UPI and Behaviour of the Financial and Consumer Market

Submitted by :
M.Sc. Economics (F.Y.)

1. Aarushi Tandon (23060242001)

2. Drishika Sinha (23060242032)
3. Suruchi Kamath (23060242093)
4. Surbi Mantri (23060242092)
5. Vanshika Prakash (23060242096)
6. Vidhi Ghadi (23060242097)
Introduction

The advent of digitalization has brought a revolution in the way we make payments. Digital
payment systems have made it easier, faster, and more convenient for people to transfer money,
pay bills, and make purchases (T R, 2023). In India, Unified Payment Interface (UPI) has
become the most popular system of digital payment.

The Unified Payment Interface (UPI) is a real-time digital payment system that was launched in
India in April 2016 (Chopra & Gupta, 2023). It was developed by the National Payments
Corporation of India (NPCI) and is regulated by the central bank. It allows inter-bank,
peer-to-peer (P2P), and person-to-merchant (P2M) transactions.

UPI acts as a digital infrastructure for digital payments through apps like Google Pay, BHIM,
and phone pay (Sharma, Bhimavarapu, Kanoujiya, Barge, & Rastogi, 2022). The introduction of
UPI has worked like a game-changer in enabling a gradual shift to the digital payment system
(Vishnoi, 2022). UPI and Rupay have emerged as financial weapons in modern warfare. These
systems make India a self-reliant economy and less dependent on international payment apps.
This is one major step towards Atmanirbhar Bharat.

The government focused on the digital finance and fintech sector in its 2022 budget to ensure
that financial services reach every part of the country and work towards financial inclusion.
According to NPCI (2021), the UPI’s value and volume have shown sparkling growth with a 103
percent increase in volume and a 100 percent increase in value in one year (Sharma,
Bhimavarapu, Kanoujiya, Barge, & Rastogi, 2022).

According to a report by the World Economic Forum, India leads globally in terms of real-time
payment transactions with 48.6 billion transactions processed in 2021. The same report estimates
that UPI has saved the Indian economy approximately $67 billion since its inception in April
2016. It is forecasted that by 2026, an additional $45.6 billion, or 1.12% of India’s GDP, will be
boosted by UPI payment (Roy, 2022).

UPI has enabled a transition towards a more transparent and accountable economy by reducing
its dependence on cash transactions. Furthermore, the availability of transaction data through
UPI has fuelled the growth of fintech companies and startups, which is driving innovation in the
financial sector and creating employment opportunities.

As for consumer perception, a study conducted in the Nilgiris district found that UPI
significantly influences impulsive buying behavior (Auxilia & Gopinath 2023). Another study
found that about 45% of the respondents believe that UPI-based digital transactions are safer and
more secure than other forms of digital payments (Bhuvaneswari, Kamalasaravanan, &
Kanimozhi, 2021).
Nations such as Brazil, Bahrain, Saudi Arabia, Singapore, the United States, and the European
Union are now trying to emulate the success of UPI in their market (T R, 2023).

Research Objective

1. To study how UPI is impacting, financial literacy, financial inclusion and the economic
development in India
2. To study how indian consumers have perceived this change, and how has it affected their
behavior

Review of Literature

Digital Literacy/Innovation

UPI was launched by the National Payments Corporation of India (NPCI) in 2016 and has
rapidly gained momentum and revolutionized how Indians conduct transactions. At present,
there are 300 million UPI users and 500 million merchants who use UPI to accept money for
their businesses. This payment infrastructure enables users to link multiple bank accounts to a
single mobile application, making real-time, peer-to-peer transactions possible with just a few
taps on a smartphone. UPI connects over 300 banks and enables seamless financial transactions
through TPAP (third-party application providers) like Google Pay, Amazon Pay, PhonePe, and
Paytm in partnership with banking partners. The ease of use and accessibility of UPI have made
it immensely popular across the nation, bridging the gap between urban and rural areas.

