptance of electronic payments for online
Transactions. Also known as a subcomponent of Electronic Data Interface (EDI),
ecommerce payment systems have become increasingly popular due to the
widespread use of the internet-based shopping and banking. Credit cards remain the
most common forms of payment for e-commerce transactions. As of 2008, in North
America almost 90% of online retail transactions were made with this payment type.
It is difficult for an online retailer to operate without supporting credit and debit cards
due to their widespread use. Online merchants must comply with stringent rules

stipulated by the credit and debit card issuers (e.g. Visa and MasterCard) in
accordance with bank and financial regulation in the countries where the debit/credit
service conducts business. There are companies that specialize in financial transaction
over the 5 internet, such as Stripe for credit cards processing, Smart pay for direct
online bank payments and PayPal for alternative payment methods at checkout. Many
of the mediacies permit consumers to establish an account quickly, and to transfer
funds between their on-line accounts and traditional bank accounts, typically via
Automated Clearing House (ACH) transactions. The speed and simplicity with which
cybermediacy accounts can be established and used have contributed to their
widespread use, despite the risk of theft, abuse, and the typically arduous process of
seeking recourse when things go wrong. The inherent information asymmetry of large
financial institutions maintaining information safeguards provides the end-user will
little insight into the system when the system mishandles funds, leaving disgruntled
users frequently accusing the mediacies of sloppy or wrongful behavior; trust between
the public and the banking corporations is not improved when large financial
institutions are revealed to have taken flagrant advantage of their asymmetric power,
such as the 2016 Wells Fargo account fraud scandal.
As the use of physical cash and cheques declines, digital payments continue their
march to become the dominant method of financial transaction. According to a study
by Capgemini and BNP Paribas, digital payments are expected to reach 726 billion
transactions by 2020. And, with some countries – such as Sweden – well on the way
to becoming cashless economies, it’s an exciting time. Digital payments are
transforming retail and bringing numerous benefits to consumers, businesses and the
public sector. The journey has taken many decades and involved breakthroughs
innovations that gradually saw the use of physical cash make less and less sense. We
have taken a look back at some of the major milestones in the rise of digital payments.
RBI has also issued licenses to open new-age small finance banks and payments
banks which are expected to give a push to financial inclusion and bring innovative
banking solutions. Things are also falling in place in terms of technology for India.
The recently launched Unified Payments Interface by National Payments Corporation
of India makes digital transactions as simple as sending a text message.
So, will the exercise to exchange currency notes and the ongoing currency crunch be a
decisive factor in making India a truly cashless economy? Nandan Nilekani, in an

interview to this newspaper, termed this as “a defining point in India moving to

cashless”. Shortage of cash has significantly increased the use of digital modes of
payment, but the actual shift will only be visible after the cash crunch eases. It is
possible that a section of people which has used electronic mode of payment for the
first time due to the cash crunch will continue to transact through this medium, but
there are still a number of hurdles in making India a cashless economy.
First, a large part of the population is still outside the banking net and not in a position
to reduce its dependence on cash. According to a 2015 report by
PricewaterhouseCoopers, India’s unbanked population was at 233 million. Even for
people with access to banking, the ability to use their debit or credit card is limited
because there are only about 1.46 million points of sale which accept payments
through cards.
Second, about 90% of the workforce, which produces nearly half of the output in the
country, works in the unorganized sector? It will not be easy for the informal sector to
become cashless, and this part of the economy is likely to be affected the most
because of the ongoing currency swap. Third, there is a general preference for cash
transactions in India. Merchants prefer not to keep records in order to avoid paying
taxes and buyers find cash payments more convenient. Although cashless transactions
have gone up in recent times, a meaningful transition will depend on a number of
things such as awareness, technological developments and government intervention.
For instance, mobile wallets have seen notable traction, and it is possible that a large
number of Indians will move straight from cash to mobile wallets.
1.3 The internet and World Wide Web: - Digital payments are inextricably
linked to the beginning of the internet, which can be traced back to ARPANET,
developed by the US during the Cold War and launched at the end of the 1960s. But it
was in 1989, when Tim Berners-Lee came up with the concept of web pages and sites
that could be linked together by hyperlinks (the World Wide Web), that digital
payments became a more realistic proposition.
1.4 The first online payments take place: - Online payments began in the
1990s. The Stanford Federal Credit Union was the first institution to offer online
banking services to customers in 1994. However, early online payment systems were
not very user friendly, requiring specialized knowledge of data transfer protocol.

Early players in digital payment were Millicent and Cash, which offered services that
used micropayment systems and electronic alternatives to cash, such as e-money,
tokens or digital cash. The founding of e-commerce pioneer Amazon in 1994
provided further impetus to these early digital payment efforts.
One of the earliest companies to specialize in online payment was PayPal, which
started as an online money transfer service in 1999. Its popularity took off when it
became popular with eBay users. PayPal consistently innovated, with features like
payments that could be made using email addresses, the addition of new currencies,
mobile payment apps, HTML payment buttons, and using a reverse Turing test (to
determine if an interaction was human or machine) to reduce fraud. PayPal was soon
targeted by established financial institutions and banks, as well as eBay, who
attempted to have the company legally classified as an unsecured service or bank.
eBay acquired PayPal in 2002, owning it until 2015, when it was spun off as a
separate company.
1.5 Keeping Your Private Data Safe: As technology changes at an

increasingly rapid pace, however, keeping your data safe has been at the forefront of
most merchant’s minds. It’s easy to see why. Data breaches can have long-reaching
financial and systematic impacts for businesses, and can damage the reputation of
longstanding organizations. What’s more, breaches can also spell financial ruin for
companies without the financial, legal and logistical bandwidth to weather the storms
of a hack. Regulations by both NACHA and PCI standardize how payment data is
received, stored, transmitted and processed for each transaction, and help reduce the
likelihood of an attack. However it’s important that payment processors who offer
PCI compliance programs stay ahead of those who wish to do harm to hardworking
business owners by hacking their systems. For point-of-sale transactions, EMV-
enabled (also known as “chip card”) transactions add another level of encryption to
your sales when performing card-present sales. End-to-end encryption, like what
Forte offers, provides a level of security to your entire payment processing system
from terminal to payment acceptance and beyond. When accepting payments online,
SSL webpages and other methods of data encryption help ease the worry of
consumers and take some of the burden off merchants to remain PCI-compliant.

