CONSUMER PERCEPTION TOWARDS DIGITAL PAYMENT SYSTEMS IN INDIA

project Submitted to
University of Mumbai for partial completion of the degree of Bachelor
of Management Studies

Under the Faculty of Commerce

By

KETAN PANCHAL
Under the guidance of

PROF. TEJAL DHARAMSI

SANPADA COLLEGE OF COMMERCE & TECHNOLOGY

SANPADA, NAVI MUMBAI - 400 705
APRIL-2024
 Declaration by learner

I the undersigned MR. KETAN PANCHAL hereby, declare that the work embodied in the
project work titled “CONSUMER PERCEPTION TOWARDS DIGITAL PAYMENT SYSTEMS IN
INDIA ”, forms my own contribution to the research work carried out under the guidance of Prof.

TEJAL DHARAMSI is a result of my own research work and has not been previously
submitted to any other University for any other Degree to this or any other University.

Wherever reference has been made to previous works of others, it has been clearly indicated as
such and included in the bibliography.

I, hereby further declare that all information of this document has obtained and presented in
accordance with academic rules and ethical conduct.

KETAN PANCHAL

Certified by

Prof. TEJAL DHARAMSI

(Project Guide)
 Acknowledgment

To list who all have helped me is difficult because they are so numerous and the depth is so
enormous.

I would like to acknowledge the following as being idealistic channels and fresh dimensions in
the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do this
project.

I would like to thank my Principal, Dr. Suryakant Lasune for providing the necessary
facilities required for completion of this project.

I take this opportunity to thank our Head of Department Prof. BUSHRA ANSARI, for his moral
support and guidance.

I would also like to express my sincere gratitude towards my project guide Prof. TEJAL
DHARASMI whose guidance and care made the project successful.

I would like to thank my COLLEGE LIBRARY, for having provided various reference books
and magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped me in the
completion of the project especially MY PARENTS AND PEERS who supported me
throughout my project.
 ORIENTAL EDUCATION SOCIETY’S
SANPADA COLLEGE OF COMMERCE & TECHNOLOGY
PLOT NO. 3,4,5, SECTOR 2, SANPADA, NAVI MUMBAI 4007053

C E R TI FI CATE

This is to certify that MR KETAN PANCHAL has worked and duly completed his Project work for
the degree of bachelor of management studied under the faculty of commerce in the subject of
MARKETING and his project is entitled, CONSUMER PERCEPTION TOWARDS DIGITAL
PAYMENT SYSTEMS IN INDIA” under my supervision
I further certify that the entire work has been done by learner under my guidance and that no part of
it has been submitted previously for any Degree of any University.
It is his own work and facts reported by his personal findings and investigations.

Date of Submission:

Project Guide Head of the Department

Prof. (guide name) Prof. Bushra Ansari

External Examiner Principal

Dr. Suryakant Lasune
 Table of content
SR.NO TOPIC PG.NO

Declaration
Acknowledgement

Executive summary
1. INTRODUCTION 8-34
1.1 About digital payment systems 1-3
1.2 History of digital payment systems in India 3-4
1.3 Evolution of digital payment systems in India 4-5

1.4 Types of digital payment systems 6-12

1.5 Characteristics of digital payment systems 12-15

1.6 Advantages and disadvantages of digital payment 15-16
systems
1.7 Success story of digital payment systems 17
1.8 A clear use case for digital payment 17
1.9 Regulatory changes- Transforming the digital 18-20
payment ecosystem
1.10 Factors contributing to the emergence of digital 21
payment systems
1.11 New payment habits and channels 21-22
1.12 Examples of technologies disrupting the payment 22-24
process
1.13 Digital payments growth factor 24-25
1.14 Government initiatives 26
1.15 Challenges 27
1.16 Way forward 28
1.17 Common facts about digital payment systems in 29
India
1.18 Release to embraces digital payment systems 29-31

1.19 Promotion of payments through cards 32-33

1.20 Importance of the study 34

1.21 Aim of the study 34

2. REVIEW OF LITERATURE 35-46

3. RESEARCH METHODOLOGY 47-48
3.1 Research objectives 47

3.2 Limitations of the study 47

3.3 Collection of data 47
3.4 Sample design 48
3.5 Hypothesis of the study 48
4. DATA ANALYSIS 49-59
5 Benefits of the digital payment systems. 62
according to the respondents
5.1 Hypothesis proved 62

6 Finding 63

7 Recommendations and suggestions 64

8 Conclusion 65-66

Annexure
Reference
 EXECUTIVE SUMMARY

Digital payment system is often used to refer to the sale of physical products online, but it can also describe
any kind of commercial transaction that is facilitated through the internet. E-commerce is often confused
with e-business, although they have nothing to do with one another. Digital payment is said to be boon for
the user who wants their transaction to take place electronically. Fast and secure modes of payments ensure
trust among the users.

However, awareness programs must be done to educate the people who want to pay through electronic
medium. Online payment stands out compared to offline payment as there is no intermediary between buyer
and seller of the goods. Security issues may be the concern for many and lack trust in online modes is the
reason many still prefer cash as a medium of payment.

Adoption of digital payments in India is in a transformation phase. Usually India is a traditionally cashbased
economy, but now slowly we see the growth of card-based economy. Government of India brought up many
schemes for the development of digital payment such as Adhar card enabled or linked payment apps like
BHIM, UPI etc.

Main focus of the government is to give digital facility to all the section including urban as well as rural all
over India. Acceptability of digital payment will be on the hands of those who use it. Slowly but surely
electronic mode is replacing traditional mode of payment. Digitally smart India is the way forward in
coming days as everyone should make use of technology for right purpose.

The collective growth of Information Communication Technology has conveyed many accomplishments to
mortal civilization, influencing the lives of people, behaviors and societal measures. The digital economy,
electronic commerce and commerce and electronic banking are now being used by the new technologies and
the wider global network, especially internet, within and outwardly. The study investigates issues that affect
customers when implementing digital payment and also proposing solutions to preserve and develop the
quality of service for digital payment systems so as to inspire patronage repetition and loyalty and attract
new customers. Descriptive analysis, independent t-test and analysis of variance were the methodologies
used for analysis of collected data. The Results attained depicts that there was
“strong correlation” existing between the benefits and the ease of use of the Digital Payment System. An
almost moderate correlation existed only between the trust and customers’ perception of the digital Payment
Systems alongside the true perception attained by customers while using the Digital Payment system and its
basic ease of use. There was a rather weak negative correlation between the average security and the
benefits of the Digital Payment System. Another quite weak and negative correlations has to do with the age
bracket of the customers and its effect on the general preference of the Digital Payment System. This study
can help providers gain an insight of the views and preferences of their customers in order to improve the
customer perception during the online purchase procedures.
 Chapter 1

Introduction
1.1 About digital payments systems

Modern era has technologically well-developed because of E-commerce. E- Commerce is doing business
electronically where there is no scope for physical or traditional system of transaction. More People opt for
e -commerce mechanism because it ensures accuracy of transaction. When people are engaging in purchase
and sale of goods and services there is need for medium of payment.

Paper transactions are losing its importance as people want to go cashless. Digital payment system is a way
of dealing through electronically equipped medium which helps in making transaction and ensures the
safety Of the transactions. Urgency of a man and shortage of a time makes this system important. In digital
Payment both payer and payee use digital modes to send and receive money. No hard cash involved in
digital system. Making cash payment is a time-consuming process and to avoid this digital payment system
came into existence.

Various modes of digital payment include mobile wallet, banking cards such as debit and credit cards, UPI,
Mobile banking etc. digital payment system works effectively because they are linked to user's bank
account. Whenever the payment is made, user will be identified through notification and similarly if can
credit is made to users account user will get an intimation. Mobile wallets are popular among youths as it
gives attractive rewards such coupons, cash back, discount etc. Smart card looks like a plastic card with
microprocessor that can be loaded with funds to make transaction. It attracts clients from all over the world.
More efficient transaction can be made with one click. Over the years bank cards are more popular because
cards are user friendly. Debit card is generally linked to Customer’s bank account and it is issued to every
account holder of the bank. Debit card has details such as Name, expiry, CVN for security of transactions.
Indian government has also taken a step to make India digitally sound and as result promoting cashless India
Motive. Nowadays almost everyone has a smartphone and man is more dependent on technology.
Most of the online transaction can be executed with the help of mobile applications. If a person wants to
buy cloth from online firstly the person will visit online shopping sites such as Amazon, flip cart etc. there
a person will be provided with the item of choice then a user makes whether to buy a product or not. If a
person wants to buy the product a person needs to place an order and needs to make payment. Payment
could through cash or most of the times using cards such as debit or credit or with the help of mobile wallet.
For making transaction through internet customer need to pay internet handling fees. Suppose if a person
wants to get movie ticket and if that person use application like book my show, then a person needs to pay
for the service provided. Immediate transfer of money from One account to another account is possible
through net banking where customer is given with unique user id and password to ensure the safety of the
transactions. Train ticket, bus ticket, flight ticket could book Online and by mere presentation of
electronically generated tickets that helps to make a journey.

Digital payment system influenced man to think differently. It forced a change in man’s traditional
Approach. More companies are now coming with digital payment applications for better access such as
Google pay, phone pay, PayPal etc. Users of electronic payment are increasing year after year. Most of the
people are satisfied with digital mode as it is convenient to them. Digital payment considerably reduced the
Work of a man as most of the banks gives the facility of digital modes of depositing and receiving cash.

Demonetization has offered an exceptional platform for acceptance of digital payment, as a substitute for
cash for Indian customers. Acceptance of cashless transaction has been drastically hard-pressed by Prime
Minister Mr. Narendra Modi as part of government reform after demonetization of high value currency of
Rs. 500 and 1000 (86% of cash circulation). The demonetization resulted in extraordinary growth in digital
payment. By February 2017, digital wallet companies had shown a growth of 271 percent for a total value
of US$2.8 billion (about $9 per person in the US) (about $9 per person in the US) (Rs. 191 corers), Indian
government and private sector companies such as Paytm, Free charge and Mobi Kwik had been assertively
pushing a number of digital payment applications, including the Adhar Payment app, the UPI app, and the
National Payments Corporation of India (NPCI) developed the Bharat Interface for Money (BHIM) app.

Digital transfers using apps has brought behavioral transform and helped in the acceptance of digital
payment. This has resulted in ease of transfer of money in rural areas which was not touched earlier by the
digital payment method. Now several overseas investors want to spend in digital payment industry which
is new eye-catching destination because of scope of remarkable growth in India .There are number of
facilitators which are leading to the escalation of digital payment and changeover from cash economy to
less cash economy.

These facilitators include diffusion of internet connectivity on smart phones, nonbanking financial
institutions facilitating digital payment, one touch payment, rise of financial technology sector and push by
government either by giving incentives or tax breaks. These all factors are creating for positive environment
for growth of digital payment in India
1.2 History of Digital Payment systems in India

Indians widely use Banking cards, or debit/credit cards, or prepaid cards, as an alternative to cash payments.
Andhra Bank launched the first credit card in India in 1981.This is the only mode of digital payment that is
popular in online transactions and physical transactions alike. Payments as a mode of economical
transaction has not experienced a large amount of disruptions. Overall, only a handful of revolutions
occurred in the ecosystem of payments (c.f. picture) . As previously mentioned, around 1200 BC, most
economical interactions were done via bartering that is, the exchange of one commodity for another. In
other words, trading goods or services in exchange for other goods or services.
Later on, around 1100 BC with the Chinese civilization, signs of circular objects appeared as testimony of
a new monetary system: coins. Close to five centuries later, these coins evolved onto a new format with
metallurgy. Indeed, minted coins were found in the kingdom of western Anatolia (Europe). This type of
monetary system took precedence until the year 800 (in China) and 1600 (in Europe) with the arrival of
paper bank notes. This was the birth of cash.

The arrival of digital within the payment industry occurred later with the emergence of modern technologies.
First, the credit card was introduced in the late 1960s by Barclays. This innovative mode of payment was
gradually adopted by other financial institutions and gradually improved until 2002, date at which the chip
and pin technologies surfaced. Passed the millennium, the democratization of internet and the e-commerce
revolution boosted the use of online payments. Finally, passed 2010 and with the improvement of
smartphone services, an increasing number of transactions is taking place through mobile platforms. The
future of payments remains unknown, however, multiple technologies could arise as new modes universally
used by customers.

1.3 Evolution of digital payment systems in India

India’s payment framework- especially the digital payment system – has been advancing heartily over
the past numerous years, prodded by advancement in data and communication technology, and fostered and
in consonance with the way imagined by RBI.

• The advent of online banking began in the 1990s with the availability of internet. Online banking
changed the entire scenario of financial services.

• The evolution of digital payments in India is piloted by the Reserve Bank of India (RBI) and
captured in the Payment Systems in India, published in 1998.

• The Payment and Settlement Act, 2007 has defined Digital Payments as any “electronic funds
transfer”, i.e. any exchange of funds which is initiated by an individual by way of instruction,
authorization, or request to a bank to debit or credit an amount from an account maintained with
that bank electronically and incorporates point of sale transfers; ATM transactions, direct deposits
or withdrawal of funds, transfers initiated by phones or internet and card payment.