The introduction of UPI 2.0 brought additional features such as an overdraft facility, invoice
payments, and signed intent, further enhancing the user experience. UPI is constantly evolving,
which is visible from numerous developments that have taken place recently, like offering
lending through the UPI stack, enabling RuPay card attachment to UPI, linking UPI to PPI, and
increasing interchange income for prepaid cards to 1.1% of GMV and Credit Cards to 1.5% of
GMV. This next level of innovation reflects the NPCI’s commitment to staying ahead of
technological advancements and catering to the changing needs of the Indian population. Also,
there will be a lot of opportunities for Fintechs and more additions in the coming days with
further development in offline payments, UPI Lite, UPI QR becoming interoperable, and CBDC
QR being supported.

Financial Inclusion with UPI in the Indian market

The conventional financial sector is changing as a result of digital banking. Banking is becoming
paperless thanks to digitalization. The 2016 demonetization promoted online banking. The
widespread adoption of digital banking by the general public was spurred by the enormous
demand for currency for necessities. The benefits of internet banking operations over traditional
physical banks quickly became apparent to the public. All manual bank branch visits were
replaced by digital methods that may be done online with just one internet connection for all
physical banking functions, such as cash withdrawal, account management, loan management,
fund transfers, and statement processing. UPI (Unified Payment Interface) is another essential
tool for digital banking via mobile these days. It is a mobile application that was introduced by
NPCI (National Payments Corporation of India), a company that manages retail payments and
settlements in India, as a revolutionary e-payment solution (Vij, R; 2023).

For the most vulnerable members of society, financial inclusion guarantees affordable and
adequate credit and financial services (Rangrajan, 2008; Planning commission, 2008). In his
policy, Rangrajan (2008) proposed using technology-based solutions to enable the development
of an inclusive financial sector strategy. TheIndian government has gradually adjusted the
economy to become more digital through the Digital India Programme. Since the
demonetization, the Indian government has worked to advance the digital economy (Maken &
Shekhar, 2017).

Allowing a steady transition to the digital payment system, the UPI's debut has changed the
game. With apps like Google Pay, BHIM, and Phone Pay, UPI serves as the digital payment
infrastructure. Implemented in 2016 by then RBI governor Dr. Raghuram Rajan under Prime
Minister Narendra Modi's administration, the UPI is far more beneficial for the general public.
Afterwards, UPI and Rupay have become vital resources in today's financial struggle. India is
now less reliant on foreign payment apps and has an independent economy thanks to these
technologies. Atmanirbhar Bharat is one significant step closer to this.

The government digitizes the economy through the Digital India Programme. In 2016, the
European Commission proposed bank and shopping transactions as indicators for the digital
economy and society index. As a sign of digitization, Szymanek (2015) looked at combining
open platforms and API (Application Programming Interface) technologies. According to Daştan
and Gürler (2016), wallets and UPI can help advance digitalization. Applications built with UPI
feature IMPS (Immediate Payment Service), which enables instantaneous money transactions
using the operator's bank account information. Wallets make use of funds kept in an app
developed by a business, which can then be utilized for purchases. Compared to wallets, which
act as a conduit between bank accounts, UPI is superior since it allows for direct bank-to-bank
transactions.

Financial services such as banking and equities, pensions, and financial literacy are among those
that are easily accessible. The scope of the financial inclusion concept has expanded in recent
research from access indicators to include financial service cost, utilization, and quality factors
(Demirgüç-Kunt et al., 2020; Pham & Doa, 2020). The degree of "access" is indicated by the
availability of financial services. One must "use" these financial services. Financial services can
be accessed and used at a cost, which includes both monetary and non-monetary expenses like
bank fees and being so close to the banks. The provision of financial services that are both
inexpensive and sustainable for both providers and clients is crucial in mitigating the negative
effects of financial exclusion (Rangrajan, 2008).