1.6 Digital payments companies become major players: -With

ecommerce and online banking becoming more established, digital payments grew
quickly, with numerous digital payments companies emerging as major players.
PayPal was awarded an EU banking license in 2007, by which time it had 35 million
customers across Europe. After eBay spun-off PayPal into an independent company in
2015, PayPal turned its focus to reducing friction around payments. PayPal continued
to grow and, showing its current scale, recently spent $2.2 billion to acquire Swedish
payment start-up iZettle, which offers a low-cost card payment device and point of
sale app for small businesses. Digital wallets have been around for some time but
have gained more traction with the Millennial generation. Stored online or on
smartphones, they are linked to bank accounts or payment cards and used to make
purchases online or in physical shops using contactless technology. The launch of
Apple Pay in September 2014 was a significant moment as its improved wallet
functionality by enabling payment cards to be added via a photo of the card and
authenticating payments via the iPhone fingerprint scanner. Credit card providers now
pay the company a fee for each transaction on the platform. Online giants Amazon
and Google also offer digital wallet functionality. Google Pay enables users to send
money and split restaurant bills, while Amazon Pay provides a secure single-click
checkout process.
1.7 CASHLESS TRANSACTION: - "A cashless economy is one in which all

the transactions are done using cards or digital means. The circulation of physical
currency is minimal." A Cashless Society describes an economic state whereby
financial transactions are not conducted with money in the form of physical banknotes
or coins, but rather through the transfer of digital information (usually an electronic
representation of money) between the transacting parties. One where the payment is
made by means other than physical cash. It includes cheques, NEFT/RTGS, payment
by debit/credit cards, or electronic transfers through services like Paytm, PayUMoney,
Airtel, Jio etc. All such payments create a track, and the transaction can be trace
Strictly speaking, some of the barter transactions (except where the transfer of title
has to be recorded, like in real estate or most vehicles), and payment by bullion, are
also cashless. However, in the present context, these are not in the definition of
cashless. Cashless transactions are not the blessings of nature for progress; these are
all only one form of transaction, developed from barter and currency. They are not

powerful blessing for 9 progress, but are only facilitators. Education, sincerity,
science and technology, coupled with hard work are the main requirements for
developing a nation. Cashless transactions can’t produce goods for consumption. I
don’t think that the invention, or usage of currency, has lost its importance. World
over, the currency is still holding a very important position. I do not know how digital
transactions can be accounted for, by customs officials, during foreign tour. Only cash
transaction will have a sense of finish, or completeness and needs no post verification,
where as digital or cashless transactions will occupy our mind, till it is verified.
However, large volumes cannot be handled in cash. Any transactions through digital
accounting as well as through cheques can be termed as cashless transaction.
Process of Cashless Transaction: -
In this increasingly digital world, it’s not surprising that money will follow suit as
well. Recent trends show that digital money kept in mobile wallets will soon replace
physical cash and even credit cards. Below the example of cashless transaction
Process
• Log in with user name and password: - User enters the username and password.
• Select the Telecom Operator: -Select the user which telecom operator he wants.
• Enter Recharge amount, phone number and connection type: -Enter the recharge
amount, mobile number and connection type of the user.
• Select one of the payment options: -Select one of the payment options like ATM
card, Debit card etc.
• Enter card Information: -Enter the card information like pin number.• Payment
Processor: -The payment is proceeding.
• Authenticate it is confirming or not: -the authenticate when it is confirming or not

when it is yes then receiving Success message.

1.8 Methods of Online Payments: - There are two types of online payments
A) Bank Payments
B) Mobile Money Wallets
Bank Payments: -
This is a system that does not involve any sort of physical card. It is used by
customers who have accounts enabled with Internet banking. Instead of entering card
details on the purchaser's site, in this system the payment gateway allows one to
specify which bank they wish to pay from. Then the user is redirected to the bank's
website, where one can authenticate oneself and then approve the payment. Typically
there will also be some form of two-factor authentication. It is typically seen as being
safer than using credit cards, as it is much more difficult for hackers to gain login
credentials compared to credit card numbers. For many eCommerce merchants,
offering an option for customers to pay with the cash in their bank account reduces
cart abandonment as it enables a way to complete a transaction without credit cards.
Mobile Money Wallets: -
In developing countries many people don't have access to banking facilities,

especially in tier II and tier III cities. Taking the example of India, there are more
mobile phone users than there are people with active bank accounts. Telecom
operators, in such locations, have started offering mobile money wallets which allow
adding funds easily through their existing mobile subscription number, by visiting
physical recharge points close to their homes and offices and converting their cash
into mobile wallet currency. 11 This can be used for online transaction and
eCommerce purchases. The Following are the different apps: -

1.9 MOBILE BANKING APPLICATIONS IN INDIA: - We have

identified some of the cashless payment methods done using debit/credit card, E-
wallet etc. and their requirements for using such modes for payment and the details
are given below:
- A) DEBIT / CREDIT CARD: - Suitable for: Online/offline merchant sale.

Transaction limit: Set by card issuer Details required: Card number CVV Expiry date
Cost: Debit cards: Up to 0.75% for transactions up to Rs. 2,000; up to 1% for
transactions above Rs. 2,000. Credit cards: around 2.5% per transaction.
B) E-WALLET: - Suitable for: Small-ticket transactions. Transaction limit: Rs.

20,000 per month (Rs. 1 lakh for KYC compliant wallet holders) Details required:

Login ID Cost: Only if you transfer money from your wallet into your bank account.
Below we have described features of various features of available banking
applications in our society.
C) BHIM: - A mobile banking application. This application is developed for

making retail payments. This application is supported by only android phones or
android users can only use this app. This app support adhaar card for making
payments which require fingerprint impression but yet it is not started working. But If
you have signed up for UPI-based (UPI is a payment system which facilitates the fund
transfer between two bank accounts. You are not required to give bank account details
for the fund transfer through the UPI payment system) payments on your bank
account, which is also linked to your mobile phone number, you’ll be able to use the
BHIM app to carry out digital transactions. BHIM is not like another mobile E-wallet.
As every BHIM users need to be linked with their bank account for making payment.
Another app like Paytm and Mobikwik does not required to link with bank account
for making payment. In those app one has limited amount of money in their wallet,
which you can send only to someone who is using the same wallet.

D) PAYTM: - Paytm can be accessed through its website and is also available on
all the phone platforms as an application. Paytm is the most widely used way of
offline digital transaction, which means it’s easy to find local stores where Paytm
payment is accepted. Paytm offers the widest range of options where it can be used.
The money stored in Paytm Wallet can be used for sending money, purchases, cab
rides and much more. Paytm has disable transfer to bank feature on its app and
website, which means you can’t send the money in your wallet back to your bank
account
E) MOBIKWIK: - Mobikwik is another option available to Indians when it comes

to cashless transaction. It also started as prepaid recharge website; it works closely
similar to Paytm. However, the places and the services where you can use Mobikwik
are fewer. Morikis allows bus and train bookings but not flights. Mobikwik Lite offers
smooth functioning even on slow internet. It doesn’t require a smartphone. Morikis
has limited reach compared to Paytm. Freecharge also works and offers services more
or less similar to Paytm and Morikis. The app is available on Android OS and
Windows mobile platforms. While the 14 Freecharge payment is not accepted on
major services like Uber and Ola, it offers some interesting features like” split bill”,

which allows you to split the amount to be paid among your friends. Freecharge also
offers for prepaid, postpaid, DTH, metro recharge and utility bill payment for various
services. It also offers redemption.
F) PhonePe: -PhonePe, is an Indian E-commerce payment system and digital

wallet company headquartered in Bangalore, India. It was founded in December 2015,
by Sameer Nigam and Rahul Chari. PhonePe app went live in August 2016 and was
the first payment app built on Unified Payment Interface (UPI).
The PhonePe app is available in over 11 Indian languages. Using PhonePe, users can
send and receive money, DTH recharge mobile, data cards make utility payments, buy
gold and shop online and offline. In addition, PhonePe also allows users to book rides,
pay for OLA Redbus tickets, order food on Freshmen, eaf, fit and avail Goibibo Flight
and Hotel services through microapps on its platform.
PhonePe is accepted as a payment option across 5 million offline and online merchant
outlets covering food, travel, groceries, movie tickets etc. The app crossed 100 million
user mark in June 2018 and also crossed 5 billion transactions in December 2019.