• Critical achievements accomplished in this overall process of development of the payments

framework incorporates the introduction of MICR (Magnetic ink character recognition code)
clearing in the early 1980s,Electronic Clearing Service and Electronic Funds Transfer in the 1990s,
issuance of credit and debit cards by the banks in the 1990s, the National Financial Switch in 2003
that realized interconnectivity of ATMs the nation over, the RTGS and NEFT in 2004, the Cheque
 Truncation System (CTS) in 2008, the second factor authentication for the ‘card not present’
transaction in 2009 and the new RTGS with upgraded features in 2013.

• The National Payments Corporation of India (NPCI) was established in 2008. It has been leading
the development of the retail payments framework.

• Besides, non-bank entities have been presented in the issuance of prepaid instruments (PPI),
including mobile and digital wallets. These measures have been complemented by noteworthy
initiatives by the NPCI including the launching of grid-wise operations of CTS, interoperability on
NACH (National Automated Clearing House), IMPS, NFS, RuPay, APBS and AEPS, National
Unified USSD Platform (NUUP), UPI and BHIM application.

• These advancements catch the evolution of the Digital Payments framework in the nation. This was
trailed by a noteworthy initiative by Indian Government which set up the Committee of Digital

Payments in August 2016 under the Chairmanship of Ratan P. Watal, Principal Adviser, NITI Aayog.

• Post demonetization in November 2016, the adoption of digital payment methods in India received
a major lift. Demonetization pushed Indians towards switching to cashless methods which come
with aplenty of hidden costs, yet when the weight diminished, Indians were back to utilizing cash.

1.4 Types of digital payment systems

Digital Payments is nothing but the transfer of money between the two Bank Accounts or Mobile Wallets
in Digitalized form. There is no involvement of physical cash transactions. The Bank Accounts may be
between any same Banks or other Banks or mobile wallets between the same service providers or the
different providers. In Digital Payments, Payer, and Payee both uses digital mode to send and receive money
in realtime.
Different methods of digital payment systems in India
 Source: Wikipedia

Digital Payments is the Govt. of India’s initiative to make India a “Digitally

Empowered” Cash-less economy under the campaign of “Digital India.” It not only helps to reduce the work
burden on Banking Industries in India but also provides a safe, reliable, fast & Digital alternative of Cash-
centric Indian Economy.

Here are the different methods or types of Digital Payments system in India

1.Banker’s credit/debit card

The most popular and common method of Digital Payments solutions in India. A person can get a Debit
card just after the opening of Account in Bank in India. The card may be Visa, Mastercard or RuPay card
depending upon your choice or Bank. The other types of Debit or Credit card providers in India are Maestro,
Diners Club, Visa Electron. Most of the PSU or Private Banks initially offer Rupay Card to its customers.
Rupay is a domestic Card mainly use for the transaction within India. Though a person can use RuPay Debit
Card in International e-commerce websites or can withdraw money in overseas countries. Several Banks
offers their own Discounts, Reward Program or Money Back to its customer for the payments made through
their Debit/Credit Card. The transaction cost for the payments made with Debit/Credit is Nil to the
customers. Though the merchant has to pay the transaction charges depending on the transaction value and
card type. PSU Banks debit cards are not international transactions enabled initially; a person has to make
a request to the card providing banks to enable international transaction rights. As per RBI norms, all the
transaction which will go through the Payment gateway within India has to verify with OTP or PIN for an
extra layer of security. But for the transaction made outside India, this is not mandatory.

One of the big drawbacks of this process is an unauthorized recurring payment. If a person does not wish
to continue the services of any subscription site in the future and unknowingly provider international
transaction enabled Debit or Credit card details at the time of purchase, then your recurring amount will get
deducted from card without authentication. Therefore, it is highly recommended to use PayPal when a
person wants to make any online transaction in international subscription-based websites or not so highly
trustable websites. In PayPal, will get the option to deactivate the recurring payments option.
2.Bank’s prepaid card

Bank’s prepaid card is also known as Gift Card or Preload able debit card for a singleuse or reloadable for
multiple uses. Any KYC complied account holder can create Bank’s prepaid card from the Bank’s Net
Banking websites or purchase from Bank’s official websites. The prepaid card can be Visa or RuPay
powered depending upon the Bank. The prepaid cards mainly used for Corporate Gift, Reward Card, or any
singleuse card for gifting purposes. The Prepaid card can be used to withdraw money at ATM or performing
an online transaction at any Payment Gateway up to a certain limit.

Some popular Banks which offer prepaid card in India are:

• Axis Bank Prepaid Card

• HDFC Bank Prepaid card

• SBI Prepaid Card

• ICICI Bank Prepaid card

• Yes, Bank Prepaid card

• Kotak Bank Prepaid card

3. Unified Payments Interface (UPI)

UPI or Unified Payments Interface is one of the most innovative Digital Payments solutions launched by
NPCI in India, maybe the best Payment solution in the World to date. As NPCI data there are 148 live UPI
member banks issue UPI for their customers and more than 33 third-party UPI apps available in Play Store.
UPI transaction has reached Rs.2,06,462.31 as of March 2020 by transaction value and already surpassed
the debit card transaction for the FY 2018-19. (Source: NPCI) Here’s a year-wise growth of UPI transaction
by volume. (As on March 2020).
 Source: UPI transactions in India 2018-2023 source @statista

A person can send money in real-time to any VPA ID (virtual payment address) if a person has a bank Account
and mobile number already registered with bank account.
Some of the best UPI payment apps in India can download in smartphone are:

1.Google pay– Currently number one in terms of transaction value (Data up to March 2019). Google pay's
digital payments transaction value is more than the total Digital Payment of Axis Bank.

2. Paytm - Most downloaded UPI App in India both Android and iOS Platform.

3.Phone pay– Very popular UPI App and currently ranked 2nd in the total volume of UPI transactions.

4.BHIM - official UPI App launched by NPCI.

4.Offline Mode

USSD is one of the offline processes of the digital payments system in India. A person can perform different
banking tasks by dialing *99# which works on the mode of Unstructured Supplementary Service Data
(USSD). The services can avail of by this mode are balance inquiry, mini statement, and Fund Transfer
through MMID. Only a person has to register your mobile number with the bank account number. Though
the process seems innovative but failed to make any real impact in the process of Digital Payments in India.
Govt. of India under the project Make in India recently launched (launched on 4 March 2019) National
Common Mobility Card. (NCMC) which is also worked on Offline Mode. NCMC (also known as One
Nation One Card) is an interoperability transport card launched by the Ministry of Housing and Urban
Affairs. A person can use the NCMC card to pay for the travel expenses, toll duties, shopping, and even
can withdraw money. The card is Contactless RuPay Powered (Visa has also started supports for NCMC
Card) and can be used as prepaid, debit or credit card on offline mode by using NFC technology.

5.Adhar Enabled Payment System (AEPS)

By this Digital payment mode, a person can transfer money between two Adhar linked Bank Accounts or
withdraw money if account linked with Adhar Card. All the transaction made by this process has to go
through the biometric authentication. This mode of payment uses by the Correspondence at CSP points for
cash withdrawal and work as micro-ATM. The AePS fees for Cash withdrawal at BC Points are around
Rs.15. The merchant also can use this mode to receive payment by fingerprint authentication of customers.
The device can be attached to mobile and all the banks have specific BHIM merchant Apps to use this
device for merchant payment. The merchants do not have to pay any transaction charges if the amount is
below Rs.

2000.As per the latest data from NPCI, AePS has crossed more than 205 million as of February 2020.

6. Mobile Wallet

The popularity of mobile wallets has increased many folds during recent times and it is one of the most used
Digital Payment modes in India. The reason is anyone can create a Mobile wallet just by downloading and
installing the App. Anyone can keep some money in a digitalized form in the Mobile Wallet. Many Mobile
wallet providers in India also run several types of rewards or cashback programs if the transaction made
from the Mobile Wallet. Anyone can easily create a Mobile Wallet if a person has a mobile number without
providing any Valid KYC documents. Though as per RBI guidelines, all the Mobile Wallets must be KYC
complied within August 2019 to continue the services of Mobile Wallet in India. The popularity of mobile
wallet has increased so much that can find the link of popular Mobile Wallet at all the Payment Gateway in
India. Anyone can easily add funds to Mobile Wallet from Credit/Debit card or from Bank’s NetBanking
service. As per RBI norms, anyone can only transfer money between two different mobile wallets
(interoperability) or from Mobile Wallet to Bank Account, if wallet is KYC complied. Paytm was the first
company in India, started the concept of Mobile Wallet. Now anyone can find many mobile wallet Apps,
from commercial Banks to Fintech Startup, in Google Play Store or iOS App Store.

7.Internet Banking
Internet Banking one of the first technology started at the initial stages of the Digital payment system in
India. All the commercial banks and recently launched Payment Banks in India have their own internet
banking portal. Some Banks have integrated so many things in their internet banking portal that anyone can
complete every banking task from the NetBanking portal. Anyone can find an internet banking option at
every Payment Gateway in India. Here is the list of some Banks which has the best internet banking portal

in India:

• ICICI Bank

• State Bank of India

• HDFC Bank

• Kotak Mahindra Bank

• DBS Bank

• CITI Bank

• Axis Bank

• Yes Bank

8.Mobile Banking

Mobile Banking is the best and most Popular Digital Payment mode in India because it is most convenient,
easy to use and integrated with all the features that we need our day-to-day banking. Anyone can find all
the Digital payment modes like IMPS, NEFT, RTGS, UPI, Bill Payments, etc at a single platform. Banks
are also encouraging their customers to use mobile banking services because it not only helps to reduce the
work pressure on Banks but also helps to create a Digital Payments ecosystem in India.

9. Micro ATM

This is mostly used by the Business Correspondence at Customer Service Points (CSP). Anyone can
withdraw money or deposit cash to Adhar Linked Bank Account by just authenticating your fingerprint to
the device. Anyone can even transfer funds between any Bank’s Account only need the Adhar to linked both
the Account.

10. POS Machine

Anyone Might observe POS Machine or Point sale Machine at various Shopping Malls, Petrol Pumps,
Movie Ticket Booking or many Kirana shops. Anyone can pay shopping bills by swiping your credit or
debit card, only need to put Card PIN to authenticate the transaction. All the Banks now starts providing
contactless debit or credit card to its customers. Anyone can authenticate the transaction just by holding the
Debit or Credit card on the contactless reader of POS Machine. Anyone does not need to provide the Card
PIN up to Rs.2000.00, it will auto-authenticate. The contactless payment works using the NFC payment
system (Near Field Communication Technology).

There are two types of POS Machines available in India, Wired (requires Telephone connection) and
wireless (requires SIM card or Wi-Fi connection). Most of the acquiring Banks now offer mPOS type of
POS Machine. SBI is now the largest acquiring Bank (Banks which provides the POS terminal to the
merchant) in the country.

1.5 Characteristics of Digital Payment Systems

Important characteristics for digital payment system are security, reliability, scalability, anonymity,
acceptability, customer base, flexibility, convertibility, efficiency, ease of integration with applications, and
ease of use. Some of these characteristics, like anonymity, are more important in some communities, or for
certain kinds of transactions, than they are in other communities.

• Security: Since payments involve actual money, payment systems will be a prime target for
criminals. Since Internet services are provided today on networks that are open, the infrastructure
supporting electronic commerce must be usable and resistant to attack in an environment where
eavesdropping and modification of messages is easy.

• Reliability: As more commerce is conducted over the Internet, the smooth running of the economy
will come to depend on the availability of the payment infrastructure, making it a target of attack
for vandals. Whether the result of an attack by vandals or simply poor design, an interruption in the
availability of the infrastructure would be catastrophic. For this reason, the infrastructure must be
available and should avoid presenting a single point of failure.

• Scalability: As commercial use of the Internet grows, the demands placed on payment servers will
grow too. The payment infrastructure must be able to handle the addition of users and merchants
without suffering a noticeable loss of performance. The existence of central servers through which
all transactions must be processed will limit the scale of the system. The payment infrastructure
must support multiple servers, distributed across the network.
• Anonymity: For some transactions, the identity of the parties to the transaction should be protected;
it should not be possible to monitor an individual’s spending patterns, nor determine one’s source
of income. An individual is traceable in traditional payment systems such as checks and credit cards.
Where anonymity is important, the cost of tracking a transaction should outweigh the value of the
information that can be obtained by doing so.
• Acceptability: The usefulness of a payment mechanisms is dependent upon what one can buy with
it. Thus, a payment instrument must be accepted widely. Where payment mechanisms are supported
by multiple servers, users of one server must be able to transact business with users of other servers.

• Customer base: The acceptability of a payment mechanism is affected by the size of the customer
base, i.e., the number of users able to make payments using the mechanism. Merchants want to sell
products, and without a large enough base of customers using a payment mechanism, it is often not
worth the extra effort for a merchant to accept the mechanism.

• Flexibility: Alternative forms of payment are needed, depending on the guarantees needed by the
parties to a transaction, the timing of the payment itself, requirements for auditability, performance
requirements, and the amount of the payment. The payment infrastructure should support several
payment methods including instruments analogous to credit cards, personal checks, cashier’s
checks, and even anonymous electronic cash. These instruments should be integrated into a common
framework.

