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HAS COVID-19 FUELED PROLIFERATION OF DIGITAL PAYMENTS IN INDIAN ECONOMY: AN EMPIRICAL RESEARCH
Anura Sinha
BBA student, Daly College of Business Management, Indore Dr. Sonal Sisodia
Principal, Daly College of Business Management, Indore
Abstract: A recent report suggests that the market size of global contactless payments is expected to grow at a CAGR of 11.7% from $10.3 Bn in 2020 to $18 Bn by 2025. In con- trast to the gloom cast by the pandemic, digital payments touched a record high. The pri- mary data was collected from 47 respondents aged between 40-50 years to study the change in preferences and reasons for shift from cash to digital payments. This research paper seeks to identify the change and present trend towards the adoption of digital pay- ment means instead of cash payments after the pandemic. The primary data was collected from 47 respondents aged between 40-50 years to study the change in preferences and rea- sons for shift from cash to digital payments. The paper suggest that the pandemic has also forced the people depending upon the cash payments to depend upon the digital platforms for payments with concerns over contracting the coronavirus from the currency notes and coins. It can be assumed that besides augmenting the broad-based use of technology, the pandemic has fueled the proliferation of digital modes of payment, propelling the country towards less-cash alternatives.
Key words: Digital payments, Covid-19, digitization, cashless transactions, changing con- sumer preferences, e-banking.
1. INTRODUCTION
The Covid pandemic has accelerated the process of digitization of the Indian economy. Even the smallest shops have QR code scanners of Paytm, Google pay, phone pay etc. for accept- ing the payment against sales. Also, with the decreased mobility for almost everyone in In- dia, the usage of digital payments for necessities and emergencies such as sending money to the family members or grocery shopping rose considerably during this time. The lock- down has also brought many first-time users who were earlier afraid of fraud or had diffi- culty in using these apps and used only physical money which now could transmit the vi- rus as well; digital payments have come up as the only option to them as they are conscious of what they touch. In addition, the government has also reduced charges for digital trans- actions, and proposed a 1,500 crore-scheme to promote digital transactions in the country, a move that industry believes will drive adoption of e-payments in smaller cities. The Na- tional Payments Corporation of India is pushing digital payments like UPI, NEFT, internet banking as a precautionary measure against the cover outbreak.The pandemic environment is moving consumers to interact more digitally with their banks, banks are now investing in modernizing their core technology to offer agility and scalability during uncertain times.
With a very strong consumer momentum in favor of digital payments, now WhatsApp has introduced in-chat Payment feature will allow the users to make payments to anyone from their contact list.
2. LITERATURE REVIEW
R Goel, S Sahai, and et al. (2019) stated in his study on consumer perception on digital transactions and found that there was an increase in the use of digital payment transac- tions due to improved technological infrastructure and favorable policy changes. D, Chawla, and H, Joshi (2019) through their study found that perceived ease of use (PEOU), perceived usefulness (PU), trust, security, facilitating conditions, and lifestyle compatibility had a sig- nificant impact on the consumer attitude and intention to use mobile wallets. (Chawla &
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Joshi, 2019). K, Kamatchi Eswaran (2019) in his study concluded that the digital transfers using apps have brought behavioral change and helped in the adoption of digital payment.
This facilitated ease of transfer of money in rural areas, which was not touched earlier by the digital payment method. Saxena and Chaudhary (2019) concluded that security, neces- sity, time, the satisfaction of the services used are the factors that influence the consumers towards M-wallets as the respondents also feel that they save time and have made life easi- er.
3. NEED FOR THE STUDY
India’s digital payment sector has been evolving since demonetization, the Covidpandemic has accelerated the digital shift and now most of the consumers are accessing online pay- ment services. It is growing at a fast pace due to rapid rise in smartphone penetration, sub- sidized data plans and favorable environment.During these difficult times, Digital payments are becoming blessing in disguise it an easy way to make and receive donations for financial hardships caused by Covid-19, the NGOs and non- profits the helping the poor section of the society by collecting donations through digital payment platforms to provide basic ne- cessities and immediately raise funds for medical emergencies.The shift is rapid and ongo- ing which will further create permanent changes to the industry. It is increasingly impor- tant to create a payment system for all to promote financial inclusivity in the country.In the upcoming year, new umbrella entity for e-payments is likely to the shape.
4. RESEARCH METHODOLOGY
This is an exploratory study with convenience-based sampling. The research is based main- ly on the primary data.A total of 47 respondents aged between 40-50 years were surveyed using a pre-tested questionnaire. The questions were aimed at understanding consumer preferences towards mode of payment in times of Covid-19. Personal observations and dis- cussions with the Bank managers of SBI & HDFC helped to understand the changes in the banking preferences after the pandemic.The study was undertaken during the period of February 2021-June 2021.