It is licensed by the Reserve Bank of India for issuance and operation of a Semi
Closed Prepaid Payment system.
G) Freecharge: - FreeCharge, is an Indian digital marketplace for financial

services based in Gurugram, Haryana, India. FreeCharge services are available across
a range of financial instruments including savings, payments, insurance, investment
and lending. The company’s focus is to create an ecosystem of innovative products
and features that enables cashless transactions. FreeCharge consumers can pay utility
bills (Electricity, Gas), pay Landline bills or recharge Mobile, Broadband, DTH and
Metro cards. In addition, FreeCharge powered by Axis Bank enables the users to
invest in mutual funds and get easy credit through FreeCharge EMI. FreeCharge UPI
and payment gateway allows consumers to instantly send or receive money, shop at
leading offline and online merchants across categories movies, entertainment, food,
shopping, travel to get cashback & discounts. On 8 April 2015, Snapdeal acquired
Freecharge in what is being referred to as the second biggest take over in the Indian e-
commerce sector so far, after the buy out of Ibibo by rival Makemytrip, and the
biggest venture capital exit in India to date. The deal was for approximately US$400

million as cash and stock. On 27 July 2017, Axis Bank acquired FreeCharge for $60
million.
F) PayPal:- PayPal Holdings, Inc. is an American company operating a worldwide

online payments system that supports online money transfers and serves as an
electronic alternative to traditional paper methods like checks and money orders. The
company operates as a payment processor for online vendors, auction sites, and many
other commercial users, for which it charges a fee in exchange for benefits such as
one-click transactions and password memory.
At a 2019 World Economic Forum panel in Davos, founder Luke Nosek stated that
PayPal’s initial mission was to "create a global currency that was independent of
interference by these, you know, corrupt cartels of banks and governments that were
debasing their currencies". Nosek said this mission ultimately failed because of
investor pressure to release a product as soon as possible.

1.10 Characteristics of Online payment
• Instant money transfer facilitated 24x7 via any mobile device.
• Single app can be used to access multiple bank accounts.
• Security of “Single Click 2 Factor Authentication”, which combines strong security

and smooth access of a payment via a single click.
• Virtual address eliminating the need of providing card number, IFSC, account
numbers etc. providing incremental security.

• The app lets one to share bill with friends.
• Single Application Merchant Payment and easier In-App Payments.
• Registering complaints directly via the Mobile App.
1.11 Advantages of Online payments
1. Easy to step up: - The first benefit of online payment systems is that they are
easy to incorporate into your business software and workflow. The integration process
is more or less the same for every online payment provider and requires your
company to register for an account. The registration process is quick, without a ton of
required paperwork. You can start accepting payments online within a few minutes.
2. Secured Payments: - It’s a bit counterintuitive but, one of the most important
benefits of online payments for your business is that your and your clients’ money are
safe. Online payment gateways are obliged to apply multiple security layers for
transactions so that the clients’ card details are not stolen from scammers.
Respectively, your money is transferred to your account safely. You also get notified
for payments automatically via email, so you can do your cross-checking.
3. Quick Transaction Clearing: - Security is obviously quite important, but

getting your money on time is crucial to your cash flow! Online payments are usually
cleared in one or two working days, depending on the traffic. His way you are able to
have a better estimation of your liquidity and accurately plan your next moves.
4. Gain impulse Buyers: - Among the benefits of the online payment system for
e-shops is that buyers are more likely to purchase if the payment process is instant.
Accepting credit cards is important to increase your revenues while not having to
deal with the actual billing process yourself
5. Quality customer experience: - As mentioned above, the benefits of online

payments for your business extend to your clients too. They will immediately
appreciate you having an online payments option to finish their purchase online. This
is also true if you’re a freelancer offering some sort of services to companies. In both

cases, giving your clients the ability to pay you with their credit or debit card online is
a huge advantage. Imagine making them do all the work themselves via the banking
system, or worse, in person with cash. In a completely secure and easy to navigate
environment, your customers can pay off outstanding invoices. Easy peas!
1.12 Disadvantages of Online Payments
1. Restriction of electronic Payments: - No matter which payment system

you choose all of the have some limits such as the maximum amount in the account,
the number of transactions per day and the amount of output. By the mean for
withdrawal or fund transfer, there would be restriction of the amount or the number of
daily transactions. In case your transfer amount exceeds the limit, you would not be
able to withdraw the money at once. Although it can be considered as a safety
solution you cannot ignore that it is inconvenient in some cases. Access to money
may be delayed in epayment systems rather than physical access to money. And also,
when different electronic payment services do not cooperate with one another, it can
make you troubles.
2. Hacking: - As you are using electronic payment systems to make transactions

online your personal or account information and credit card number is exposed over
the Internet so it can put you in the risk of being hacked. Being hacked could mean
financial losses for you in the way that hackers may use your identity for fraudulent
activities or make huge fund transfers from your account. On the other hand, the
worse situation happens when the electronic payment company get hacked, it would
lead to the leak of personal data on cards and its owners, no matter how much they
pay attention to security tips it is always possible.
3. Disputed Transaction: - If someone uses your company's electronic money

without your authorization, you would identify the unfamiliar charge and file a claim
with your bank, online payment processor or credit card company. Without sufficient
information about the person who performed the transaction, though, it can be
difficult to win the claim and receive a refunds

4. Increased Business Costs: - E-payment systems come with an increased

need to protect sensitive financial information stored in a business's computer systems
from unauthorized access. Enterprises with in-house epayment systems must incur
additional costs in procuring, installing and maintaining sophisticated payment-
security technologies.
5. Security Concerns: - - Although stringent measures such as symmetric

encryption are in place to make e-payment safe and secure, it is still vulnerable to
hacking. Fraudsters, for instance, use phishing attacks to trick unsuspecting users into
providing the log-in details of their ewallets, which they capture and use to access the
victims' personal and financial information. Inadequate authentication also ails e-
payment systems. Without superior identity verification measures like biometrics and
facial recognition, anyone can use another person's cards and ewallets and get away
without being caught. These security concerns may make some people reluctant to use
e-payment systems.
1.13 Demonetization in India
On 8 November 2016, the Government of India announced the demonetization of all