The financial inclusion index was developed as a means of measuring financial inclusion
(Ambarkhane et al., 2016). Two indices of financial inclusion were proposed by Sarma (2008,
2012) and Beck et al. (2007). The geographic spread of the financial system, including the
quantity of branches and ATMs per 1000 km2, was one of the access indicators they employed.
Another measure of usage that demonstrates the quantitative amount of financial inclusion is the
number of transactions per account, as demonstrated by Ambarkhane et al. (2016). For a
UPI-based financial transaction to be completed, the beneficiary account must be opened and
connected to the customer's cell phone. After digitalization, banks began processing transactions
based on UPI through newly created bank accounts.

Undoubtedly, UPI has been successful in integrating a large number of people into the official
economy and payment infrastructure. The negative consequences of numerous of the early
challenges that typically beset a nascent technology and its deployment have been significantly
reduced thanks in large part to central bank support for the technology (Guha and Gupta; 2023).
The success of UPI has encouraged the Indian government, which is now thinking about
transferring UPI's technology to less developed nations. As a result, India's domestic initiatives
to create an inclusive and digital economy would become an international movement. The
Reserve Bank of India (RBI) has released data indicating that the number of digital transactions
in the nation surpassed one billion in December 2017, following a record of over one billion
transactions in January. Comparing November 2017 with 998 million digital transactions up to
that time, there was an increase of almost 6.5 percent (Sarkar and Das, 2018).

The foundation of the Indian financial technology ecosystem includes four wealth teach pillars: a
framework for developing new business models to encourage technology use, Financing: a
platform for digital advances without stringent banking verification, comprising 376 start-ups in
India that were created in 2010 and included of mobile wallets and Unified Payments Interface
(UPI). Insurance technology: insurance platforms enable the comparison and personalization of
insurance products that are accessible via more than 110 online channels.

Due mostly to the virus outbreak, the size of UPI unexpectedly increased, with 1.5 billion
transactions totaling 3 lakh crore in July 2020 (Khokhar, P. (2021) . The Indian government's
expectations for the year 2020 have been exceeded by the digital transactions, which by June
2020 had closed $46 billion, 14% more than the objective of $40 billion. This creates a new
avenue for the government to pursue its goal of complete inclusion; digitization has made it
possible to do away with exclusivity and create a nation that is financially inclusive
(Demirgüç-Kunt et al., 2018).

Contribution of UPI to Economic Development in India

2016 saw the introduction of UPI in India, A mobile device that can be connected to more than
one bank account. Users of the UPI can make transactions and payments to merchants and other
individuals.it also provides access to several features of the bank. The Indian economy is fast
growing and hence the introduction of UPI and digitalization will play an important role in
driving the economy. As of 2022, nearly 297 banks have been linked to UPI platforms with 46
payment service providers in contrast to just 21 banks that had been linked in 2016 thereby
displaying an upward trend in the number of banks linked implying the success of UPI in India
owing to the significant rise in the demand and adoption of digital payments wherein the number
of UPI users also increased mainly due to its convenience that it offered which resulted in many
merchants including street vendors conducting their transactions through UPI.

Figure - Rise in number of Banks going live on UPI

(Source: NPCI Statistics)

It can also be observed that there was rapid expansion in the number of banks linked during the
pandemic. During the pandemic, the need for digital payments grew and with it ‘Buy Now, Pay
Later (BPNL)’ deals became increasingly popular which enabled excessive consumption leading
to an impressive and much needed post pandemic growth in the Indian retail sector.
 The increase in UPI users has also contributed to the reduction of the amount of black money
being circulated in the economy and it helps to control the unauthorized and unaccounted
transactions that can otherwise be easily conducted through cash (DIGITAL PAYMENTS AND
THEIR IMPACT ON THE INDIAN ECONOMY | IBEF, n.d.).Further, a reduction in the amount
of hard cash kept with individuals will help to avoid tax frauds which would boost India’s tax
income thereby leading to an increase in the number of taxpayers in the country. Besides this,
UPI has turned out to be an extremely efficient way of undertaking transactions. This feature of
UPI has c\has helped to set up new businesses and the MSME sector is one to have benefited
largely. As the MSME sector contributes heavily to the Indian economy, UPI and other digital
payment methods have created a huge positive impact (Miss Maliha Batool Doctoral, Mr. Kashif
Sajjad, Miss Mehar Fatima (2021).