ANALYSIS OF DATA
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Majority of respondents have increased their usage of digital payment platforms mainly be- cause it is convenient as it is available 24x7, saves time. Another major reason is that there is no need to carry cash everywhere , no fear of losing cash, payments can easily be done from mobile phones. 54.5% think that It is easier to track the transactions and keep a record of it for follow ups.
Th digital payment options are not free from difficulties. Majority is not in favour of using e- payments as it does not provide all the banking services. In addition, 45.5% are reluctant as the transactions compulsorily require internet connection. The above data reveals that 91.5% of the respondents think that e-payments are helpful in making life convenient, oth- er 85% are unsure about it.
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The above data reveals that during the pandemic, about 61.7% respondents strongly agree that digital payments were a necessity for making payments for daily needs and wants, whereas 8.5% are neutral that it was neither a necessity nor non-essential.
1.
After the pandemic, 87.2% respondents have increased their usage of digital payments for making payments whereas 8.5% respondents have recorded no change.
2.
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E-wallets have surpassed Cash and cards both in transaction values & volumes.
The usage rate apps such as -Paytm, Google Pay, Phone pay etc. is the highest whereas that of internet banking is the lowest. Surprisingly, Population has moved steadily away from cash.
4.
The above chart, shows that 44.7% respondents use digital payment options more than 15 times a month on an average , 19% 10-15 times , 21.3% 5-10 times and 14.9% less than 5 times on an average.
5. CONCLUSIONS
An evolutionary succession from cash to cheques to credit and debit cards, currently to mobile banking and digital wallets has been witnessed. The pandemic has led to unprece- dented public concerns over viral transmission via cash. The nationwide lockdown has pushed people towards contactless payments since 2020, following the initial stay-at-home orders in march 2020, the hygiene concerns over handing over cash or cards to cashier, standing in bank queues drove consumers to adopt contactless payments. In turn, even the industry is adapting to this shift by rounding out their digital payment ecosystem, both in terms of infrastructure and services. Interestingly, many new existing companies such as
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WhatsApp are introducing their own digital payment platforms in India. It is today well past the early adopter stage and the mainstream majority is adopting it. Even more heartening is that the lower income group is also a part of this movement to digital economy.
Further research on upcoming digital payment options, cyber security, regulatory frame- works will be conducted.
6. SUGGESTIONS
The payment providers should explore capabilities that give customers and businesses more insight and control over their finances and payments.
Digital payment platforms can play key role in facilitating the access to credit for small businesses, with partnership with banks.
Improving financial literacy is important to enhance uptake of digital finance among Indians which is critical for the growth of digital economy.
Constraints such as server downtime impede such access and create problems such as transaction failures, which are beyond the control of users, it is important to find out solu- tions to this problem.
Provided risks are properly addressed, digital payment systems have the potential to create value for all users and Indian economy during the times of pandemic and beyond.
REFERENCES
(1) Chawla, D., & Joshi, H. (2019). Consumer attitude and intention to adopt mobile wallet in India – An empirical study. International Journal of Bank Marketing.
https://doi.org/10.1108/IJBM-09-2018-0256
(2) Goel, R., Sahai, S., Vinaik, A., & Garg, V. (2019). Moving from cash to cashless econo- my: - A study of consumer perception towards digital transactions. International Jour-
nal of Recent Technology and Engineering.
https://doi.org/10.17492/pragati.v7i1.195425
(3) Kamatchi Eswaran, K. (2019). Consumer perception towards digital payment mode with special reference to digital wallets. Research explorer-A Blind Review & Refereed Quarterly International Journal.Economic Times, “Govt encouraging people to avoid us- ing cash to stop coronavirus transmission,” 19 March 2020. [Online]. Available:
https://economictimes.indiatimes.com/news/economy/policy/govt-encouraging- people-to-avoid-using-cash-to-stop-coronavirus-2386
(4) Journal of Contemporary Issues in Business and Government Vol. 27, No. 1, 2021 P-
ISSN: 2204-1990; E-ISSN: 1323-6903
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(5) Business Today, “Govt wants people to stop cash transaction to prevent coronavirus,”
19 March 2020. [Online]. Available: https://www.businesstoday.in/current/economy- politics/govt-wants-people-to-stop-cash-transaction-to-prevent- coronavi- rus/story/398626.html.WHO, “Coronavirus disease (COVID-19) advice for the public,”
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