₹500 and ₹1,000 banknotes of the Mahatma Gandhi Series. It also announced the
issuance of new ₹500 and ₹2,000 banknotes in exchange for the demonetized
banknotes. The Prime minister of India Narendra Modi claimed that the action would
curtail the shadow economy and reduce the use of illicit and counterfeit cash to fund
illegal activity and terrorism. The announcement of demonetization was followed by
prolonged cash shortages in the weeks that followed, which created significant
disruption throughout the economy. People seeking to exchange their banknotes had
to stand in lengthy queues, and several deaths were linked to the rush to exchange
cash. According to a 2018 report from the Reserve Bank of India, approximately
99.3% of the demonetized banknotes, or ₹15.30 lakh crore (15.3 trillion) of the
₹15.41 lakh crore that had been demonetized, were deposited with the banking

system. The banknotes that were not deposited were only worth ₹10,720 crore (107.2
billion), leading analysts to state that the effort had failed to remove black money
from the economy. The BSE SENSEX and NIFTY 50 stock indices fell over 6
percent on the day after the announcement. The move reduced the country's industrial
production and its GDP growth rate. Initially, the move received support from several
bankers as well as from some international commentators. The move was also
criticized as poorly planned and unfair, and was met with protests, litigation, and
strikes against 21 the government in several places across India. Debates also took
place concerning the move in both houses of the parliament.
Online Transactions: - Demonetization's motto was to encourage the

cashless/digital economy. More and more cash-less or less-cash transactions will lead
to more disclosure of income which will increase the direct tax collections. With a
reduction in cash transactions, alternative forms of payment will more in demand.
Electronic mode of payment like online transaction, payment through applications,
Ewallets E-banking, usage of debit and credit cards etc. will surely see the substantial
increase in demand
To hit Maoists: - This step actually made money with Maoists worthless. As
reported Maoists had hoarded over Rs.7000 cores with them at Baster in Chhattisgarh.
All such currency is now nothing but pieces of papers.
Rise in GDP: - Though demonetization has negatively impacted sectors such as

real estate and property, construction, and household consumption in general, it is
believed that long term benefits for GDP growth will outweigh the short-term
transitional impact. We are now heading towards a 9% GDP growth by FY2018-19.
Position of Cash Transactions in India: - India is predominantly a

cashintensive economy. The payments system in India is in its development phase as
cash is still the king in transactions. With rapid growth and modernization of the
economy, India is going to embrace the new payment systems in the coming years.
The cash intensity in India is very high compared to other developing countries. The
value of notes and coins in circulation as a percentage of GDP for 2010 was 12.04%
in India whereas it was just 3.93% in Brazil, 5.32% in Mexico and 3.72% in South
Africa. The value of non-cash payment transactions compared to cash transactions is
very less but there is steady increase in the non-cash payments in the country. The
amount of money held in bills and coins (M0) relative to the amount held in demand
deposit and savings accounts (M2) is a good indicator for comparing the cash
intensity. M0 as a percentage of M2 is over 50% for India whereas it is just 24% in
Egypt, 9% in Mexico and South Africa and 5% in China (Marotta, et.al 2014). The
number of currency notes in circulation is also far higher than in other large
economies. India had 76.47 billion currency notes in circulation in 2012-13 compared
with 34.5 billion in the US.
Position of Cashless Payments in India: - India has competitive telecommunication

market, well developed financial markets and it is a leading exporter of technology
services. All these factors support the growth of cashless payments. But India has not
gained much in terms of cashless payments compared to its peers. Non-cash payments
in India are dominated by card payments, electronic direct transactions and non-cash
paper transactions. Cards are the most used cashless payment option available in the
country. The non-cash payments through modes of cheques, demand drafts, net
banking and cards currently account for 22% of all consumer payments in India and it
is projected to increase to 59% by 2025. Digital transactions have shown steady
growth of 50% year on year over the last few years in India. And ATM transactions
grew at 15% and branch-based transactions have reduced by 7% in FY 15 compared
to FY14 (Alpesh, et.al). The digital transactions are continuously rising due to
improvement in the smart phone penetration, good internet connectivity and support
from the central bank towards digitization and they are going to change the payment
scenario in the country.
1.14 Effects of Demonetization on Online Payment System
Demonetization affects every field of life like social field, economic, political and
legal field, but its main effect is on economic and business activity of the country.
Demonetization also has too much effect on e-commerce industry in India. These
effects are positive as well as negative.
Negative Effects: -
1) Online Sales Sudden Go-Down: - Demonetization makes sudden a big

effect on online sales. Because Indian customer mostly believed in cash transactions,
90 % of Indian online sales based on cash transaction. Demonetization affected 86%

currency of the country so people have very less cash for spending on online
purchase. Online sales registered sudden decline due to less cash, because purchasers
have less cash so their first priority is for essential things to fulfil their basic
requirement rather than purchase of other things. It makes big effect on online sales.
2) Order Undelivered Increase: - India faced cash crisis after demonetization.

It resulted in more than 50 % of online purchase orders undelivered after 8 November
2016 due to nonpayment of cash on delivery (according ET Tech report) and payment
in old currency against cash payment by purchaser. These undelivered orders made
loss for the companies due to logistics and packing cost accrued in sales process. E-
commerce total sales went down by up to 70% during the demonetization time.
3) Online Purchase Order Reduction: - During cash crisis in Indian total no

of individual purchase orders also decreased. These are the reason of online purchase
reduction; first purchaser does not have enough cash for purchase. They have small
quantity of cash in hand, so that they keep cash for purchase of necessary goods to
fulfill their basic requirements. Second black money is spending on luxury goods,
entertainment & leisure things like antiques, car, interior decorator, electronic, clothes
and fashion, movies, exotic vacations, dining out and personal grooming at salon etc.
Both the reasons have big effect of online purchase order, due to which online
purchase order reduce during demonetization.
4) Suspension of COD Orders: - Indian customer believed in cash purchase.

Indian 90% purchase and sales based on cash transaction. So that Indian customer
preferred COD mode of payment for online purchase by 83% (according Nielsen’s
global connected consumer survey). These are reasons for COD mode of payments
preferred by Indian consumer 1. Online fraud risk 2. Convenience 3. Familiarity 4.
Less use of plastic money 5. Lack of trust in online payment. After demonetization %
COD order undelivered due to lack of cash for payment. Undelivered orders are
unnecessary expense of the ecommerce company, so that companies take decision of
COD facility suspension up to 60% on online purchase for short time. It created
adverse effect on online business.