During the pandemic it was UPI that helped many businesses remain afloat as transactions had
become easy and banking was conceivable implying that small and medium businesses suffered
a little less. Most MSME are rural wherein several informal and small business overlap, it was
UPI that helped to bridge the rural urban divide and help rural crafts and designs gain national
and, in some cases, international status these businesses mainly included homemade foods, local
arts, jewelry, etc. This proved beneficial not only for the producers who got a wider reach and
also a source of steady income but also for the consumers.

UPI has also had a huge impact on the banking and Fintech industries. It has provided banks
with a low-cost alternative to cash and helps them save on merchant onboarding costs. The data
that is acquired through these digital transactions also enables the bank to market for other
services and also have a better understanding of the spending pattern of consumers which in turn
helps the bank to serve customers better. The open architecture also helped fintech firms to invest
in innovation and hence develop newer products and unique services.

Companies have benefited with the introduction of UPI and the umpteen offers, coupons,
discounts and rewards that are often offered to the users through the app which makes marketing
of companies easier and also helps to boost consumer spending. The increase in the buying and
selling would drive growth in the economy. Moreover, as UPI involves zero fees, spending
would increase. Another observation made was that the with provision of discounts on digital
payments of highway tolls, electricity bills, fuel and service charge encourages consumers to pay
bills and taxes on time (Kumar, Abhishek & Choudhary, Rajesh & Kumar, Saroj & Kar, Sanjay
& Bansal, Rohit. (2022)). The government of India with a motive to promote UPI and digital
transactions in India has launched various schemes and initiatives like Digi Dhan, Di initiative,
and cashless India.

Despite the many benefits and contribution of UPI to the development of the nation, it does face
a fair share of challenges that include: -
 ● Digital literacy- digital literacy is considered extremely crucial for a highly populated
country like India with the majority of the population in the rural areas. Also, since UPI
apps are primarily available in English and a few regional languages, those individuals
who aren’t very comfortable with these languages might find it difficult to use the app
effectively and efficiently. Lack of educational programs or guidance on how to use UPI
also impedes its acceptance.
● Transaction failure- according to the NPCI report, there exists a significant rise in the
transaction failures. For private sector banks like Axis bank, HDFC, etc reported a lower
rate of failure whereas public sector banks like Union bank, Punjab national bank, etc the
failure rates have increased drastically. The main increase in failure has been attributed to
the increase in volume of transactions, connectivity problems, and lack of responses from
bank servers (Kumar, Abhishek & Choudhary, Rajesh & Kumar, Saroj & Kar, Sanjay &
Bansal, Rohit. (2022). To address this issue the RBI released a circular regarding the
harmonization of Turnaround time and customer reimbursement in the event of a
transaction failure. Even though there has been proper redressal of this challenge, the
problem that still arises here is that people lack digital literacy i.e., individuals don’t
know where and who to reach out to in case of such an event.
● Cyber frauds- the recent alert notification by RBI to all banks stressed on the fact that
fraudsters are now increasingly targeting UPI platforms. Covid has been a significant
driver of digital payment use and growth in India, but transaction growth has been
followed by the proliferation of payment-focused scams, with an increased number of
users being targeted by scammers. (The Print, 2021)

Consumer Behavior for UPI and Technology

“Cash; Pay cash, Theodore. It’s safest unless you keep your wallet where someone can pick your
pocket.”- Jewel E. Ann, Scarlet Stone