• Convertibility: Users of the Internet will select financial instruments that best suit their needs for a
given transaction. It is likely that several forms of payment will emerge, providing different tradeoffs
with respect to the characteristics just described. In such an environment it is important that funds
represented by one mechanism be easily convertible into funds represented by others.

• Efficiency: Royalties for access to information may generate frequent payments for insignificant
amounts. Applications must be able to make these “micropayments” without noticeable
performance degradation. The cost per transaction of using the infrastructure must be small enough
that it is insignificant even for transaction amounts about pennies.

• Ease of integration: Applications must be modified to use the payment infrastructure to make a
payment service available to users. Ideally, a common API should be used so that the integration is
not specific to one kind of payment instrument. Support for payment should be integrated into
request-response protocols on which applications are built so that a basic level of service is available
to higher level applications without significant modification.
 • Ease of use: Users should not be constantly interrupted to provide payment information and most
payments should occur automatically. However, users should be able to limit their losses. Payments
beyond a certain threshold should require approval. Users should be able to monitor their spending
without going out

1.6 Advantages and Disadvantages of digital payments

1.Advantages:

Digital payments are the future of India’s payment system. The cost of running an ATM is exceedingly high
& risky. Banks may also stop setting up new ATMs in the future and many ATM locations may be phased
out within the next few years. As for customers, one must pay charges, if ATM uses limit exceed by 3 times
in a month. Therefore, the best alternative is Digital Payments.

Here are some Advantages of Digital Payments System

• Fast: The payment processing is fast on a real-time basis.

• Less Time Consuming: Hassle-free and less time-consuming. Anyone does not have to visit the
branch or ATM for cash withdrawal and payment to the recipients.

• Cost-Effective: Transaction charges are almost nothing in comparison to Cash Transaction.

• Less Risky: Manual Cash handling and carrying involve remarkably substantial risk whereas

Digital Payments system is risk-free because one only transacts with the digitalized form of money.

• Availability: The benefits of Digital Payments Service is available for 24*7 and all the time in a
year. Therefore, no headache of Bank Holiday or Strike or Cash Shortages.

• Convenience: All the transactions can be done from the comfort of home. No need to queue up for
ATM withdrawal.

• Accessibility: Anyone can access the services of the Digital payments system, just needed a
Smartphone & internet connection. (One can use Digital Payments in Offline mode also).

• Offers and discounts: Many merchants offer Discounts & cashback for the payments which are
done in Digitalized form like Payment made by Debit/Credit Card or UPI Platform.
2. Disadvantages:

Digital payment methods have several disadvantages. Some of them are as follows:

• Service fees: Payment gateways and third-party payment processors charge service fees.

• Inconvenient for offline sales: Online payment methods are inconvenient for offline sales.
• Vulnerability to cyber-criminals: Cyber-criminals can disable online payment methods or
exploit them to steal people’s money or information.

• Reliance on telecommunication infrastructure: Internet & server problems can disable

online payment methods.

• Technical problems: Online payment methods can go down due to technical problems.

1.7 Success story of digital payment

Fintech has powered much of the digital payments product innovation that India has seen over the last few
years. There has been exponential growth and adoption of digital payments, triggered partly by Covid-19
and the need for contactless payments, but also by developments in technology and product offerings. The
Government has consistently maintained that pushing digital payments is a key policy objective. The Union
Budget (2021) earmarked INR 15 billion for schemes towards incentivizing digital payments. Transaction
volume of digital payments on the Unified Payments Interface (UPI) network increased by approximately
58% between February 2020 and October 2020 (and crossed 2 billion transactions in October 2020). The
digital payments market in India is estimated to reach the USD 1 trillion mark by 2023.

The ability to create a simple, easy to use, and complete end to end digital customer journey has been a
key reason for the growing adoption of digital payments. Initially, the know your customer checks that
required physical verification of documents was a challenge for many digital payment platforms, but in
early 2020, the RBI permitted Fintech players to utilize certain modes of digital and video KYC to
onboard customers. Video-based customer verification methods have since been adopted by several bank
and non-bank Fintech players which has made customer on-boarding easy and cost-effective.

1.8 A clear use case for digital payments

Covid-19 has brought into focus the benefits of digital payment products in a time when face to face contact
must be minimized. Another key strength of digital products is that they are capable of a much wider reach
than financial products delivered via brick-andmortar models. There are two key reasons for this:

(i) Fintech platforms have much lower customer acquisition costs than banks and can service customer
segments that do not have access to formal banking products.

(ii) Fintech platforms leverage their use of technology to develop targeted customer acquisition tools and
customized solutions.

1.9 Regulatory changes- Transforming the digital payment ecosystem

The RBI has historically adopted a restrictive regulatory regime for non-bank Fintech payment solution
providers. However, as the digital payments sector has matured, the RBI has become more comfortable
giving non-bank players access to the payments, financial and digital infrastructure that banks are able to
access. The ability of Fintech platforms to address financial inclusion in a way that banks have not been
able to tackle has also become apparent. Consequently, the RBI recently (in April 2021), announced several
changes that will completely revolutionize how Fintech payment players will operate.

These measures have quite correctly been hailed to be “game changers” for the digital payment's ecosystem.

The RBI has made four key changes:

1.Access to RTGS and NEFT: membership to the RBI-operated centralized payment systems (such as
RTGS and NEFT) was not open to issuers of pre-paid wallets and other non-bank entities. Recognizing the
critical role that wallet issuers and non-bank payment platforms play in enabling digital payments (in terms
of volume, innovation, and access), the RBI has allowed payment system operators to participate in
centralized payment systems. The RBI has also been mindful of minimizing systemic risk, and by opening
access to non-bank players in the RTGS and NEFT infrastructure, the RBI also hopes to minimize such risk.
This move has been a long-standing industry ask and will create a much greater level playing field between
bank and non-bank payment operators.

2.Inter-operability: In 2017, the RBI had introduced a full inter-operability framework for wallets to be
adopted on a voluntary basis by wallet issuers. However, the market did not move towards full
interoperability inter-se wallets. While transfers between bank accounts and a single wallet issuer is
possible, transfer of funds from one wallet to another wallet (issued by separate issuers) was not
operationalized. The RBI, to push usage and creation of a uniform payments infrastructure, has now made
full-interoperability mandatory.

3.Increased infrastructure: To minimize financial risk, the RBI had limited the amount that could be
loaded onto a wallet at INR 1 lakh. This limit has now been increased to INR
2 lakhs which is also the same as the limit applicable to payment bank accounts. This is a significant move
and, in many ways, recognizes the quasi-banking functionality of wallets and other non-bank digital
payment products. Given that the know your customer checks for a wallet are on par with what is required
to open a bank account, the equalizing of limits for both products are welcome and was triggered by the key
role that digital payment products play in the financial ecosystem outside of the formal banking sector.

4.Cash withdrawal: the RBI had always been categorical about restricting non-bank wallet issuers from
allowing cash withdrawal facilities. Cash withdrawal has now been permitted for all non-bank issued full
KYC wallets. This makes a pre-paid instrument such as a wallet akin in many respects to a small value
savings account and allows pre-paid payment products to become the “single point” that solves for multiple
financial needs of the customer (payments, access to inter-operable infrastructure, cash withdrawal and the
ability to transact up to INR 2 lakhs.

(i) Market reaction

Fintech platforms can effectively use technology, artificial intelligence, and big data analytics to understand
their customers and deliver tailor made customized financial solutions. Digital payment operators rely not
only on financial data but also on data sets such as the digital footprint of a customer and online behavioral
data to target customers and deliver products.

As non-bank payment players roll out several of the quasi-bank features now permitted by the RBI, the
market can expect significant product innovation which will increase customer usage, enable much wider
penetration of pre-paid instruments, and push the growth of digital payments.

A question that is being asked is how banks will react to these measures that remove a lot of the competitive
advantage that banks have historically had. However, Fintech players tend to service several customer
segments that banks find too expensive to tap into in the ordinary course. The market has, consequently,
shifted to more collaborative model, with banks and non-bank entities partnering in several dimensions,
each leveraging their respective strengths to provide customers easy-to-use financial products. Non-banks
can leverage technology more effectively while banks have strong balance sheets. There are several
partnerships in the payments space where banks have partnered with technology platforms to manage the
customer and product interface for both pre-paid and UPI-enabled payment solutions.

(ii) Strengthening digital payments infrastructure

The RBI, with the intent of strengthening the digital payments infrastructure and also lowering systemic
risk, had (in August 18, 2020) released a framework for the authorization of a new pan-India umbrella entity
focusing on retail payment systems, such as setting up automated teller machines and white labelled points
of sale; developing clearance and settlement systems for participating Fintech players; undertaking systemic
risk management; and ensuring competitive and efficient functioning of the payments space. The market
expectation is the RBI will issue licenses to 2-3 pan India umbrella payment entities. The new pan-India
umbrella payment entities are likely to bring about innovation in digital payments infrastructure and
products which will usher in the next substantial change in digital payments.

(iii) Financial access and inclusion

Given that digital products are capable of a much wider reach than the traditional financial products
delivered via physical delivery channels, many more people can easily access Fintech products. Consumers
only need a smart phone, and good mobile connectivity to be able to transact and access digital financial
products.

Several Fintech players are now looking at Tier II, Tier II cities, and more remote locations as focus areas
for their digital payment products. Digital and financial literacy will be critical to roll out this next phase of
digitization of payments in remote and unbanked areas. Investment in digital payments infrastructure
particularly on last-mile delivery and on expanding internet connectivity in Tier II and Tier III cities will be
crucial.

Digital payment products have become the first point of contact for many consumers to access a much wider
set of financial products – credit products, small value loans, insurance, and investment products. Wider
penetration of digital payments therefore means not only digitization of payments but also increase in access
to the formal financial sector for several sections of consumers.

The recent changes rolled out by the RBI has allowed Fintech platforms to offer quasibanking facilities and
meet a much wider set of financial needs of consumers. There is a clear recognition among market players,
regulators, and consumers that Fintech plays a critical role in the Indian financial services sector and can
effectively meet the goals of financial inclusion and access.

1.10 Factors contributing to the emergence of digital payment systems

The effect of the digital wave on the payment industry is non-negligible. In 2015 the volume growth for
non-cash transactions reached $426.3 billion (about $1,300 per person in the US) (about $1,300 per person
in the US) (about $1,300 per person in the US) s (USD) which corresponded to a 10.1% increase compared
to the previous year. In addition, according to a study made by the Boston Consulting Group and Google,
digitalization will accelerate in the next five years and non- cash transactions – today amounting to 22% of
all consumer payments – will overtake cash transactions by 2023.

This revolution is due to four main factors:

• The increased connectivity and mobility of our daily lives shifting consumer expectations towards
dematerialized modes of payments.
• The consumer shift towards digital urging retailers to change marketplaces towards e-commerce
and m-commerce.
• The arrival of numerous innovative solutions disrupting the very value chain of payments.

• The favorable regulatory lenience fostering innovation and opening competition.

1.11 New payment habits and channels
Historically, there were two main use cases for payments: retail shopping and peerto-peer exchanges.
However, the digital wave has triggered the arrival of a new type of purchasing habit: online shopping.
Whether it is via computer (e-commerce) or mobile phones (m-commerce) the trend has entirely
redefined the model upon which the payment industry is based. In 2016, 1.61 billion people purchased
goods online for a total of $1.9 trillion (about $5,800 per person in the US) (about $5,800 per person in
the US) (about $5,800 per person in the US) s (USD). Nonetheless, the emergence of online commerce
does not imply the death of traditional retailing. According to the Boston Consulting Group, retail and
wholesale distributors will continue to hold a large share of payment volumes in the future and will
even grow by 4% in Europe and 8% in North America by 2025.
Overall, digital technologies have impacted all the payment scenarios by changing both the way these
payments are made (channel of payment) and their instrument. In 2016, Cap Gemini Consulting
identified six main categories of payment channels:

1. POS (Point-Of-Sales),

2. ATM (Automated Teller Machine),

3. PIP & AIPs (Third party providers),

4. Mobile

5. Online

6. Bank branches.

as well as 6 payment instruments:

1. Digital wallets (mobile phone)

2. Credit
3. Debit
4. Stored Value Cards/e-money

5. Checks/drafts

6. Virtual currencies

1.12 Examples of technologies disrupting the payment process

Multiple technologies have empowered the digitalization of the payment process. These technologies
intervene at all levels of the value chain and have/will reshape the way payments take place

• NFC: Near Field Communication defined as a form of contactless communication that connects
two devices when the devices are close to each other. The connection enables the two devices to
share information with each other via radio-frequency. From a payment perspective, this technology
 has been used to connect credit/debit cards with a POS device. In addition, it is now gradually
incremented into phones in which the information shared is encrypted and dynamic. Mobile wallet
solutions like Stripe, Apple Pay, Samsung Pay or Android Pay use this technology.