5) Purchasing Power affected: - During demonetization many people lost their

jobs. Many people do not run their business properly and many are not very friendly
with use of plastic money. Many do not have money in their hand due to all money
deposited in bank. Many people do not have debit card, credit card and net banking
facility on their accounts. So, they have money in their bank accounts but do not have
any option of use. It had huge impact on purchasing power of Indian customer due to
demonetization. Lower purchasing power adversely affected ecommerce sales.
6) Sales of Luxurious Goods Affected: - Indian consumer spends most of

their black money on luxurious goods like expensive watches, clothes, cosmetics
product home appliances etc. Demonetization throw-out whole black money from the
circulation in the economy. Now back money is totally out of trend and due to this
reason, they lose their purchasing power with regard to luxurious goods. Sales of
luxurious good through E-commerce declined during this period due to low
purchasing power.
Positive Effects: -
1) Online Web Traffic Increases: - Online traffic increase on online payments

sites. NITI Aayog published a report on the growth of digital payments in India post-
demonetization. According to this report, digital payments have seen a whopping
surge of 271 per cent in the very first month following demonetization. The number
of mobile wallet transactions has increased to 63 lakhs from 17 lakhs. Paytm, one
among the biggest players in the mobile wallet space revealed that it served 45 million
customers within 3 weeks after demonetization. Transactions via Repays cards have
also increased suggesting that more Jan-Dham account holders have started using
debit cards for online transactions. “We saw an initial decline in transactions for the
1st 10 days of demonetization; however, the transactions started getting back to
normal from 1st week of December. As of February, we see a steady increase in

transactions as well as online payments as mentioned by Vikash Chetan, Founder Of

C-ouponzGuru (A coupons and deals aggregator in India).
2) Online Payment Option Repaid Increase: - Indian faces cash crises in

India after demonetization because they do not have cash in hand for purchase and
payment. They had money in their banks so that they go for online payment with
online payments options like pay tm, credit/ debit card, online banking, MIPS, NEFT,
UPI & other e-payment options. Due to this reason online option repaid increase.
After 8 November Transaction through card Growth of more than 300 % in terms of
number & more than 500% in terms of value of transaction. 26 Transaction through
mobile wallets Growth was more than 200 % in terms of number and value of
transaction. Source (RBI).
3) Online Payment Increase: - Demonetization big aim to push customer

towards making digital payments. People do not have cash in hand so that they move
from cash to online payment options due to this reason digital payments transaction
registered rapid increase day by day after 8 Nov 2016. In Transaction through card,
there was a growth of more than 300 % in terms of number & more than 500% in
terms of value of transaction. Growth was more than 200 % in terms of number and
value of transaction in case of transaction through mobile wallets. Transaction on e-
wallets have increased from 17 lakh to 63 lakh per day and use of Repay card
increased from 3.85lakh to 16 lakh per day (Times of India business Dec 9,2016).
Indian online total digital transactions increased 400-1000% after demonetization
(government of India).
4) Government Promotion for Online transactions: - Government of India

promote for online payment. Our respected prime minister of India promotes
payments through Paytm, exactly 30 days after junking existing high-value Rs500 and
Rs1,000 banknotes, Union finance minister Arun Jaitley sought to draw Indians
toward digital payments by offering up to 10% off on insurance policies, highway
usage and concessions on train travel. The government will also waive service tax on
online transactions below Rs2,000 ($29.6), he added. Apart from these, there will be a
0.75% discount at petrol stations even though oil companies currently add a surcharge
for using debit or credit cards.

5) Private Partners Promote Online Payment: - Many online options

available for payments. They give lots of discount for online payments like HDFC
bank, axis bank credit card, SBI credit card, Payten discount on utility bill payments,
recharge it now give discount for online different-2 bill payment and Coupon Dunia
give discount coupon for online purchase etc.
6) Increase in Bank Deposits: - Indian nationalized as well as private bank

deposits suddenly increased after demonetization. Cash deposits totaling 1.6-1.7 lakh
crore were made during the demonetization period (“demonetization and banking
growth” Research article posted on RBI 27 website) total aggregate deposited grew by
14.5% during November 11 to December 30, 2016 as against 10.3% during the
corresponding period of 2015(demonetization and banking growth” Research article
posted on RBI website )
Cheque transactions and payments remained largely unchanged over 2016, while
money transfers using national electronic funds transfer (NEFT)–through which
money is transferred in batches, after approval from the banks sending and receiving
money– and transactions over Point of Sale terminals (debit card swipe machines)
grew 16% and 35%, respectively, in 2016 (October over October), as compared to
mobile, smartphone and app based payment platforms. Third, the government will
also need to play its part. It will have to find ways to incentivize cashless transactions
and discourage cash payments. Implementation of the goods and services tax, for
example, should encourage businesses to go cashless. Government should also use
this opportunity to revamp the tax administration, as more than taxes, small
businesses fear tax inspectors.
The move by the government to demonetize old currency and to replace it with the
new one has taken the country by surprise. The move was an effort to handle the
threat of illegal money, corruption, terror funding and counterfeit currency. The
decision regarding demonetizing the old currency was a step to eradicate the
undeclared money from Indian economy. Demonetization has opened many inroads in
the digital payment system in India. People are now becoming less apprehensive of
technology, and are becoming comfortable with the digital world with every passing
day. It may be a move towards the cashless economy. The demonetization has
introduced a new method or style of the cashless payments in the country. The new

age banks are expected to give further improvements in the area of digital currency
transactions. The technological advancements and innovative payment systems are
going to reduce the cash transaction system in the future. The demonetization had a
big effect on e-commerce area. After demonetization online business sales decreased
but after few months it again increased slowly because the customers have started
using their ATM debit cards and mobile wallets for transactions. Government and
private payment service providers give big discounts on the use of online bill
payments and purchase transactions. These types of discounts and offers create
positive effect on e-commerce business and in India ecommerce business will
increase day by day. The present study focused on implementation of demonetization
and its effect on digital payment. From the study, it can be concluded that the move of
demonetization could have been improved by proper planning. In the nutshell, it can
be said that demonetization has improved the quality of life of common man with
regard to digital payment system. The banning of Rs. 500 and Rs. 1000 notes were
released suddenly and the worst affected was the common man. The social impact
was drastic with marriages facing severe issues with cash transactions. People
conducting marriages must produce the marriage invitation to withdraw 2,50,000 and
above. This has caused great difficulty among the public. The impact on the health
care sector was huge with hospitals refusing to accept the old currency. The common
man faced severe issues transacting in the hospitals with old currencies and several
cases of death had been registered for not attending the patients due to demonetization
Salaried employees faced the issue on the opening day of the month with their salaries
credited in the bank account but they were able to withdraw only 2,000 rupees from
the ATM machines. Many salaried people have gone to the bank branch to withdraw
their full salary amount with loss of pay. Social problems in the form of road
blockades and quarrels arouse with people waiting in long queues before the banks
and ATM machines. People become restless spending an entire day to withdraw
money. Several deaths have been registered as a result of waiting in long queue.
Pensioners are worst affected with no special provisions made for senior citizens in
banks. Demonetization has opened many inroads in the digital payment system in
India. People are now becoming less apprehensive of technology, and are becoming
comfortable with the digital world with very passing day. The software industry has
also been given a big boost. The e-commerce industry did suffer with the onset of
demonetization, has now tremendous scope for growth. Although extremely
beneficial and very convenient, the digital payment system is not without its own
share of flaws. The security of these methods is nowhere near perfect, and this is one
software sector which will see massive improvements in the coming few years.
CHAPTER NO.2
RESEARCH METHODOLOGY
Research Methodology is a systematic process used to collect information and data,

perform a careful investigation and statistically analyze it for the purpose of making
business and economic decisions. The methodology could comprise of publication
research, data collection methods, how to conduct interviews and surveys and other
research approaches. Research may include information from present and historical
studies. The research methodology is integral and the most crucial component as it
focuses on different types of research techniques and demonstrates the different
methods, methodologies and important dimensions followed in the research study and
help us to make a choice between them depending upon our research problem and
preferred approach. It is imperative to include a basis of the concepts and theories that