As years pass by a rising number of economies are going cashless this is where ICT technology
plays an important role in easing time and sustaining the environment. Technology plays a
crucial factor, especially for the mobile wallet apps like Google Pay and PayTm. Who has
replaced the cash transaction it is to be noted that it's not completely replaced yet but a substitute
for it. The National Payments Corporation of India (NPCI) launched UPI in 2016 at first the
surge for trust was not developed but as the younger generation found it feasible and
post-pandemic the usage reached heights. Mobile wallets are a critical component in the digital
economy with users able to transact safely and easily. They use ICT to enable their customers to
make payments using different methods and thus minimize the amount of physical cash they
handle. Transparent users and clear payment references for recording transactions enhance tax
compliance. Nevertheless, the success or otherwise of mobile wallet apps depends on matching
their attributes to the likes of customers.

The payment apps have a vast wide range of payment options which attract the customer with the
versatile enhancement of the app services. Mobile wallet apps are highly dependent on the user
interface and experience for their adoption or abandonment.

Digital India is one of the visionary projects aimed at the transformation of the country’s
financial arena. The focus is on digital payments to fight corruption and money laundering for
greater development of the economy. This drive towards a cashless economy has seen mobile
wallets rise to be one of the big payment systems in India. Mobile Wallets Post The significant
demonetization action with the termination of Rs. 500 and Rs.1000 However, in one stroke, 1000
currency notes had changed Indian financial history. Mobile wallets were one of the main forms
of non-cash transactions in the aftermath of demonetization. Once viewed as basic tools for
charging and paying bills at home, mobile pocket apps are now transforming into essential
financial instruments that spare customers from going to banks. The Operational Mechanism of
Mobile Wallets Unlike conventional wallets, mobile wallets require applications to be installed in
Androids and iOs. The cards are closely associated with the customer’s bank account and mobile
phone number so that their operations may be smooth and secure. Such a combination of features
in one platform is what has led to the spread of mobile wallets as a good mode of settling money
issues as well. Diverse Applications of Mobile Wallets in contemporary times, mobile wallets
have transcended their initial utility and now serve as versatile financial instruments. Users
leverage these platforms for diverse transactions, including payments, fund transfers, recharges,
and even receiving funds directly into their bank accounts. This multifaceted functionality has

significantly contributed to the integration of mobile wallets into the daily lives of consumers.
Addressing Currency Challenges Mobile wallets have addressed a longstanding challenge faced
by consumers in retail shops, petty establishments, food corners, beverage outlets, bus travels,
and various other visiting places – the scarcity of small denomination currency. By providing a
digital alternative to traditional cash transactions, mobile wallets have effectively mitigated this
problem, enhancing the overall ease and efficiency of financial transactions for both consumers
and businesses.

The consumer adoption and learning curve about the technology literacy behind digital payment
systems determine the success or failure of mobile wallets in the market. Consumers now prefer
cashless transactions due to their increased familiarity with online financial activities. In today’s
culture of embracing online payments and moving to the most technologically advanced form of
financial transactions, mobile wallets occupy a key position here. (Dahlberg et al., 2015). These
days, it is impossible to imagine digital finance without such a tool as a mobile wallet which
performs many types of payment operations. In the case of low-income countries, this will be an
opportunity to involve many people in economic activities including bank accounts. The current
usage of mobile wallets and their importance in carrying out financial transactions in emerging
economies is examined through this literature review. It also outlines individual cases such as the
massive expansion of PayTm and the evolution of the Bharat Interface for Money (BHIM app)
developed by the National Payments Corporation of India. (Ghosh, 2017). Mobile wallets have
moved far past their original goals, and are now used for a great many financial services. Mobile
wallets provide ease of use because one does not necessarily have to be physically present to
conduct simple peer-to-peer transfers up to more complex activities like bill paying or shopping
in a retail store. The adoption of digital wallets especially occurs in emerging economies that
have limited traditional banking system accessibility. Promoting Direct Fund Transactions One
major step forward is the Bharat Interface for Money app which was launched by the National
Payments Corporation of India. The app allows for immediate electronic money transfers from
one personal account to another without any hassle. The evolution of BHIM suggests a planned
approach towards improving the effectiveness and convenience of e-payment systems in India.