• QR Coding: Quick Response Coding is also a form of contactless communication process

connecting two devices. However, in this case, the information is encrypted in the form of a
twodimensional bar-code decrypted by the other device via camera or infra-red scanning. PayPal or

MasterCard are among the solutions that have integrated such type of solution.

• BLE: Bluetooth Low Energy is also a form of wireless communication. Closely related to the NFC
technology, the BLE relies on radio waves to transmit information. When two sensors are close to
each other, they recognize their personal information. However, the BLE payment process appears
to be quicker (0.003 seconds for BLE versus 0.1 second for NFC).

• IoT: Directly correlated with NFC, QR Coding and BLE, Internet of Things is a form a
machinetomachine communication composing a network of devices of all kinds, in such industries
as automotive, consumer goods, and utilities, that exchange information and perform functions
without the physical assistance of humans. In 2010, this network composed 12.5 billion devices, a
number expected to grow up to 50 billion in 2020.From a payment perspective however, very few
have jumped on the IoT bandwagon.

• Tokens: Tokenization is the process by which sensitive data is protected by transforming it into an
algorithmically generated number and is used for safety purposes as a security enabler for credit
card payments online or by phone.

• Biometrics: Biometry is the process of automated recognition of individuals based on their

physiological or behavioral characteristics such as fingerprints, face, iris, voice, pulse, handwriting,
signatures, etc. From a payment perspective it is used to authenticate the payment.

• Block chain: Block chain is a digital distributed transaction ledger in which transactions are
grouped into blocks that are linked to one another to form a
‘chain of blocks’ and for which all parties have access to review past entries. The chain, is later
protected by cryptography so previously recorded transactions can be preserved. The advantage of
this technology is that it has the potential to provide faster transactions at a cheaper rate. If on
average transactions are processed within 24 hours, with block chain, they could be processed within
0.1 second and for one-eight of the traditional cost. In addition, on average, it could lead to $20
 billion (about $62 per person in the US) (about $62 per person in the US) (about $62 per person in
the US) savings in costs associated with financial transactions.

• Cryptocurrencies: Closely related to block-chain (technology upon which they are built),
cryptocurrencies could affect the monetary ecosystem and the balance of indexes. Nevertheless, the
lack of legal framework continues to define the boundaries of their application.

• Al and machine learning: AI finds its use in risk detection and in assisting humans to quickly

understand exceptionally substantial amounts of changing information. With an increasing amount

of digitally-powered transactions, this technology could offer multiple opportunities to reshape the

payment sector. It could contribute to the detection and reduction of frauds.

1.13 Payments Growth Factor

Some reasons why it makes sense to adopt digital payment methods are:

• Convenience and Speed: The most basic reason one should go digital is the sheer ease it brings. Numerous
forms of digital payments have made it more convenient – paying bills online or on mobile, buying a public
transport ticket with an e-wallet or using a tap-and-pay card for a purchase – has all been reduced to a
matter of seconds. Digitally, one can pay for anything down to the exact paisa vis-à-vis shuffling for exact
change.

• Security: Payment regulations in India are governed by a forward-looking, yet cautionary body that is
concerned with the protection of its citizens. It has introduced various measures to safeguard transactions
and continues to do so regularly. Additional Factor of Authentication (AFA) and real-time transaction alerts
were the first few steps. This was enhanced further with biometric/Adhar-based authentication and robust
fraud mitigation measures.

• Consumer Safety and Protection: Along with proactive measures, there are redressed mechanisms that
safeguard consumers in case of breaches. When one loses a wallet/cash, you know that it is all gone. With
digital payment instruments, it is simpler – one loses it, one block it – limiting your financial exposure.
One can also raise chargebacks and disputes over transactions that you are erroneously been charged. If
anyone face a fraud and report it in time, there is a liability to pay back as well.

• Financial Gains: To popularize digital payments, the government and payment instrument issuers are
incentivizing customers through cash back schemes and discounts. Some provide loyalty programs based
on usage of the instrument. Payment service providers have also started providing insurance on payments
and against frauds, cushioning the risk.
• No Financial Leakages: With a large country like ours, there are many leakages in transfers especially to
the less savvy. Initiatives like the Direct Benefit Transfers (DBT) and Public Distribution System (PDS)
improve point-of-sale traceability and help customers receive the benefits and subsidies earmarked for
them, without bureaucracy or leakage. A transparent electronic trail helps track expenses and subsidy
transfers to the last mile.

1.14 Government initiatives

Some of the initiatives taken by government to promote digital payments are:

• DigiVaarta: DigiVaarta is launched to spread the awareness of an DigiDhan and on the usage of BHIM
app.

• DIGI shala: It is launched on DD channel to promote digital payments.

• DigiDhan Abhiyan campaign: It is organized to promote cashless transactions.

• Vittiya Saksarta Abhiyam: It is an initiative by MHRD to engage youth to use a digitally enabled cashless
economy.
• Lucky Grahak Yojana and DigiDhan Vyapar Yojana offer cash awards to consumers and merchants
who utilize payment instruments for personal consumption expenditures.
• TDS Deduction at Source: To discourage the practice of making business payment in cash, 2% tax
deducted at source (TDS) will be levied on cash withdrawals exceeding Rs. 1 crore in a year from a bank
account
• Use of Low-Cost Digital Modes: Any business entity with annual turnover more than 50 crore shall offer
low-cost digital modes of payments to their customers and no charges shall be imposed on customers as
well as merchants. BHIM UPI, Adhar Pay, NEFT and RTGS can be used to promote less cash economy
• Digital Smart Government cards: officials made social security pension payments through digital smart
cards which led to reduction in bribe.
• Go Digital and get discounts on Insurance, petrol, and Diesel: 0.75% discount is given on petrol and
diesel purchase if digital payment is made by e-wallets or debit cards or credit cards.
• Discount on Rail Tickets: People travelling by train by purchasing monthly tickets will enjoy a discount
of 0.5% if tickets are purchased digitally.
• INR 10 lakhs of Insurance: People travelling long distances using Indian Railways will get travel
insurance of Rs 10 lakhs on unforeseen happening if tickets are purchased digitally.
• Rupay Card from NABARD: Those people who have kisan credit card can get Rupay cards from
NABARD.

• 10% discounts for highway tolls: It can be availed when payments are made using digital payment mode.

1.15 Challenges
 Even though the number of digital transactions is a positive sign for the economy, there are several structural
challenges that are hindering the growth of digital payments in our country. While a growing number of
ecommerce platforms are adopting digital payment methods, consumers still prefer the option of paying by
cash. This phenomenon is in part related to the apprehension regarding cybersecurity in digital transactions
(as shown in figure- Reasons against adopting digital payments across India in 2017-18)

Some of the major challenges are:

• Fraud and Security: The security breaches and risks for data security is the biggest concern among the
consumers and can be considered as a key challenge for the adoption of digital payments. Making a safer
route for transactions is imperative and not a choice as hacking and security breaches can cause financial
as well as a reputational loss for the company.
• Awareness and Adoption: India is a cash dominant society. Even though there is a rapid increase in digital
payment modes, there is still a lack of awareness among people concerning security, data privacy, etc.
which is leading them to believe that making payments via cards or cash is better than mobile application.

Consumers still do not consider mobile wallets as a safe mode for payment and the mobile wallet industry
needs to invest a good amount of time and effort to overcome this.
• Merchant Support: Adopting mobile wallets is putting many merchants into the dilemma. Many
merchants (from small as well as big businesses) are still resisting to upgrade to EMV standards and
contactless payments. This is resulting in customers sticking to the traditional/old methods of payments.
• Compliance: Mobile wallets need to be compliant with all legal requirements of government standards.
The mobile wallet industry should take needed efforts in the best interest of customers as well as for
themselves.
• Compatibility: Mobile wallets need to be compatible with all the mobile models and their operating
systems. The customer is the king and he is looking for a seamless and convenient way of digital
transaction, for which it is required that compatibility exists across all Operating Systems and mobile
devices.

1.16 Way Forward

For smooth implementation of cash less system in India, a wide variety of measures are needed by the
Government. It will have to bring transparency and efficiency in epayment system, strategies licensing
payment banks, promoting mobile wallets and withdrawing service charge on digital payments, etc.

• Increase digital literacy in India so that digital transactions can be increased as well as the coefficient of
safety factor rises. Increase in digital literacy can decrease the presently occurring banking frauds.
• Strengthen the cyber infrastructure and boost cyber security in India to reduce hacking and banking
theft incidents. As the digital transfer of money is totally technology based the cyber security factor is
essential because even a single security breach can shake confidence of people in digital transactions.
• Boost mobile infrastructure in the country. Most of the digital payments are now handled by mobile
devices, therefore the operating systems and android versions should be made compatible to increase the
confidence in digital payments.
• Reduce the digital divide among the masses by incentivizing people in urban and more importantly in
the rural areas.
• Ease the complexities and enable end-of-day settlement process for the merchants (As small retailers and
merchants need rotation of cash flow in quick turnaround time for their business operations).
• Reduce the transaction charges over the digital payments and discourage cash transactions by charging
cash handling cost.
• Emphasize on integrated system of digital payments to reduce existing challenges and support quality
outcome. For instance, by ensuring more stringent laws for security breach, IT Act for digital payment
transactions etc.

Effect of the digital wave on the payment industry is non-negligible. In 2015 the volume growth for noncash
transactions reached $426.3 billion (about $1,300 per person in the US) (about $1,300 per person in the US)
(about $1,300 per person in the US) s (USD) which corresponded to a 10.1% increase compared to the
previous year. In addition, according to a study made by the Boston Consulting Group and Google,
digitalization will accelerate in the next five years and non- cash transactions – today amounting to 22% of
all consumer payments – will overtake cash transactions by 2023.

1.17 Common Facts About Digital Payment System in India

Here are some common Facts about Digital Payments system in India

• The total transaction value of the Digital Payments system was around ₹4572 Crores as of March
2020 which has already exceed the target of ₹4,000, set by the Government of India.
• Swiping of Debit Card at Point of Sale (POS) has increased by 27% and swiping of Credit Card grew
by 22% as in March 2019 as compared to the corresponding period last year. Whereas ATM
withdrawal increased by merely 15%, according to RBI data. Though this figure declined by

15.47% and 12.23% respectively on March 20 due to lockdown.

• Aiming at “Cash-Lite” payment society, RBI published Vision Document on the

“Payments and Settlements Systems in India: Vision 2019-2021”, a 3-year RoadMap to augment
the Digital payments solutions amongst the masses where the Digital payments system still has not
been reached. RBI is also considering the implementation of Offline Digital Payments solution, i.e
mode of payment without using the internet or smartphone for future development.
• More than 566 million people use the internet today and are expected to reach 627 million at the end
of 2019. Digital adoption mostly propelled by Rural India which registered a growth of 35%.
 • The government is considering the mandatory setting up of the QR code-based payment system at all
shops in India.
• The number of people who use Digital Payment systems at least once in a month grows to 100 million.

1.18 Release to embrace digital payment systems

Cash is King, but things have changed and that is not the case anymore. Digital payment systems
have spread like wildfire especially in the last three years. India has been one of the frontrunners
when it comes to digital payments. According to a report by NITI Aayog, In FY 2016-17 itself, digital
payments rose by 55% in India. According to a report by the National Payments Corporation of India
(NPCI), UPI users in India have crossed 100 million. If one think about most recent transactions, one
might realize that make most of online payments digitally. Anyone uses debit/credit cards or UPI to
pay bills and purchase things.

So, here are the top benefits of doing so.

1.Greater convenience

It is human tendency to chase after convenience. Anyone wants everything on fingertips, and rightly
ensuring that one always have enough cash on one can be difficult. Anyone also had to be worried
about safety since one can use cash if they steal wallet. Digital payment systems, on the other hand,
have made things so much easier! If anyone left wallet at home can still pay for your auto ride simply
by scanning a barcode through -wallet system! With one tap of the finger, we can pay our mobile
bills, electricity bills, house rent and even buy food when feel like a snack.

2.Improved security features

The government is pushing digital payment systems because it wants to increase transparency among
monetary transactions among people. Indians have traditionally held on to cash but now everyone
has slowly understood the safety and security that accompanies digital payments. When one carry
cash, there is a high probability of it being stolen. Even withdrawing Rs.5,000 rupees from an ATM
at night especially can be worrying. Anyone is constantly anxious about what is in wallet. With digital
payments, all these issues do not even come up. Many digital payment systems are protected with
fingertip sensors or special codes. So even if someone steals smartphone, that person will not be able
to access bank account from e-wallet system.

3.Help you keep track of your payments

With cash payments, a person would have to maintain a manual record of every expense they make.
But this is exceedingly difficult to sustain in the long-term as it is unrealistic to keep track of every
small payment that person make. Digital payment systems automatically log all transactions.
 4.Multiple digital payments options

Digital payment options are abundant. One can have several UPI options, debit cards, credit cards,
NFC, all aided by highly secure payment gateway systems. In fact, several payment gateway
companies have blossomed because of this digital revolution. Money gets immediately deducted from
account and gets added when receive money from someone. There is absolutely no delay of any kind.
When someone embrace digital payment systems, embrace a comfortable life.