underlie these methods. There are many different ways to approach the research that
fulfills the requirements of a dissertation. The methods and techniques are chosen in
order to fulfill the research objectives successfully.
2.1 OBJECTIVES OF THE STUDY: -
 To study about the awareness of use of online payment apps among the
Earning Population.
 To analyse the awareness of different payment apps on the basis of
demographic factors (i.e. Gender, Age, Qualification etc).
 To identify the various challenges faced by the population during the use of
online payment apps.
 To find out benefits in going cashless.
 To understand the working of various Electronic Payment system and its
security services
 To know which apps is more used by the Population.
 To understand about the current and Future scenario of E-Payment system.
2.2 NATURE OF THE STUDY: - This particular study would help to

understand the present and future scenario of online payments through apps by
Earning Population and also helps to determined how much percentage of earning
population are using this service.
2.3 SCOPE OF THE STUDY: - This study would help to know how many
peoples are aware about online payments apps. It also helps to know how many
peoples are moving towards digitalization. This research would help to know the
benefits or threats of using online payments services.
2.4 SIGNIFICANCE OF THE STUDY: -  To bring out solution in the

form of applications to uproot electronic system.  To understand the frequency of
usage and the problems faced while using online payments apps.  To analyses and
enhance payments done with the help of mobile devices at POS terminals and the
success and trustworthiness of mobile wallets used. The usability and enhancement of
the mobile wallets designed and developed.  To understand the usage of latest
method of transactions.

2.5 SELECTION OF THE PROBLEM: - This topic has been selected to

know how much population are using the online payments apps for payments. It also
helps to know how the investors view on risk involved in investment. To know
various reasons for investing and not investing in a particular investment option. To
know whether they invest based on risk or return.
2.6 PRIMARY DATA: - The data that is collected by an investigator himself to

carry out a specific research is known as primary data. Such data is collected by the
investigators from the original source of information. It gives the investigator first
information relating to his study.
2.7 LIMITATIONS OF THE STUDY: -
1. Non representative sample: In this research project a sample survey was

conducted. A sample of 102 respondents was selected. So such sample size cannot be
said to be the true representative of the universe.
2. Shortage of time: The time period of study was very limited. It is very
difficult to have in detail study on project work due to limited time period. The period
of 4 to 6 weeks is not enough for the proper study of the project.
3. Inadequate data: The data provided was not up to the mark due to which
problems where faced.
4. Lack of scientific method: The lack of scientific training in methodology of

research was great impediment in our research program, which led to the delay of
research.
5. Biasness in the responses: The answers provided by the respondents suffer

from business.
6. Cost Factor: It was not possible to conduct extensive research due to paucity of
funds.
2.8 STATISTICAL TOOLS: -

The data thus collected was analyzed and interpreted with relevant statistical tools for
drawing conclusions. For analyzing the data, relevant tools such as percentage
analysis, tables and graphs were used for proper understanding of the research.
DESCRIPTION OF RESEARCH METHODS AND SAMPLING TECHNIQUES

USED
R
Study phase Objectives of the Study esearch method Used
Qu
Pilot Study To ensure validation of the estionnaire Survey method
questionnaire
T
Questionnaire Study o bring out the relationship Questionnaire Survey
between different variables
under study
CHAPTER NO. 3 REVIEW OF LITERATURE

Sanghita Roy, Dr. Indrajit Sinha (2014), stated that E- payment system in
India, has shown tremendous growth, but still there has lot to be done to increase its
usage. Still 90% of the transactions are cash based. Technology Acceptance Model
used for the purpose of study. They found Innovation, incentive, customer
convenience and legal framework are the four factors which contribute to strengthen
the E- payment system.
E-payment systems are important mechanisms used by individual and organizations

as a secured and convenient way of making payments over the internet and at the

same time a gateway to technological advancement in the field of world economy

(Slozko & Pello, 2015).
Rakesh H M & Ramya T J (2014) in their research paper titled “A Study on

Factors Influencing Consumer Adoption of Internet Banking in India” tried to
examine the factors that influence internet banking adoption. It is found that internet
banking is influenced by its perceived reliability, Perceived ease of use and Perceived
usefulness. In the process of internet banking services expert should emphasize the
benefits its adoption provides and awareness can also be improved to attract
consumers‟ attention to internet banking services.
Kartikeya Bolar (2014) In his research paper “End-user Acceptance of

Technology Interface In Transaction Based Environment“ stated that Creators and
investors of technology need information about the customers evaluation of their
technology interface based on the features and various quality dimensions to make
strategic decisions in improving technology interfaces and compete on various quality
dimensions.
Nitsure (2014) in his paper observed that the problem being faced by developing
countries like India in the adoption of E-banking initiatives due to low dissemination
of Information Technology. The paper highlighted the problems such as security
concerns, rules, regulation and management. In India there is a major risk of the
emergence of a digital split as the poor are excluded from the internet and so from the
financial system.
Balazs Vinnai, General Manager, Digital Channels, Misys(April 25,

2016), says that “It is critical for banks to consider new digital channels as part of an
integrated strategy and evolve from first to second generation digital banking:
switching digital from a supporting role, to the primary sales and communication
channel for banks,” says Vinnai. “Reengineering processes around the customer is not
easy, but banks must embrace digital banking to remain competitive and relevant.”
Shwetu Kumar, Vijay Yadav, Atiqu-Ur-Rahman, Aditi Bansal (2014), made a study
on “ PayTM”, it studied about its achievements, technical architecture of PayTM,
working and technologies of PayTM which include a study on supply chain

management, web technologies of PayTM, web based tool of PayTM and also
described about electronic payment system
Sanaz Zarrin Kafsh (2015), made a study on “Developing Consumer Adoption

Model on Mobile wallets in Canada”, by taking a sample of 530 respondents through
Convenience sampling, Partial lease square model was used to analyse the data. As
per the analyse made by them, there is a relation among perceived usage, perceived
ease of u se and perceived security in predicting the adoption of payment gateway.
Jonas Edman and StefanHenningsson (2016) describe the introduction of

mobile payments is one of many innovations that are changing the payment market
The mobile payment market cooperation (MPMC) framework in this article shows
how the digitalization of payments, as a technology innovation, affects the
competition and collaboration among traditional and new stakeholders in the payment
ecosystem at three levels of analysis. We do this by integrating theories of market
cooperation with the literatures on business and technology ecosystems. The MPMC
framework depicts technology-based market cooperation strategies in the context of
recent battles in the mobile payment’s ecosystem. In these battles, the competitors can
use technology either in defensive build-and-defend strategies to protect market
position, or in offensive battering-ram strategies for ecosystem entry or position
improvement. Successful strategies can lead to: Ricardian rents, based on operational
efficiency advantages traceable to the firm’s position relative to suppliers and
monopoly power; and Baingan rents, resulting from the extent the firm is able to resist
price competition in the market.
Kumari and Khanna (2017), Cashless payment: a behavioral change to an