According to Akhila Pai H. (2018), ‘Digital’ is a concept put forth by the Government of India.
The country ‘India’ enhanced the use of virtual money and other technologies such as mobile
wallets, eventually resulting in cashless transactions. Anil Kumar.Punna & Mahesh Kumar.
Mobile banking is a core aspect of Punna's (2017) electronic means for moving money from one
account to another. Various payment methods like Debit/Mobile banking, credit card, and
internet banking contribute up to 10 percent of the total payment. As it was said by Pankaj
Yadav, 2017. The researcher has concentrated on all-sided users in the east, west, north, and
south of India. All of the customers were in a position to provide some data about the mobile
wallet and its utilization or usefulness. Six factors have been borne in mind by the research.
Previous studies concerning the perceived quality of service, perceived risk, and perceived utility
among others. This is because of the factors associated with trust (cost, observing ease of use,
and trust) which result in the implementation of mobile wallets. Richa Goel et al. (2019)
considered the cashless economy as a way to the Indian economy where one has to be sure in the
first place curbs the circulation of physical currency in the country. The idea of cashless
payments relies on virtual media and other modern technology. Demonetisation has seen people
embrace mobile payment transactions such as m-Pesa which are now commonplace. The
development of information technology through mobile, V. M. Gurme (2017) gives a new
product named Mobile Wallet.” Mobile wallet payment invention breaks. This enables these
entities, i.e., businesses, banking, and financial institutions to grow and become flexible. FAIR
Inc. The majority of the Japanese populace is conservative when it comes to technology and
science. In the future, Japan will be cashless since the Government of Japan encourages more
people to adopt mobile wallets and other forms of digital payment. The understanding was that
there are no works that review literature related to mobile wallets PayTm versus Google Pay,
Reasons, and Competitive Analysis. These are the only two digital pockets as of now.
Indian consumers as well as a large portion of the world’s population buy products or services
directly from companies with thousands of customers in India. An additional research need has
also been addressed. Many researchers have hypothesized and carried out the research of
variables explaining the adoption of mobiles but this research focuses on consumers' trust in the
e-wallets on the strength of Trust, Gain, and Accountability. Adeoti, O.O., & Oshotimehin,
(2011). International Journal of Applied Research 2017. The effect of motivational factors in the
adoption of POS by consumers was studied at a glance. The study employs the probit model on
nativity, perceived security, ease of use, availability, convenience, intent to use, and technology
complexity factors to influence POS terminal usage through empirical evidence. Sanghita Roy, &
Dr. Indrajit Sinha (2014). It was also stated that the E-payment system in India, has grown
tremendously, but a lot needs to be done in its usage. However, only eighty percent of the
transactions are cashless. Study using the Technology Acceptance Model. Innovation, incentives,
customer convenience, and legal framework were considered to be the four factors in
strengthening the E- e-payment system. (Roy & Sinha, 2014). Dr. Ramesh Sarder, (2016).
Electronic payment systems generate large volumes of data from their use by residents living
around bigger cities, hence, people’s spending habits on issues. Majority of the E-commerce
firms are offering coupons for digital payments.