5.No bank visits

Nobody likes visiting a bank. In fact, it is one of those boring tasks we keep pushing because it can
be a long and tedious process. Cashing Cheque involves standing in long lines and having to visit
multiple tellers before finally get what is needed. Setting a DD takes around 24 hours as well.

6.Tax benefit

The government has provided service tax waivers for several goods and services. Service tax is

waived up to Rs. 2000 on card transactions. One can also avail discounts on fuel, train tickets and

some insurance. The government has taken these steps with the intent of pushing people to embrace

digital payment systems 7.women empowerment

The digital payment systems revolution in India has been a pioneer in empowering women across the
country. Many women in India have traditionally been dependent on men to handle their finances.
Men used to control the amount of cash that women could use for household purchases. These days,
an increasing number of women are accessing their accounts directly through digital payment systems
for even the smallest things such as buying vegetables from local kiranawalla.

1.19 Promotion of payments through cards

Short term steps

The Short-Term Steps for Promotion of Payments through Card / Digital Means, which will be
implemented within one year, are suggested as follows:

A. Promotion of Card / Digital Transactions in Government Payments and Collections

• Government Departments/ Organizations / Central Public Sector Undertakings/ Anchor Networks

shall take steps to (a) withdraw convenience fee / service charge /surcharge on customers who prefer
to make card/ digital payments for essential commodities, utility service providers, petrol pumps,
 gas agencies, railway tickets/ IRCTC, tax department, museums, monuments etc.; (b) take
appropriate steps to bear MDR cost like other merchants; and (c) build acceptance infrastructure
(POS/ Mobile POS terminals) for card / digital payments at all collection centers.

• Ministry of Road Transport & Highways / Ministry of Urban Development shall facilitate the use
of existing open-loop systems issued by a bank for multipurpose use, including for making transit
payments with a dedicated application (e.g. Toll fees, metro rail and bus services, etc).

• Department of Financial Services/ RBI shall ensure that each eligible account holder under PMJDY
may be provided access to the digital financial services in addition to the “RuPay Card.”

• Ministry of Electronics & Information Technology shall formulate an action plan to ensure
Government Departments/Organizations introduce appropriate acceptance infrastructure and
facilitate collection of all revenue, fee, penalties etc., through card/ digital means beyond a specified
threshold, through

“PayGov India” or other mechanisms.

• Ministry of Electronics & Information Technology shall develop ‘PayGov

India’ as a “single unified portal” across central, state governments and their public sector
undertakings for collection purposes.

B. Measures for Wider Adoption of Card/Digital Transactions

• Department of Financial Services/RBI shall take steps to (a) rationalize Merchant Discount Rate
(MDR) on Card transactions; and (b) formulate a differentiated MDR framework for some key transaction
segments, such as utility payments and railway ticketing by examining the matter
holistically in consultation with the stakeholders.

• Department of Financial Services/RBI shall relax Two Factor Authentication for both card present
and card not present transactions below a certain specified amount. DFS/ RBI shall work out a multi
tired authentication framework for low, medium, and high value transactions.

• Department of Revenue shall take steps to remove double taxation, if any, on service tax currently
paid on MDR by the acquiring bank and on interchange fee by the issuing bank.

• Wherever needed, the Departments/ Ministries shall make modifications in the Rules and
Regulations that may have been issued, so that appropriate change is incorporated to allow payments
/ receipts by using cards/ digital means also. Cash payments by any Government Department/
Agency shall be allowed only under extremely specific circumstances for clearly stated reasons.

• Department of Revenue/ Department of Financial Services shall mandate payments beyond a

prescribed threshold old only in card/ digital/cashless mode.

C. Creating Acceptance Infrastructure

 • Department of Financial Services/ RBI shall introduce of formulae linked acceptance infrastructure
for different stakeholders of certain card products through appropriate ratio of POS terminals/
mobile POS terminals to cards issued or other means. The possibility of creating an Acceptance/
Financial Inclusion Fund for the purpose shall be explored.

• Department of Financial Services/ RBI shall re-examine requirements under PML Act and Rules,
for bringing Uniform (Know Your Customer) KYC norms based on an authorized identity for all
payment systems, including Unique Identification Number or other proof of identity. Appropriate
steps shall also be taken to introduce tiered KYC for facilitating low, medium, and high value
transactions through cards and digital means.

• Department of Financial Services/ RBI shall amend and simplify the Merchant Acquisition
guidelines to include Unique Identification Number or other identity-based KYC for merchants.

• Department of Financial Services / RBI shall take steps to allow enhanced Cash out, of a specified
amount, at Point of Sale (PoS) Terminals through Cards/ Digital means.

D. Encouraging Pointing/ Payment Channels

• Department of Telecommunications shall take appropriate steps for rationalization/ reduction of

USSD Charges and the feasibility of its being charged only on successful transactions.

• Department of Telecommunications/ Department of Financial Services/ RBI shall make a provision

for a unified USSD platform which can support transactions across all payment mechanisms.

• Department of Financial services/ RBI shall promote Mobile banking to leverage upon the huge
infrastructure available at lower cost. Towards this end, steps shall be taken to address mobile
banking registration and activation challenges; ease regulations and reduce entry barriers to digital
wallets/ pre-paid instrument.

E. Awareness and Grievance Redressal

• Department of Financial Services/RBI shall take steps (a) to create necessary assurance mechanisms
for fraudulent transactions wherein, in case of a fraudulent transaction, the money will be credited
back to customers’ account and b locked and subsequently released after the investigation is
complete, within maximum of 2 – 3 months; (b) to strengthen the role of banking ombudsman to
provide greater customer confidence and (c) to formulate a comprehensive customer protection
policy for transactions through cards and digital means.
 • Department of Financial Services/RBI shall take steps to optimally use funds under Depositor
Education and Awareness Fund (DEAF) for expanding acceptance infrastructure and conducting
awareness campaigns for a less cash society.

Medium Term Steps

The Medium-Term Steps for Promotion of Payments through Cards / Digital Means, which may be
implemented within two years, are suggested below:

• Department of Financial Services/RBI shall frame necessary guidelines for merchant payment
standards and interoperability between various issuers and acceptance networks, including telecom,
internet, pre-paid instrument providers and Payments Banks, to ensure that merchant payments are
interoperable across the broad spectrum of payments and settlements system.

• Department of Economic Affairs shall constitute one or more Committees with key industry
stakeholders, RBI and concerned Government Departments to review the payment system in the
country. The following issues, among other, may be addressed by the Committee:

1. Need for changes, if any, in the regulatory mechanisms under the Payments and Settlement
systems (PSS) Act, 2007 and, in other legislations affecting the payment ecosystem.

2. unique identification Number or other proof of identity for authentication of cards digital
transactions and setting up of a Centralized KYC Registry.

3. of single window system of Payment Gateway to accept all types of Cards / Digital payments
for Government receipts and enable settlements between consumer and merchants via NPCI
or other agencies within specified timelines

4. . Studying feasibility and framing rules for creating a payments history for all card/ digital
pay

• Department of Revenue/ Department of Economic Affairs/ Department of Financial Services

shall grant tax rebates/incentives or introduce mechanisms for cash back/lottery or any other
measures to incentivize transactions through cards and digital means.

• Department of Financial Services/ RBI shall develop a methodology for enabling extremely high
value transactions through cards and digital means beyond the limits presently prescribed.

1.20 Importance of the Study

This study is an attempt to identify the thinking of consumers with respect to online payments and about
the safety of these payments. Though, a lot of research has been done on consumer perception towards
credit card payments, very less has been done on other modes of payment and the challenges faced by the
consumers for digital payments. This study aims to Understand the frequency of digital payments and
factors affecting, or challenges faced by the consumers while using digital payment modes these may affect
consumer perception.

1.21 Aim of the study

• To understand concept and the different modes of digital payment and to understanding consumers'
Perceptions with respect to online and digital payments and safety of these transaction.
• To know the perception of consumers towards security of digital payment systems.
• To understand the awareness of the students on the usage of digital payments.
• To know insight of respondents towards cashless payment systems.
• To identify the degree to which consumers believes that using digital payment would enable them to
increase their trust.
 LITERATURE REVIEW
CHAPTER-2

India is the second-largest smartphone market in the world after China. The smartphones and other
facilities with strong back up of Internet providers like Reliance Jio have boosted usage of the
digital wallets, electronic payments. Mobile connectivity and internet are very important for online
payments. As of November 2019, the active internet users in India are 504 million (Digital in India
2019 by IAMAI and Nielsen). Financial service institutions and other firms have tried a lot in increasing
online payments and governments have also increased efforts to make increased penetration of internet.
The penetration in rural India is also increasing substantially). The digital payment market is estimated to
be $ 69,168 million in 2020(statistica.com). This is contributed by the technological developments
happening in this filed and emergence of digital wallets. Digital wallet is a software application that
helps users to digitally store money, payment credentials, and more. Consumers can use this software
to implement various types of cashless transactions (McKinsey, May 2015).

This is very much used for digital payment. The major deterrent for India‘s growth in this sector is
the reach and quality of internet. India was ranked 128 out of 140 countries in terms of internet download
speed as per the research done by The Hindu (December 2019). This must be improved for digital
payment to be more successful.

Though digital payment has reduced in different key sectors affected by COVID- 19, a lot of other
sectors have seen an increase of utilization like online retail stores, gaming industry, utility payment
etc (PWC Report, 2020). Usage of mobile payment has increased over the years for payment. Indians
are moving from cash to cashless economy slowly. Podile and Rajesh (2017) in their paper
entitled
―Public Perception on Cashless Transactions in India were of the view that majority of the customers in
the country have adopted the electronic payment system for their transactions.

Sumathy and Vipin (2017) identified that the major drivers that accelerated the growth of Indian
Digital Payment Systems are found to be favorable regulatory environment, the emergence of next
generation payment service providers and enhanced customer experience.

To understand the awareness level of a cashless economy, a study was done by Garg and
Punchal (2017) in which benefits, and challenges of a cashless economy were studied. The conclusion
showed the preference of people towards cashless economy because they feel it helps to fight against
illegal activities, corruption, etc.
This theory is supported by Das and Agarwal (2010) in their article on ―Cashless P a y m e n t
System in India- A Roadmap. The country needs to move away from cash-based towards a cashless
(electronic) payment system. A cashless economy will help in reducing currency management costs,
track transactions, check tax avoidance / fraud etc. and enhance financial inclusion and integrate the
parallel economy with mainstream. Report by ETBFSI (2019) gave insights about digital payments.
The report gave insights about customer demand which has increased more than 100% in the last few
months. Credit and debit cards were used maximum and digital payment was done mainly in food
sector, financial services, and tourism. The maximum usage was found in Bengaluru and wallets
usage in cities have also increased. Digitalization is playing a significant role in every field of business,
from purchase to payments (Yuvaraj & Eveline 2018).

Kumar and Chaubey (2017) have found from their study that process of digitization is happening
very slowly and people are adopting it as there is no other choice. With the advanced technology and
availability of the internet, consumers find convenience in online banking facilities and other mobile
applications. It has made consumers more convenient to do their transactions anywhere and at any
time.

Although consumers fear for their privacy and security in transacting online, developments in
technology in the form of big data, internet of things helps us to move towards a cashless economy. The
importance of awareness creation by suing digital marketing and social media was discussed by
Andrew Stephen in 2015. The speed of adoption was discussed by some researchers.

D. Sudhir Babu, P. Lakshmi Narayanamma (2018) found that electronic payments help in buying
products faster. Gokilavani et al (2018) found a significant difference in the socio- economic status
of consumers and their perception towards digital payments in his study on perception of customers
towards Digital Payments.

Customer perception plays a key role in the adoption of digital payment. Service providers for digital
payments should also take proper care to avoid undue delays in processing payments. All these points
are also supported by other studies.

A study on technology by Reiss D.G in 2018 found that improvement in Information and communication
technology and reduction in cost of providing internet will make digital payment more widespread.
This was also mentioned with the added observations of ease of use and convenience by (Kotecha P.S. in
2018), (Neha
Mehta, Sweety Shah ,2020), (Vinitha. K, Vasantha Shanmugam,2017) (Alaknanda Lonar et al, 2018)

and (Anoushka Sharma et. al. (2015).

Teoh et al (2013) in his study of Malaysian respondents who used e- payment also found that the
most favorable factors affecting e-payments were ease of use and self-efficacy. But they found that there
was a negative relationship between trust and security.

Ardiansah et al (2019) found a positive relationship between purchase intention and ease of use.
D.N.V. Krishna Reddy, Dr. M,Sudhir Reddy (2015) found that digital medium provides ease of use
and safety and security in payments. These issues were also discussed by Akhila Pai (2018)
Along with ease of use, social factors and perception of brands are also found to be important for
influencing customer adoption of digital payment (Chua Chang Jin et al, 2020). This was also supported
by the research done by Andrew T Stephen (2015). The loyalty factor was also discussed by Dr.K
.S. Manikandan and J. Mary Jayakodi (2017). Brijesh Sivathanu (2018) mentioned in his article
mentioned the importance of how customers want to behave and resistance to new innovations on the usage
of digital payment. Junadi, Sfenrianto (2015) studied the main factors which influenced the reason
behind digital payment in Indonesia and found 5 major factors, namely, culture, perceived safety,
expectation of performance, expectation with respect to effort and impact of society.