economic growth. The paper aims to study how a behavioral change led to an
economic growth in the Indian economic scenario. After the study conducted it was
seen that various factors were responsible for such a change as people were finding
various benefits and opportunities by adopting such a change.
Rajeev Ranjan Kumar, D Israel, Garima Malik (2017) studied Digital

payments evolve as the next generation system to take over the global commerce
landscape in the same manner in which internet and mobile telephony had dominated
the traditional communication domains. The use of mobile banking apps has spurred
the digital medium across the globe and resulted in a fundamental shift in retailing
practices. The purpose of this paper is to comprehend various factors influencing the
customer’s continuance 44 intention behavior to use mobile banking apps. In this
study, we developed a research model that encompasses the attributes of Expectation
confirmation theory (ECT) and Self-determination theory (SDT). The research model
was tested using survey data collected from 744 respondents across various
demographics and analyzed using structural equation modeling (SEM) to understand
the usage behavior of mobile banking apps in a multi-faceted business environment.
The various hypothesis of the research model indicate that mobile banking apps
continuance intention usage behavior is strongly influenced by the satisfaction,
intrinsic and identified regulations, whereas satisfaction is influenced by the
expectation-confirmation, trust, and quality. The research findings reveal that, “An
enormous potential is available for marketing managers and researchers to tape these
opportunities and plan for continual and sustainable growth of mobile banking apps.
Dr. R. MuthuKrishnaveni (2018) studied “Cashless Economy” is the system

where all the monetary payments are done by using digital means like internet
banking, debit, credit cards, e-wallets instead of hard cash. India was introduced to
“cashless economy” in a pronounced way in 2016. To attain the cashless economy,
the government of India and RBI jointly decided to introduce UPI based payment
apps. Hence UPI payment apps is a way to cashless Economy. UPI and UPI 2.0 apps
and their progress say their increasing cashless payments.
Shamsher Singh Ravish Rana (2017) studied the last decade has seen
tremendous growth in use of internet and mobile phone in India. Increasing use of
internet, mobile penetration and government initiative such as Digital India are acting
as catalyst which leads to exponential growth in use of digital payment. Electronics
Consumer transaction made at point of sale (POS) for services and products either
through internet banking or mobile banking using smart phone or card payment are

called as digital payment. The consumer perception of digital payment has a

significant and positive impact on adoption of digital payment. The structured
questionnaire was used as research tool for understanding consumer perception of
digital payment. Primary data was collected from 150 respondents in Delhi. ANOVA
and frequency analysis were used to analyze the responses. ANOVA indicate that
there is no significant 41 variance in consumer perception based on the demographic
factors such as gender, age, profession and annual income of the patients. However,
education was found to significant influence for adoption of digital payment.
CHAPTER NO.4 DATA ANALYSIS & INTERPRETATION
INTERPRETATION: INTERPRETATION:
Q1) Gender?
Gender No. of respondents % of respondents
Female 46 57

Male 34 43
Transgender 0 0
Grand Total 80 100
INTERPRETATION:
Among the respondents57.5% were male and42.5% were female
Q2 AGE
Age No. of respondents % of respondents

20-40 51 63.7%
40-60 9 11.3%
Below 20 20 25%
above60 1 1.3%

Grand Total 80 100%
INTERPRETATION: From questionnaire, it is observed that maximum number of

respondents fall under the age group of 20-40 years (63.7%) and is followed by age
group below 20 years (25%) and age group of 41-60 (11.3%) and age group above
60(1.3%)
Q3 Education Qualification
Education No. of respondents % of respondents

Graduate 28 35.4
HSC 11 13.9
Post Graduate 6 6.3
SSC 1 1.3
Under Graduate 21 26.6
Grand Total 80 100
INTERPRETATION: In above figure, it can be observed that no of graduate

respondents is comparatively greater than others respondents i.e. (35.4%).
Q4 PROFESSION
Qualification/Profession No. of respondents % of respondents

Business Class 3 3.7%
Government Services 3 3.7%

Housewife 5 6.3%
Salaried 26 32.6%
Self Employed 12 15%
Grand Total 80 100%
INTERPRETATION: Most of the respondents are falls under category of Self

Employed with percentage of 34.2%. With 31.6% percent people falls under the
category of Salaried. With 3.7% percent people falls under the category of Business
Class, and rest of the people fall under the category of Government with 3.7%. and
Housewife with 5 %

Q5 ANNUAL INCOME
Annual Income No. of respondents % of respondents

Below 2,50,000 53 66.3%
2,50,000-5,00,000 17 21.3%
5,00,000-7,50,000 7. 8.8%
7,50,000-10,00,000 1 1.5%
Above 10,00,000 2 2.5%
Grand Total 80 100%

respondents fall under the Annual Income below 2,50,000 (66.350%) and the least no
of respondent falls under the Annual Income of 7,50,000-10,00,000 (1.5%).
Q6 Do you use online payments apps?

Do you use online No. of respondents % of respondents

payments apps
Yes 71 88.8%
No 9 11.3%
Grand Total 80 100%
INTERPRETATION: From questionnaire, it is observed that88.8 % of respondents

use online apps for payments, while 11.3% respondents do not use online payment
apps.
Q7) Which apps do you use for online payments?

INTERPRETATION:
From questionnaire, it is observed that maximum used apps are Google Pay i.e. 86.1%
and followed by Paytm 46.8%, Phone Pe 44.3% and Bhim 19%.
Q8) How often do you use online payment apps?

INTERPRETATION: From questionnaire, it is observed that no of respondent uses

online payment apps weekly (28.7%) and followed by Monthly (21.3%), daily
(37.5%), Never (3.7%) and Yearly (8.8%).

Q9) What is your purpose of using online payment?
INTERPRETATION: From questionnaire, it is observed that maximum purpose of

use of online payment apps by respondent is recharge(68.8%) and followed by bill
payment (61.3%), Money Transfer (62.5%) and to avail cashback (18.8%).
Q10) Which app you would like to use in terms of

Q11) How much money do you spend for online payments?
INTERPRETATION: From questionnaire, it is observed that maximum no of

respondents (38.8%) spends less than 1000.

Q12) How much would you rate online payments apps?

respondents (51.9%) Rate 4 in 1 to 5 scale

Q13) Are there any obstacles when you use online payment apps?
INTERPRETATION: From questionnaire, it is observed that (25.3%) of respondents

sometimes face an obstacle while using the online payment apps.

Q14) What are the obstacles you face while using online payment apps?

Q15) Did demonetization affect the online payment apps?

Q16) Are this apps services useful for payments?

respondents (83.5%) are believe that online payment apps are useful while 5%
respondent are not believing on online payment apps

Q17) Do you believe your transaction are secured?

respondents (51.9%) are believe that their online transaction is secured, followed by
(40.5%) respondents believed that their online transaction maybe secured and (7.5%)
respondent are not believe that their online transaction is secured.