Perceived Ease of Use

One of the financial inclusion opportunities that can be accessed by people is the mobile wallet.
It saves time among people so that they will not run late plus quick payment of goods using a
mobile wallet. Making different kinds of transactions such as air ticket booking, accommodation
reservations, bill payments, and shopping, among others. India as well as many other
international mobile wallet companies battle it out for a share of the Indian mobile wallet.
Currently, worldwide a total of two trillion Indian rupees are transacted through mobiles, and the
survey showed that 83.6% of the respondents are transacting using mobile money in India. All
the mobile wallet brands have been licensed by the Reserve Bank of India, including private and
government-owned banks to link their UPIs with smartphone wallets. A majority of employees
and students in Bangalore households, small-scale investors, retailers, street vendors, and even
peasants have taken on it to carry out their day-to-day transactions by using mobile wallets.
Around 20 Indian mobile wallet brands. Many people use them but in Bangalore, most of them
opt for PayTm & Google Pay. An attempt is made to analyze the reasons why these two types of
wallets became successful compared to others in Bangalore. In cashless payments, mobile wallet
payments are the most convenient and fastest mode of payment. Mobile wallets has multiple
deals for the users and thus no bank is involved in making transactions with the help of cards,
account numbers, IFSC, and passwords. The Indian economy is currently moving away from
cash-based transactions towards payment via electronic means. The government has made
several attempts in trying to transform the entire face of Indian economics into something new.
Today, all transactions are being turned into a digital setting. Several digital payment systems
were developed as a way to speed up the adoption of the digital economy notion. Such payment
systems can change people’s economic lifestyles.
Perceived Risks

As per the TRAI Report 2016, Kerala has up to 9.73 million urban net users. Malappuram is the
most populated district in the state having a total population of 4,112,920 among which 9,52,191
are urban. Another issue on literacy affects the knowledge among people about digital payment
systems. The literacy rate is at 93.57% in the district. What does perception and concern
surrounding digital payment systems among these urban people look like nowadays? This paper
seeks to address the issue. All work on UPI has just been theoretical Operationally it is employed
in theoretical UPI studies. The likely future benefits of UPI towards greater masses and for its
gains in financial digitalization.
Operative studies using UPI discuss mainly for it to be accepted as its operational strength. For
mass popularity, digitalization is a futuristic tool. Yet, as noted by the authors, not one among
these practices. In essence, the study empirically addresses the impact of UPI on the economy
enhancing economic development for poor people. Accessibility, convenience, and low costs are
inherent features of UPI itself which will also help in eliminating the obstacles of financial
exclusion $26,56,70,$92,$98. Financial exclusion costs and barriers are what largely contribute
financially to encouraging financial penetration and promoting economic growth. Technology
drivers such as fintech, mobile, etc., are very. It has proved effective in improving people’s
financial literacy. Likewise, similar arguments should be made towards UPII supporting its
financial literacy. ICT (information, communication, and technology) also supports economic
development. On its part, ICT supports economic growth clearly and positively promotes
financial literacy. Moreover, it serves as another piece of evidence that supports this claim. It
demonstrates how literacy further supports economic development. It is also equally important to
therefore it is implied that UPI supports literacy.

Thus, the following hypothesis is formed:

H1: The issue of literacy (financial literacy) is affected by the UPI. Evidence abounds in
literature about literacy or finances; it is, therefore, a conclusion that literacy indeed contributes
to financial inclusion. Mobile Wallet App has some challenges as well. Those problems have
Psychological and emotional impacts on the user. From the forthcoming table, it is clear that the
issues are being turned into the problems that mobile wallet users have been facing. The tables
show that 19.7% of the respondents state that they make the transaction as they go along with it.
At times Payment Failure occurred and Money was withdrawn from the account by using Paytm
and Google Pay applications. Since it was a result of network problems and banks, it is a big
issue on the part of the wallet companies server issues, as well as, wallet issues but the customers
are not in a good state of mind mentally. The data source is primarily the researchers from
Vinayagamoorthi G., Alagappa University, India Gopalakrishnan S., Acharya Institute of
Graduate Studies, India Sudha M., Acharya Institute of Graduate Studies, India Mathiraj S.
P.Thirupathi Manickam, Alagappa University, India*
International Journal of E-Business Research Volume 18 • Issue 1
shows Billions of Transactions—in the Indian Banking sector. As shown in the table above and
Figure 1, there is a clear development of the digital payment system in India. A few transactions
shall be made by cash. This will comprise the withdrawal transactions through ATMs and the
deposits in the CDMs. It contains financial transactions for ATM and Mobile only. Cash, as well
as the conventional technique of making payment by cheque, is known as the traditional channel.
These include, among others, counter cash transactions within branches better known as “cash
transactions.” Nevertheless, ECS is an out-of-line transaction since it is designed both online and
later used. Debit and credit card usage in conducting electronic transactions of e-commerce. This
will include Mobile, ECS, and POS while these are referred to as transactions through digital
channels, internet, NEFT (in branch), and cheque transactions will be categorized under
branch-based transactions and cash and ATM transactions will be categorized under ATM
transactions.