Gokilavani, R, Kumar Venkatesh. D, Durgarani. M, Mahalakshmi R (2018) also studied the varied
factors affecting rate of adoption of digital payment. The importance of digital payment in banking was
stressed by 2 papers. Roy, SK (2017) analyses internet banking acceptance and found that acceptance of
technology and risk management are the reasons for customer acceptance. Priyanka Philip (2020)
found that internet banking improves the operating efficiency of the bank. Lin WR et al (2020) talked
about the importance of online banking, need to maintain its efficiency and reducing costs so that
customers will be happy, and banks can retain them.

Importance of demographics and factors influencing consumer adoption was given by Satadruti
Chakraborty , Dipa Mitra (2018) (M. Kavitha and K Sampath Kumar,2018). The importance of
demographic factors like education level was also stressed upon by the study by Shamsher Singh
and Ravish Rana in the year 2017 who also talked about importance of internet penetration and
usage of smartphone. The importance of age and education in influencing digital payments was also
studied by Vally & Divya in 2018. Dr.K. Kamatchi Eswaran (2019) found that only education has
an impact of adoption of digital payment. A contradicting view was given by Singh and Rana (2017) whose
study showed that the demographic factors do not really show any impact on the implementation of digital
payment mode. Another angle was given by Vaishnav Kameswaran, Srihari Hulikal Muralidhar in
2019 whose study found how visually impaired customers used cash and digital systems for payment in
metropolitan India.

Other studies also investigated these factors. Factors determining digital payment and how this payment
influence how consumers purchase was found out from a study in Nigeria which also found factors like
digital literacy, financial inclusion, service with respect to internet and infrastructure as the essential
elements for adoption of digital payment in Nigeria. (Oyelami, L.O et al,2020).

Another study found out a positive relationship between benefits and trust whereas there was a
negative relationship improvement in Information and communication technology and reduction in
cost of providing internet will make digital payment more widespread. This was also mentioned with
the added observations of ease of use and convenience by (Kotecha P.S. in 2018), (Neha Mehta,
Sweety Shah ,2020), (Vinitha. K, Vasantha Shanmugam,2017) (Alaknanda Lonar et al, 2018) and
(Anoushka Sharma et. al. (2015). Teoh et al (2013) in his study of Malaysian respondents who used
e- payment also found that the most favorable factors affecting e-payments were ease of use and
selfefficacy. But they found that there was a negative relationship between trust and security.

Ardiansah et al (2019) found a positive relationship between purchase intention and ease of use.
D.N.V. Krishna Reddy, Dr. M. Sudhir Reddy (2015) found that digital medium provides ease of use
and safety and security in payments. These issues were also discussed by Akhila Pai (2018) Along with
ease of use, social factors and perception of brands are also found to be important for influencing
customer adoption of digital payment (Chua Chang Jin et al, 2020). This was also supported by the
research done by Andrew T Stephen (2015). The loyalty factor was also discussed by Dr. S.

Manikandan and J. Mary Jayakodi (2017).

Brijesh Sivathanu (2018) mentioned in his article mentioned the importance of how customers want to
behave and resistance to new innovations on the usage of digital payment. Junadi, Sfenrianto (2015)
studied the main factors which influenced the reason behind digital payment in Indonesia and found 5
major factors, namely, culture, perceived safety, expectation of performance, expectation with respect to
effort and impact of society. Gokilavani, R, Kumar Venkatesh. D, Durgarani. Mahalakshmi R (2018)
also studied the distinct factors affecting rate of adoption of digital payment. The importance of digital
payment in banking was stressed by 2 papers. Roy, SK (2017) analyses internet banking acceptance and
found that acceptance of technology and risk management are the reasons for customer acceptance.

Priyanka Philip (2020) found that internet banking improves the operating efficiency of the bank.
Lin W-R et al (2020) talked about the importance of online banking, need to maintain its efficiency and
reducing costs so that customers will be happy, and banks can retain them. Importance of demographics
and factors influencing consumer adoption was given by Satadruti Chakraborty , Dipa Mitra (2018)
(M. Kavitha and K Sampath Kumar,2018). The importance of demographic factors like education
level was also stressed upon by the study by Shamsher Singh and Ravish Rana in the year 2017
who also talked about importance of internet penetration and usage of smartphone. The importance
of age and education in influencing digital payments was also studied by Vally & Divya in 2018.

Dr.K. Kamatchi Eswaran (2019) found that only education has an impact of adoption of digital
payment. A contradicting view was given by Singh and Rana (2017) whose study showed that the
demographic factors do not really show any impact on the implementation of digital payment mode.

Another angle was given by Vaishnav Kameswaran, Srihari Hulikal Muralidhar in 2019 whose study
found how visually impaired customers used cash and digital systems for payment in metropolitan India.
Other studies also investigated these factors. Factors determining digital payment and how this payment
influence how consumers purchase was found out from a study in Nigeria which also found factors like
digital literacy, financial inclusion, service with respect to internet and infrastructure as the essential
elements for adoption of digital payment in Nigeria. (Oyelami, L.O et al,2020). Another study found
out a positive relationship between benefits and trust whereas there was a negative relationship between
risk and trust. This trust influenced customer intention to use digital payment. (Jungkun Park et
al,2018). Efficiency, safety, convenience, savings in cost and time, ease of use and privacy of consumers
have positive and high impact on the rate of adoption of digital payment of consumers (R.
Gokilavani,2018) ( Cherinet Boke Chakiso, 2019).

The importance of economic and other benefits along with safety factor in influencing digital wallet
payment was put forward by Sushil Punwatkar and Dr. Manoj Verghese (2018). Trust, safety and how
much the system helps the user are also found to be factors which help the digital transactions in gulf
countries (Wassan Abdullah Alkhowaiter, Aug 2020). Vaidya et al (2020) also talked about the
importance of convenience in digital payment along with connectivity issues and more penetration of
smartphones. The importance of third-party payments which have a high positive relationship with
the ability of finance companies to create value for the customers was studied by Yao Meifang et al,2018.
This factor was also highlighted by the study on the kind of advantages delivered by banking using mobile
by Sampaio C.H. et al, 2017.

The importance of mobile wallets was studied by several researchers. Ramesh Sardar (2016) study
found out that mobile wallets contributed to the development of cashless electronic payments. The
author investigated the inter-operability of the mobile wallets so that customers can benefit from
easy and fast transactions The importance of social influence and risk of using mobile wallets were
found to be some of the factors for usage of wallets for payment (Madan.K, Yadav. R,2016).

Cost was found to be the important factor for adopting digital wallet (P. Tiwari, V. Garg, and A.
Singhal ,2019). Personal factors, technical factors and environment influence mobile payment (Maris
Karsen,2019).Expectations with respect to performance and other technical factors are more relevant
than social or individual motivation factors for the acceptance of mobile payment systems in India
.(Gupta

K. and Arora ,N., 2019)

Usage intention, usage of new methods and price discounts etc influence mobile wallets usage among
consumers and government owned platforms like BHIM was found to be safer. (Neelu Tiwari,
Naveen Kumar Singh, 2019).

A study by Dr. Mamta Brahmbhatt (2018) found that preference of the wallets was high in the city and
the customers there were aware of government initiatives. The role of government and that of government
owned platform was also specified by Prof. Pushpa S. Abbigeri, Dr. Rajeshwari M. Shettar (2018).
Hendy Mustiko Aji et al (2020) also studied impact of government support on usage of mobile wallets
and they found out that these effects of this support vary between countries. An analysis using unified
theory of acceptance and use of technology model with personality difference as main factor with
customer related sub factors found that expectation from the system, usage intention and problem
solving are the main thrust areas for consumer adoption of mobile payment( Pushp Patil et al, October
2020) (E.Slade et al,2015). Pushp P. Pati et al also talked about usage of theory of acceptance model and
unified theory of acceptance and use of technology model (2018).
J. Sobana Shanthini Dr. J. Immanuel Nallathmbi (2018) found that usage of cashless transactions
like debit and credit cards was frequent, but security was the main challenge in adoption. Lavanya R
(2019) also spoke about digital banking services and government initiatives and their role in usage of
l in her article. Prasanth et al (2019) found that although plastic money is used a lot due to its convenience,
safety and trust are the main deterrents in using them. Financial knowledge, nonacceptance,
Infrastructure problems and economy problems were found to be most important challenges of adoption
of digital payment in rural sector.

Improving these measures and trust are the solutions suggested by government of India. (Renu Singh,
Garima Malik,2019).

Another study found out factors like costs, safety of transactions, acceptability of digital payment
methods and ability to handle the transactions are found to be the main challenges in adoption of
electronic payment in India (Masudul Hasan Adil, Neeraj R. Hatekar,2020) .If a bank invests
on information technology then that will help in consumer usage of digital payment and their online
presence.(Santiago Carbó‐Valverde et al, 2020). Deepak Gupta, Asha (2020) also found from a
study 384 respondents in Haryana that most respondents face difficulty in digital transactions due to
poor infrastructure, poor online literacy, and connectivity) The support of government, mechanism of
addressing consumer concerns and knowledge of consumers are very important in consumer adoption
of digital payments. Fintech plays an important role here. (Ankita Das, Debabrata Das, May 2020).

The security issues were also studied by several papers. Ardiansah et al (2019) found that purchase
intention is having a weak association with security. Privacy is perceived as biggest risk in security of
mobile payment which in turn affect the usage (Vess Johnson et al, 2017). However, the risk involved
with security issues is the major problem to the success of the digital payments. This literature is supported
by Hem Shweta Rathore (2016) in a study on ―Adoption of digital wallet by consumers, in Mumbai.
Maryam Barkhordari et al (2017) analyzed features having impact on trust in digital payments in Iran.
The study found using structural equation modelling that ways of transaction using technology and access
to safety guidelines affect security whereas guidelines of safety and safety measures influence trust. Good
trust helps in easy digital payment adoption. Hassan et al (2020) studied the security aspect of digital
payment and defined factors like integrity ,authorization etc as areas of protection. They also found that
safety issues in digital payment is more complex than normal security issues.

There is a key role of small retailers in making cashless transactions popular. The study among 117
retailers in UP found that ease of transactions and safety issues were the deterrents from using digital
mode. (Subho Chattopadhyay,2018). Reduced knowledge, less market, trust, safety issues and not
having enough communications of benefits were found to be most important challenges for adoption of
digital payments in retailers (Francisco Liébana Cabanillas,2016).
Similar study among retailers in Pune city also found that high percentage of them allowed usage of digital
payment with similar problems of knowledge, trust, and connectivity issues (Upendra Lele, 2019). Vendors
do not adopt digital payment much. A study of vendors found that factors which influence behavior of
respondents are important for mobile payment. (Sumerta, 2018); (Madan, 2016); (Tan, 2016); (Yadav,
2015;). Ligon E et al (2019) found in their study that supply-side factors like infrastructure, price,
and ability to use are not the deterrents for a smaller number of people adopting digital payment. This
was found out using a study on more than 1000 small level businesspeople in Jaipur and they found that
factors like willingness to use digital mode and taxes are the main deterrents. Another reason for not using
these methods are lack of safety and other security issues.

T.M. Praveen (2020) in his article talked about Artificial Intelligence, Internet of things, and other
technologies have enhanced the digital payment industry. Use of digital identity using biometrics is also
becoming highly relevant. Near field communications and remote payments using mobile is picking
up. The future belongs to technology and scanning through mobile cameras will be enough to facilitate
payments. Technology with a human interface is going to be the new future. Use of bitcoin collection
supervision system using block chain technology was studied by P. Chen, B. Jiang, and C.
Wang(2017).The study found that this system can effectively manage transactions using digital medium
with more security and can do it efficiently. Avital, M., Hedman, J., & Albinsson, L. (2017) in their
study analyzed the use of block chain technology in creating a digital legal tender which can act as an
instrument for value exchange. The role of authentication of mobile devices and through that safety
of transactions of customers was discussed by Yoo, S. (2017). The importance of block chain technology
for safety purposes for the internet users was also studied by Paul J.Taylor et al in their article
published in 2019. Companies can use crypto currencies for payment purpose which might help in speedy
transactions thereby maintaining relationships with existing customers and acquiring new customers.
(Achilleas Boukis, 2019)

Bitcoin will play a key role as a virtual currency in future. There is a need to have stringent rules and
regulations for this concept and a framework is vital. Respondents of the surveys in India are
however increasingly demonstrating their acceptance of mobile-based payment methods, compared to
their global counterparts. A high percentage of respondents like to pay through either cash or debit card,
the two of which are closely placed in terms of their preferences, at 66% and 67%, respectively, and this
behavior could pose a serious challenge to players in the digital payment industry. A cashless society is
influenced by lot of parameters. The government has a role to play to help customers adapt to cashless
transactions. Especially this is true in the wake of the pandemic in the world. In India, one of the primary
factors is the impact of government on consumers towards cashless transactions. Both private and
public banks also promote and help their customers towards cashless transactions by offering mobile
banking and net banking facilities. Consumers can monitor, transac,make payments, recharge, booking,
etc., done with the help of mobile wallets. Different deals, discounts provided, the cashback and other
kinds of incentives help in attracting consumers to transactions without using cash. Another factor which
has contributed to the emergence and development of digital payment is crypto currency. It is important
for analysing the role of crypto currency in digital transactions and one paper which discussed this in
detail in terms of importance is Agarwal et al (2018).