Q18) Do you feel that offline payments are better than online payments?

respondents (47.5%) feel that online payments apps are better than offline payment
mode and (52.5%) respondents feel that offline mode is better than online payments
apps.
CHAPTER NO. 5 SUGGESTION AND CONCLUSION

5.1 Suggestions: -
• Indian government need to start providing digital literacy to every citizen.
• To create impact of digital Mumbai to be realized, we have to use technology to

solve problems faced by Citizen of Mumbai and for that we need a very strong culture
of grounds-up frugal innovation.
• Indian government and as well as banks should take initiatives to promote the online
payments modes
• Manage cash flow with immediate payments. Online payments are immediate, and
free you from reliance on snail mail or collecting on-site.
• Eliminate paper-based processes.
• The Government or Private Establishments should make the portal or interface of

apps simple so that people do not face any difficult to understand.
• The government should setup a special cyber-crime unit to look after the cyber and
email frauds generated as a result of online payments.
• Marketing various digital apps in rural and semi-rural areas to spread awareness
among earning people to use various digital payments portals available.
• Government or Private Establishments should provide concessions in online

payments. This will not only be pocket friendly to the users but also ensure safety and
transparency in the means of payments.
• Server down is the biggest problems faced by the people. So, the Government or
Private Establishments should take the corrective measures to solve this problem.
5.2 Conclusion: -

Present study has made an attempt to understand customer perception regarding

digital payment. It was found that demographic factor except education does not have
much impact on the adoption of the digital payment. It indicates that adoption of
digital payment is influenced by the education level of the customer. If a person has
studied beyond matriculation and internet savvy, he or she will be inclined to use the
digital payment mode. The growth of users of Smartphone and internet penetration in
such area also facilitated the adoption of digital payment. The digital evolution has
triggered the way people are communicating, purchasing products, paying their utility
bills online, exchange of information or performing business. The technology has
altogether changed the consumer behavior pattern towards purchasing and utilizing
the products or services. They try to take advantage of the various digital platforms to
expand their business and for sustainable development growth.
The organizations through digital are able to share the experience by giving the
consumers various options like variety, discounts, product/service comparison,
payment preferences, etc. This has in fact exposed consumers towards the habitual use
of browsing products, using different online payments that in turn develop trust and
usually loyalty towards the products and/or payment platforms.
At the same time there are many problems faced the consumers at the time of
payments like miss use of personal information, Loss of data, Hacking, Online frauds,
Security Issues, Server down etc.
Security is a major issue in online payment system as there are various internet threats
which affect the security system of internet and increase risk. The current
authentication technique for online payment system is not very secure to protect user
from identity theft, as a result any attacker gains the access on confidential
information of user like credit card number or account password and make illegal
transfer of fund. It is proved from our background study that single factor
authentication increases risks posed by phishing, identity theft, fraud and loss of
customer confidential information. Financial institution should implement an effective
authentication to reduce fraud and make strong customer authentication a necessary to
enforce security to assist financial institutions to detect and decrease user identity
thefts.

The organizations are trying their level best to attract the consumers towards using
their ecommerce and payment platforms to increase their business, by solving the
problems faced by the consumers.

CHAPTER NO 6 Bibliography
BIBLIOGRAPHY
WEBSITES:
•https://en.m.wikipedia.org/wiki/E-commerce_payment_system
•https://en.m.wikipedia.org/wiki/Mobile_payment
•https://www.met.edu/uploadfile/documents/Ms_Shreya_Jain_eMBA_student. pdf
•https://www.quora.com/What-is-cashless-transaction
•https://smallbusinessfirst.com.au/advantages-and-disadvantages-of-onlinepayments/
•https://en.m.wikipedia.org/wiki/2016_Indian_banknote_demonetisation
•https://www.quora.com/What-are-positive-and-negative-effects-ofdemonetization
•www.googlescholar.com
•https://www.sciencedirect.com/science/article/pii/S2444969516300555
•https://www.theseus.fi/handle/10024/139600
•https://rba.gov.au/publications/rdp/2014/pdf/rdp2014-05.pdf
•http://search.proquest.com/openview/0895f8abb03009cc9444bc9d237010e9/1?pq-
origsite=gscholar&cbl=2044944


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Prahladrai Dalmia Lions College of Commerce & Economics

1 | A study on digital payment system

2 | A study on digital payment system

Cashless payments survey is an online form having some questions related to

3 | A study on digital payment system

1.2 History of Online Payments Apps

4 | A study on digital payment system

5 | A study on digital payment system

interview to this newspaper, termed this as “a defining point in India moving to

6 | A study on digital payment system

1.5 Keeping Your Private Data Safe: As technology changes at an

7 | A study on digital payment system

1.6 Digital payments companies become major players: -With

1.7 CASHLESS TRANSACTION: - "A cashless economy is one in which all

8 | A study on digital payment system

Process of Cashless Transaction: -

• Authenticate it is confirming or not: -the authenticate when it is confirming or not

9 | A study on digital payment system

B) Mobile Money Wallets

Mobile Money Wallets: -

In developing countries many people don't have access to banking facilities,

10 | A study on digital payment system

1.9 MOBILE BANKING APPLICATIONS IN INDIA: - We have

- A) DEBIT / CREDIT CARD: - Suitable for: Online/offline merchant sale.

B) E-WALLET: - Suitable for: Small-ticket transactions. Transaction limit: Rs.

11 | A study on digital payment system

C) BHIM: - A mobile banking application. This application is developed for

12 | A study on digital payment system

E) MOBIKWIK: - Mobikwik is another option available to Indians when it comes

13 | A study on digital payment system

F) PhonePe: -PhonePe, is an Indian E-commerce payment system and digital

14 | A study on digital payment system

G) Freecharge: - FreeCharge, is an Indian digital marketplace for financial

15 | A study on digital payment system

F) PayPal:- PayPal Holdings, Inc. is an American company operating a worldwide

16 | A study on digital payment system

1.10 Characteristics of Online payment

• Instant money transfer facilitated 24x7 via any mobile device.

• Single app can be used to access multiple bank accounts.

• Security of “Single Click 2 Factor Authentication”, which combines strong security

17 | A study on digital payment system

• The app lets one to share bill with friends.

• Single Application Merchant Payment and easier In-App Payments.

• Registering complaints directly via the Mobile App.

1.11 Advantages of Online payments

3. Quick Transaction Clearing: - Security is obviously quite important, but

5. Quality customer experience: - As mentioned above, the benefits of online

18 | A study on digital payment system

1.12 Disadvantages of Online Payments

1. Restriction of electronic Payments: - No matter which payment system

2. Hacking: - As you are using electronic payment systems to make transactions

3. Disputed Transaction: - If someone uses your company's electronic money

19 | A study on digital payment system

4. Increased Business Costs: - E-payment systems come with an increased

5. Security Concerns: - - Although stringent measures such as symmetric

1.13 Demonetization in India

On 8 November 2016, the Government of India announced the demonetization of all

20 | A study on digital payment system

Online Transactions: - Demonetization's motto was to encourage the

Rise in GDP: - Though demonetization has negatively impacted sectors such as

Position of Cash Transactions in India: - India is predominantly a

Position of Cashless Payments in India: - India has competitive telecommunication