Discussion :

Conclusion:

The largest invention in digital banking is regarded as UPI. Such an innovation is necessary to
create the digital ecosystem. One important contribution of this research is financial inclusion,
which is aided by a digital ecosystem. Individuals’ voluntary exclusion from financial inclusion,
cost effectiveness, accessibility to technology, and ease are the main factors supporting the UPI
platform's longevity. The existence of such a digital ecosystem will contribute to people being
more financially literate.

India, as a nation, is poised to seize a great opportunity to increase financial inclusion through
FinTech, which is quickly emerging as a vital economic engine. Less than 300 million of its 1.3
billion inhabitants have ever taken out a loan, therefore the next 300 million provide an obvious
potential. India is rapidly becoming a data-rich nation, with a billion people having some sort of
financial or telecommunications data.

India's experimentation with digital payments has been successful thus far, mostly due to the
government's emphasis on creating a digital India as well as the other aspects mentioned above.
As a digital public utility, UPI and UPI123Pay have likely increased the number of people
participating in the formal economy and improved payment convenience. Mobile wallets must
recognize and cater to consumer preferences if they aim to be successful. The digital India
project, which was accelerated by demonetization, led to the emergence of mobile wallets as an
illustration of how technology can transform society. These digital solutions not only solve the
long-standing problem of a lack of small-value currency, but they also thwart illicit operations
that try to increase the size of the national budget. India's transition to a cashless society will see
mobile wallets continuing to set the standard. As customers in India accelerate the shift to a
cashless society, mobile wallets will remain at the forefront. It appears that the future of mobile
wallets in India will be determined by the way government initiatives, technology advancements,
and consumer adoption evolve together. The material reviewed for this paper emphasizes how
crucial it is for financial transactions in developing nations to be conducted using mobile wallets.
The introduction of the BHIM app and the remarkable expansion of PayTm are examples of how
these digital solutions are changing society and business. As mobile wallets continue to progress
to new heights, it is becoming clear that they have enormous potential to support economic
development in developing countries.

Given that this is essential to achieving the full societal benefits of mobile wallets in these
settings, it follows that overcoming the obstacles and making the most of the numerous
technological improvements will be important.

Customers desire convenience and speedy payments via UPI. When things are simpler, users can
pay quickly and effortlessly. Paying for goods, services, and other expenses with UPI is
convenient for customers. UPI is more popular among younger people as a means of payment. In
the meantime, UPI service providers' commercials and government campaigns greatly increased
public knowledge of the UPI platform. Another reason why young people in India might use UPI
is for impression management.

Many sectors in India today vouch for UPI and looking at the success of UPI in India, many
foreign nations have also started to adopt UPI. Millions of Indians use UPI gateways to carry out
their day-to-day expenditures. The digital payment space has as mentioned earlier seen
tremendous growth, innovation and regulatory support. However, the increased transaction
failure and cyber fraud must be looked upon. The focus today with UPI having achieved the
reach it has should be on increasing literacy among the masses especially in rural India and
creating digital infrastructure.
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