Agarwal et al (2018) discussed role of crypto currency in money supply. They believed cashless
economy and digital economy really helped people in transactions. Research study suggested the
importance of digital modes of money transactions. The study gave the importance of creation of
reliable Crypto- Currencies by National Governments. It is important to develop confidence in
customer’s mind through transactional efficiency in money market. Thus, Government involvement
to generate the Crypto-Currency has become very important and critical for
tomorrow‘s normal economic and business conditions in the economy The close relationship has been
observed between the money supply, Gross Domestic Product, and price level over the period. Milton
Friedman and others have expressed that supply of money gives a fair picture of the economy in coming
time and the level of prices and inflation overall. Decisions on Monetary Policy by Central banks are
based on the money supply. Though for last few decades, the relationships between various measures
of the money supply and variables such as GDP growth and inflation have been observed to be quite
unstable. The reasons have been due to the free flow of currency across borders with online means of
movements of funds /savings.

Peter Gomer(2017) in his research article stated that the financial industry has experienced a continuous
evolution in service delivery due to digitalization. This evolution is characterized by expanded
connectivity and enhanced speed of information processing both at the customer interface and in
backoffice processes. Digital Finance encompasses a magnitude of new financial products, financial
businesses, financerelated Software, and novel forms of customer communication and interaction to the
end users. Digital Investments Support individuals or institutions in investment decisions and in arranging
the required investment transactions on their own by use of the respective devices and technologies.

Digital Investments include Mobile trading, social trading, online brokerage, and online trading in the B2C
area and high-frequency and algorithmic trading in the B2B context.

Joao Porto de Albuquerque(2016) discovered in his article despite its enormous potential, the use of
mobile Technology for carrying out payment transactions and replicating monetary features, has only
taken off in a limited number of countries. The fact that mobile payment services are not being provided
on a worldwide Scale, suggests that the reasons for the successful cases are not yet fully understood, and
as a result, cannot be easily replicated. This study includes a detailed analysis of 12 primary case studies
on existing mobile payment schemes, as well as a consultation exercise with stakeholders. The main
contribution of this study Is to provide a clear account of the knowledge that exists on mobile payments.
As a result, it has been Possible to detect serious gaps in this knowledge base (in geographical,
methodological, and conceptual Areas) and show how future research can make improvements in the field
well
Kalina S Staykova2015) stated the payment market has been stable for several decades with wellDefined
roles (acquirers and issuers), profitable business models (the card schemes) and a dominant design in
which the merchants absorb the costs associated with payments. However, numerous digital payment
Solutions, which rely on new disruptive technologies, are emerging on the payment market, transforming
the Payment area from being established into a state of flux. This article investigates the numerous factors
that determine the success of a given solution. To this end, we build a framework to analyze the entry and
expansion strategies of the digital payment solutions. Paper claims that the timing of entry of the
firstmover speeds up the timing of entry of the early follower, thus determining the order of entry.

Stefan Henningsson (2014) argued about how digital eco system plays a key role in digital Payments. In
digital ecosystems, the fusion relation between business and technology means that the decision of
technical compatibility of the offering is also the decision of how to position the firm relative to the
cooperative relations that characterize business ecosystems. This paper concentrated on development of
The Digital Ecosystem Technology Transformation (DETT) framework for explaining technology-based
transformation of digital ecosystems by integrating theories of business and technology ecosystems. The
Framework depicts ecosystem transformation as distributed and emergent from micro-, meso-, and
macroLevel coopetition. The DETT framework consists an alternative to the existing explanations of
digital ecosystem stem transformation as the rational management of one central actor balancing
ecosystem tensions.

W Ming Yen Teoh(2013), Study was conducted to view the promising growth of epayment. The use of
epayment by most respondents confirms that there is an enormous potential for future expansion of such
payment devices. The challenge is to ensure that it continues to meet consumer’s expectations which will
subsequently lead to its increased adoption and use. Study uses the multiple linear regressions; it reveals
that benefits, self‐efficacy, and ease of use exert significant influences on consumers’ perception towards
e‐payment. However, the insignificant results obtained for trust and security warrant further investigation.

C Kim (2010) identified It is commonly believed that good security improves trust, and that the
perceptions of good security and trust will increase the use of electronic commerce. In fact, customers’
perceptions of the security of e-payment systems have become a major factor in the evolution of
electronic commerce in markets. The paper examines issues related to e-payment security from the
viewpoint of customers. The study proposes a conceptual model that delineates the determinants of
Consumers’ perceived security and perceived trust, as well as the effects of perceived security and
perceived trust on the use of e-payment systems. To test the model, structural equation modeling is
employed to analyze data collected from 219 respondents in Korea. This research provides a theoretical
foundation for academics and practical guidelines for service providers in dealing with the security
aspects of e-payment systems.

Abdullai Besim (2009) The given economy on payment plays vital role in the payment system as mean
electronic payment Instruments. Electronic payment system supports the e-commerce activities in general.
There are numerous types of electronic payment instruments in the market today such as credit cards,
debit cards as well as electronic banking. The available ATM machines, can participate to better use of
debit cards from citizens to withdraw money. Withdrawing money from ATM machines can lead to extra
savings from banks, Because, they use less paper to document transactions uses increased cards in
everyday payments and other transactions, there are many other factors that influence the use of electronic
payment instruments.

Sumanjeet S(2009) EFT based payment system came into existence. It was first electronic based Payment
system, which does not depend on a central processing intermediary. An electronic fund transfer is A
financial application of Electronic Data Interchange (EDI), which sends credit card numbers or electronic
Cheque via secured private networks between banks and major corporations. To use EFT to clear
payments And settle accounts, an online payment service will need to add capabilities to process orders,
accounts, and Receipts. But a landmark came in this direction with the development of digital currency
the nature of digital Currency or electronic money mirrors that of paper money as a means of payment. As
such, digital currency Payment systems have the same advantages as paper currency payment, namely
anonymity and Convenience.

Jennifer Rowley (2008) indicated that as the importance of digital content to business and society grows
It is important seek a holistic perspective on the definition and nature of digital content marketing (DCM).
Along the journey it becomes evident that a recurrent theme in DCM is customer value, and this leads into
The second major contribution of the article, an exploration of the notion of customer value in digital
content marketplaces. Digital content is defined as: ‘bit-based objects distributed through electronic
channels.’ A structured analysis is conducted based on a set of questions to surface some of the unique
characteristics of digital content marketing. The analysis is informed by a literature review, and the
Exploration of numerous web sites which deliver diverse types of digital content. The conclusion

Summarizes the unique characteristics of digital content, and associated consequences for digital content
Marketing. It focuses on the impact of the difficulty in developing a notion of ‘value’ in the context of
digital Content, and its consequences for value chain structures, pricing strategies, marketing
communications and Branding, and licensing and digital rights management. In addition, the customer’s
experience of digital Content is influenced by all stakeholders in the value chain as well as requiring the
customer to participate in Learning and co-creation of the experience.

Ching A and Hayashi F(2007) In any given transaction, a consumer will have any number of options as
to how to Pay for the purchase. Consumers will choose their transactional medium according to the
relative costs and benefits Of using one method over another. Consumer payment choice is influenced by
numerous factors. Previous research has highlighted three important sets of factors such as consumer
characteristics, payment method attributes, and transaction characteristics. Consumer characteristics, such
as age, income, and educational level, have shown to be correlated with the use of payment methods in the
previous literature. Payment method attributes may also be Important factors when consumers choose a
payment method. Some payment instruments have distinctive Attributes. For example, cash gives
consumers anonymity, and credit cards provide liquidity at least until the next Billing date. Other
attributes, such as transaction time, security, ease of use, control spending, and so on, also vary by
payment methods.

Bamasak (2011) stated that there is a vivid potential for m-payment. Security of mobile payment
transactions and the unlawful Use of mobile phones to make a payment were found to be of great
concerns to the mobile phone users. Security and solitude were The key concerns for the customers which
influence the acceptance of digital payment solutions. Doan (2014) illustrated the Adoption of mobile
wallet among consumers in Finland as only at the beginning stages of the Innovation-Decision process.

As per Ministry of Finance Report (December 2016) on Digital payment, financial inclusion is one of the
foremost challenge facing India.53 percent of India populace had access to recognized financial services.
In this context, digital payment can act as accelerator to financial inclusion. Increasing availability of
mobile phone, availability of data network infrastructure, rollout of 3G And 4G networks and large
merchant eco system are the significant enablers of digital payment in India. It is further supported by the
harmonized efforts of industry, supervisory body, and government.

As per RBI’s report ‘Vision 2018’ four pronged policy Focusing on regulation, robust infrastructure,
effective supervisory mechanism, and customer centricity has been adopted to push adoption of digital
payment in India.

The percentage of cash usage for transactions has seen a rapid decline in the past few years in India. In
2010, the percentage of cash in all payments was 89% compared with 78% in 2015. This rapid decline is a
result of an increased adoption of non-cash instruments such as cards and digital payments like mobile
wallets, electronic transfers, etc. Stored value instruments like mobile wallets (Paytm, Mobi Kwik, Citrus,
etc.) and prepaid and gift cards have made payments though internet devices well-situated and
Troublefree. India represents one of the largest market opportunities for digital payments. With a
population of 1.25 billion, India Accounts for 18% of the global population. The two key drivers of digital
paymentsmobile phones and internet users are already well established in India. To date, India has about
1.0 billion mobile phone subscribers and 300 million internet users, ranking 2nd on both metrics globally.

According to Ratan Watal, principal advisor Niti Aayog and former finance secretary, digital payments
grew 55% by volume and 24.2% by value in 2016-17 over the previous year. Data from the Reserve Bank
of India (RBI) indicates that the rate of acceptance of digital payments had speeded up following
demonetization last year but has slowed in recent months of 2017. Total digital transactions in April 2017
of Rs109.58 trillion are 26.78 lower from Rs149.58 trillion in March 2017. It has been observed that ATM
transactions are same at 700 million, the transaction at PoS terminal has increased three times from 109
million in January 2016 to 328 million.
 Chapter:3
Research Methodology
The quality of work depends upon the methodology adopted for the study and the process of collecting,

Synthesizing and analyzing of the information. The validity of the systematic work depends upon the proper

Sampling, collection of data, and interpretation of the data and formulation of conclusion.

4.1 Objective of the Study

1. To know the perception of consumers towards security of digital payment systems.

2. To understand the awareness of the students on the usage of digital payments.

3. To know insight of respondents towards cashless payment systems.

4.To identify the degree to which consumers believes that using digital payment would enable them to
increase their trust.

4.2 Limitations of the study

1. Respondents may not feel encouraged to provide accurate, honest answers.

2. Respondents may not be fully aware of the topic.

3.Respondents perceives a question different as per their perception.

4 “Yes” or “No answer options can also be problematic. Respondents may answer “No” if the option “only
once is not available.

5.The study is conducted solely for academic purpose and as such a findings, suggestions and conclusions
cannot be broadly generalized.

4.3 Collection of data

Data was collected through both primary and secondary data sources.

1.Primary data

a. The primary data was collected through good questionnaires.

b. The data was collected from sample size of 100 respondents.

 2.secondary data

a. The secondary data has been collected from various websites available on internet and magazines. b.

Through reference books.

4.4 Sample design

Sampling unit: I have conducted my survey by trying to approach those people who might have some
knowledge about the topic so I can get accurate information.

Sample size: The sample consisted of 100 respondents. The sample was drawn from friends and family.
Sampling method: non-random sampling technique is used to collect the review of the respondents online
by administering a questionnaire to them.

4.5 Hypothesis

A hypothesis is a statement that introduces a research question and proposes an expected result. It is an
integral part of the scientific method that forms the basis of scientific experiments. Therefore, you need to
be careful and thorough when building your hypothesis.

The hypothesis for the present study is:

H0: There is no significant difference in consumer perception towards digital payment systems in India.

H1: There is a significant difference in consumer Perception towards digital payment systems in India.
 Chapter:4

Data analysis

5.1 Gender
Table 1: Gender wise distribution of respondent
Gender Percentage

Male 65.1

Female 34.9

Total 100

Analysis

Interpretation:
Above table and pie chart clearly indicates that 65.1% of respondents were male and 34.9% respondents
were female.

5.2 : Age

Table 2: Age wise distribution of respondent

Age group Percentage

 18-29 95.3

30-44 2.3

45-49 2.3

60+ 00

100
Total

Analysis

Interpretation:

Above table and pie chart clearly indicates 95.3 of respondents belong to 18–29-year age group whereas
,2.3% of respondents belong to the 30- 40 age group and 2.3 percentage of respondents belong to 45– 59year
age group and none belong to age group of 60 and above.

5.3 : Respondents aware about the digital payment systems

Table 3

Respondents Percentage

Aware 95.3

Unaware 4.7

Total 100
Analysis

Interpretation:

Above table and pie chart shows that 95.3 % of respondents were aware about the digital payment systems
whereas 4.7% of respondents were unaware of digital payment systems.

5.4: Digital payment systems known to the respondents

Table 4
Credit /debit/prepaid card 10

Unified Payment interface 25

(Google pay, Paytm)

BHIM 2

Pos machine 0

Mobile wallet 6

Total 43

Analysis :
 Interpretation:

Above table and pie chart shows that number of 23% respondents were known to the credit /debit/prepaid
card, number of 58 % respondents were known to the unified payment interface, number of 5%
respondents were known to the BHIM, number of respondents were known to the mobile wallet were
14%

5.5 :The source from which the respondents aware about the digital payment systems Table
5
Source Percentage

Internet 72

friends / family 19
Advertisement 9

Total 100
 COLUMN2
Internet friends / family Advertisement

9%

19%

72%

Interpretation:

Above table shows that the 72% of the respondents got aware from the internet and 19% of the respondents
got aware through friends and 9 % through advertisement

5.6 : Respondents review towards how often they use digital payment systems.

ANALYSIS :

Interpretation:

As per the above table 2.3 % 0f the respondents said “Never” ,4.7% 0f the respondents said “monthly”,

16.3 % of respondents said “weekly” ,76.7 % of respondents said “Daily” to the statement in case of cash.

5.7: Reasons for choosing services provided by digital payment systems Table
6
 Reasons Percentage

Better rates 2.3

Safe and secure 25.6

Convienience 51.2

Easy to 20.9
maintain
transactions

Analysis

Interpretation:

Above given table and pie chart shows that the 2.3% of the respondents said that they choose the digital
payment systems for better rates, 51.2% of the respondents said that they choose digital payment systems
for convenience, 20.9% for easy to maintain transations,25.6 % for for privacy.

5.8: Respondents review towards digital payment systems save their time and money Table.7
Respondents Percentage

Respondents who say “Yes” 97.7

Respondents who say “No” 2.3

 Total 100

Analysis:

Interpretation:

Above table and pie chart shows that the 97.7% of the respondents were saying that digital payment
systems offer a greater choice them and merchant in the way they send and receive payment and 2.3% of
the respondents were saying that no to this statement.

5.9 : Digital payment systems are better than cash or not. Table
8
Respondents Percentage
reply

Strongly 7
disagree
Disagree
11.6
Strongly agree
16.3

Agree
65.1

Analysis :
Interpretation:
Above table and pie char shows that 16.3% of the respondents were strongly disagree with the statement
which says that “Digital payment systems are better than cash “and 11.6% of the respondents were
disagree, 7% of the respondents were strongly agreed, 65.1% of the respondents were agree with the
statement.

5.10 : Do you trust the security which is provided by digital payment systems Table.9
Respondents Percentage

Respondents who said “Not at 4.7

all”

Respondents who said “A little 23.3

Respondents who said 55.8

“Somewhat’’

Respondents who said “A lot’’ 16.3

Total 100

Analysis:
Interpretation:

When asked if trust the security which is provided by digital payment systems 55.8 says that somewhat trust ,
23.3 % says that trust a little , while 4.7% don’t trust at all and overall 16.3% trusts a lot

Table 5.11: Respondents review towards digital payment systems can be easily understood and readily

adopted or not.

Table.10
Respondents Percentage

Respondents who 97.7

said “Yes”

Respondents who 2.3

said “No”

Total 100

Analysis:

Interpretation:
Above table and pie chart shows that 97.7% of the respondents were agree with statement which is “Digital
payment systems can be easily understood and readily adopted whereas 2.3% of the respondents were not
agree with the statement
 Chapter : 5

Benefits of the digital payment systems. according to the respondents:

1. Increased security: Carrying cash always can be a risky decision. Therefore, senior citizens are common
targets of small thefts or robberies. One of the main advantages of digital payments is that they are much
more secure than regular cash transactions, as they require proper verification and authentication. Banks and
other digital payment platforms also provide added security for digital transactions in the form of OTPs and
cross-verification, which can help in preventing fraudulent transactions.

2.More convenient: Standing in long ATM queues just to withdraw a small amount of cash is hardly an
exciting activity for anyone. However, most seniors must face this scenario every time they step out to buy
something. Digital payments, on the other hand, offer increased convenience for the elderly as it allows them
to easily conduct financial transactions without having to worry about whether they have adequate cash in
their wallet.

3.Seamless transactions: Since digital payments have been around for quite sometime now, the process has
become easier than ever, especially for seniors. Showrooms, malls, and even small shops have now started
accepting digital payments. The whole transaction process has also become seamless, as buyers can now
make payments using their mobile banking apps or other digital wallets.

over, some banks and digital wallets provide special rewards and offers for their senior customers as well.

6. Convenience during travel: Gone are the days when we had to carry copious amounts of cash during any
outstation travel. Today, retailers all over the country have understood the importance of going cashless and
have started accepting digital payments. Thus, elders can now easily travel to and from other cities in India,
without having to worry about finding an ATM or running out of cash

7.Physical distancing: One of the main benefits of digital payments is that it promotes safe and contactless
transactions. With the Covid-19 crisis still looming over our heads, avoiding physical contact is of utmost
importance.

8.Track your spending: The first step towards financial independence is to maintain a regular
weekly/monthly budget. This is even more important for seniors who depend on their pension and other life
savings. Digital payments allow the elderly to stay on top of their overall spending with easy-to-access bank
statements and records of all transactions.

9.Budget discipline: Going cashless is one of the best ways for seniors to understand their spending habits,
as they can use different apps to track and analyze their transaction patterns as well.
10. Save time and Money: One of the main benefits of going cashless is that it can save the elderly a lot of
time and money as well. The various payment options available ensure that seniors can make faster
payments.

Elders can also save money by opting for digital platforms that do not charge any transaction fees.

5.1 Hypothesis proved:

Null hypothesis: There is no difference between consumer perception towards digital payment systems in
India.

Alternative hypothesis: There is a difference between consumer perception towards digital payment
systems in India.

The above data analysis is showing that there is a difference between consumer perception towards

digital payment systems in India.

Hence, proved that the alternate hypothesis have been accepted and null hypothesis have been

rejected.
 Chapter: 6
Findings

• Majority of respondents are female.

• Majority of the respondents are above 18 and below 30 years.
• It is clear from the analysis that digital payment system is popular among respondents.

• Digital mode is universally used as compared to cash mode.

• Demonetization is the main reason for digitalization of payment.

• Majority of respondent uses debit and credit cards over other mode of payment because it is easily

• Available and issued at the time of opening of bank account.

• Friends and advertisement plays a key role in influencing respondents to go for digital payment
system.

• People prefer to use digital mode of payment on a weekly to monthly basis.

• Majority of the user agrees that digital mode of payment is comfortable to be used on day to day
basis.

• Majority of people have satisfied with the security of transaction involved in digital payment system.

• Using digital payment saves considerable amount of time as there is less procedure involved in it.

• Security issues are the biggest threat to digital payment system.

• Debit and credit cards are major means of payment mode in emergencies.

• In coming years digital payment will cover all areas and cash transactions are slowly sidelined.

8.1 Limitations

• Data is collected with the help of questionnaire as it lacks detailed insight of the problems.

• Sample size taken for the study is 100 respondent which not large in numbers

• The perception of individual differs from one another so which may result in lacking accuracy in
Data.
 Chapter : 7 Recommendation and
suggestions
• Awareness programs must be done at educational sector to educate people about digital Payment
system.

• As respondents are aware of the digital payment system as per our findings steps must be taken

• To minimize the deficiencies involved in digital payments like security issues, trustworthiness etc.
• Many people use cards for all their needs but there is a additional charge on the use of debit or credit
Cards. To encourage people to engage in digital modes it is important to remove additional Charges
for just mere use of cards.

• Service provider of mobile wallet, net banking must take into consideration user experience and
take Their valuable feedback to better their services.

• Cash payment is still to be seen everywhere. If government to implement digital system of payment
Or cashless society it must act on that behalf by encouraging people to use digital modes and giving
Proper incentives.

• Different customers have unique needs so it is necessary to provide them with number of payment

Methods so it gives option to user to select the mode of payment which is best suited to him.

• While making payment customer needs to give essential information. There must be a better
Mechanism for maintaining the privacy of the information provided by the user.

• User friendly atmosphere must be created so that user can be retained to one mode of Payment.
 Chapter:8 Conclusion

Present study has tried to understand customer perception regarding digital payment. Digital payments are
an Important mode of completing a particular transaction. From most of the respondents agree that Mobile
wallet/digital payment provides benefits to individual for purchase of products, improve the quality of
decision, helpful in Buying products as compared to traditional methods. They also agree that interaction
with mobile wallet is helpful and that they Trust the service providers. Also customers of different age
groups are availing these services. It is necessary to organizations to Create awareness about the
importance and usage of digital payments.

Transformations that take place in the digital world have impacted in every phase of human life.
Smartphones and internet facilities had made life simpler by a click of a button. This increases the needs
and expectations of the consumers. In the current scenario with the increasing use of cashless payments
has almost substituted the physical cash transactions. Though there are few limitations especially when it
comes to privacy and security concern, but it depends on how consumers, banks, and other agencies use
and handle the information. Therefore, the study tries to find out consumer thinking about the digital
payments.

The literature review reveals that majority of the consumers prefer credit/debit card and they are
comfortable using digital transactions. Security is found to be the most difficult factor which prevents its
usage. It was also inferred from the study that consumer has enough awareness of the information security
in cashless transactions. Cashless transactions are to be encouraged as it provides convenience and agility.
Even internet banking has become extremely popular for transactions. Modern technology and automation
are going to take the transactions more user friendly in the future. The studies also mention that
digitization is connected to self-efficacy and is the need of the hour as consumers want to shop more and
want to pay through online media and be innovative. There are challenges of connectivity and
infrastructure, but the society is moving towards internet of things and artificial intelligence. So,
consumers must be able to adapt to these innovations, new additions and techniques and move forward.

The study is quite relevant in this era where technology and digitization are essential for better consumer
service. This study will help future researchers to formulate adequate primary data collection and analysis
which will ensure better results. The future research can take a leaf out of these challenges and come out
with new innovative directions. The study is important for the industry as it highlights positive and negative
factors and highlights importance of technology and safety issues.

Very less studies have been conducted in the role of digital payment among the retailers. Also, less
studies are there in the role of technology in digital payment. There is need for more studies in these
areas which future researchers can concentrate. There can be more studies by using primary data
collection and analysis
Technology has made our lives easier. One of the technological innovations in banking, finance and
commerce is the Digital Payments. Digital Payments refers to the technological breakthrough that enables
us to perform financial transactions online, thus avoiding hindrances and other hassles. Digital Payments
provides greater freedom to individuals in paying their taxes, licenses, fees, fines, and purchases at
unconventional locations and at whichever time of the day, & 365 days (about 12 months) of the year.

Due to the developments in digital world each activity of human being had changed. As a part of Policy
change cash is no longer becoming a mode of transaction. The country needs to move away from the
cash-based towards a cashless (digital) payment system. This will provide multiple advantages like,
reduce currency management cost, track transactions, check tax avoidance or fraud etc., enhance financial
inclusion And gradually integrate the parallel economy with the main stream.

The findings reveal that while people are getting comfortable with cashless payments, negative
perceptions are holding back many from adopting the new system. The negative perceptions are like
security problems, poor network coverage, and lack of merchant willingness, high transactional costs, lack
Of users’ knowledge on technology, defunct POS machines, delayed reimbursement in case of failed
transactions, procedures, and financial limits. Convenience in use of cashless transactions and incentive
System are the positive signs for the progress of cashless payments in India. Finally the study concludes
that India may not become a cashless economy unless the perception of the people will be rightly
addressed by the government and the banking institutions. They should pave the way for the safe and
secure mean to cashless transactions
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 Chapter:12

Annexure

1.Gender

• Male

• Female

• Other

2.What is your age?

• 18-29

• 30- 44

• 45-59

• 60+

3.Do you know about the digital payment systems?

• Yes

• No

4.If yes, then which kind of digital payment systems do you know? (E.g., credit/ debit card,
Prepaid card, Unified payment interface, (Google pay, Paytm, Phone pay) BHIM, Micro ATM,

POS machine, Mobile wallet)

• Short answer

5.If you know about the above digital payment systems then how did you get to know about it? (E.g.,
Internet, Through friends)
• Short answer

6.How often do you use the following payments

• Cash. Never. Monthly. Weekly. Daily.

• Credit/debit card online

• Debit card

• Mobile payment (Google pay, Apple pay)

• PayPal

• EDI

7.What are the reasons for choosing services provided by digital payments systems?

• Better rates

• Safe and secure

• Convenience

• Easy to maintain transactions

• Low service charges
• Privacy.

8.Do digital payment systems save your time and money?

• Yes

• No

9.Digital payment systems are better than cash?

• Strongly disagree
• Disagree.

• Strongly agree

• Agree
10.Do you trust the security which is provided by digital payment systems?
• Not at all

• A little

• Somewhat

• A lot

11.Digital payment systems can be easily understood and readily adopted? •

Yes

• No