DISSERTATION PROJECT REPORT

On

A comparative study on emerging trends in

digital payments and the rapid rise of UPI in
India

By

Nitesh Singh
Roll Number: 148KC
MBA (IB):2020-22
Indian Institute of Foreign Trade
(Kolkata Campus)

Under the guidance and mentorship of

Dr. Bharat Chillakuri

 Table of Contents

S. No. Particular Page No.

1. Abstract 3

2. Review of 4
Literature
3. Purpose of Study 5
4. Research 5
Objectives
5. Research 5
Methodology

2
 Abstract

India as a country is improving in a variety of ways. The government's actions have lifted many
people out of poverty and resulted in strong consumer growth. The backbone of growing
economies is robust banking and payment infrastructure. In the last two decades, this youthful
India has seen remarkable expansion in the digital payments market.

Inspite of its progress, the country remains largely reliant on currency, which has its own set of
limits. People who rely heavily on cash are vulnerable to inflationary impacts, which reduce the
value of currency in their possession.

As a result, the need of the hour is to replace cash transactions with a more inclusive digital
payment system.

Modern payment options have emerged in the previous two decades, including advancements in
the fields of internet banking, electronic money transfer (RTGS/NEFT), and cards.

The RBI's Vision Policy 2019-21 emphasises the bank's commitment to building a Digital
Payments Ecosystem. On January 1, 2021, the Reserve Bank of India (RBI) announced a
composite Digital Payments Index to measure the amount of payment digitization across the
country.

Despite all the efforts and progress in the digital payments market, there is still a lot of room for
expansion. Branch banking and cash transactions are still preferred by a large portion of the
population over digital payment options. However, considerable work remains to be done to make
these solutions more adaptable, tailored, and inexpensive.

As a result, the current research project aims to better understand India's digital payments
environment as well as people's banking habits, especially in a post COVID era. The project also
aims to find out that what drives the Indian citizens to choose digital payments to cash
transactions? Also, determining the reasons for the slightly poor adoption rate and analysing the
results.

Lastly, the research project also aims to provide an overall picture of the current digital payments
landscape in India while narrowing down on the dramatic rise of UPI (Unified Payment
Interface), and the reasons, strategies behind the same.

3
 Literature Review
The study has been cited to a number of government publications and research articles. The details
of the same have been mentioned below:

1. A study on Digital Payments in India with perspective of Consumer’s Adoption- Suma

Vally & Hema Divya (K L University, Guntur)

The research paper emphasizes the benefits of payment system digitization. It demonstrates that a
customer's age, rather than their money, is a significant influence in their adoption of digital
payment systems. In addition, a higher level of education fosters a positive attitude toward
innovation adoption.

2. The Payment Systems Revolution: India’s Story – N V Narendra Kumar & Abhishek
Thakur (Institute for Development & Research in Banking Technology)

The article follows India's digital payments history over the last four decades. Growth was gradual
at first since the focus was on developing the necessary infrastructure and procedural rules.
Payment systems began to evolve at a faster rate as a result of the existing ecosystem. The RBI
deserves credit for issuing appropriate guidelines and, on the other hand, promoting new players
such as NPCI, which revolutionized the entire landscape.

3. Factors Influencing Customer’s Digital Payment Result With Suggestion To

Tiruchirappalli District - P. Ganesh, and A. Khaleelur Rahman (Jamal Mohamed College)

The report goes into great detail about the value of digital payments and how various factors
influenced consumers. The discovery also contributed to a better understanding of the impact of
many elements on overall satisfaction with digital payment. Because this was an exploratory study,
certain limitations have been noted, and recommendations for future research have been made.

4. Monopoly Money – The Effect of Payment Coupling and Form on Spending Behavior-
Priya Raghubir & Joydeep Srivastava

The study defines coupling as a link between the purchase and the actual spend. It investigates
whether customer expenditure is linked to the method of payment. Consumers have a variety of
payment alternatives from which to pick when making a purchase. Consumers who expect to pay
with a credit card in the future are willing to pay less than those who do not. Overall, less
transparent payment forms are more easily spent since they are considered as monopoly money.

5. Mobile Payments Market Report – India by S&P Global, 2021

In 2019, the Unified Payment Interface, a standard used by the financial industry, processed 11
billion transactions. Wallets may become obsolete in the near future due to the popularity and ease
of use of UPI, as well as more severe KYC compliance requirements. Google Pay, PhonePe, and
Paytm were the most popular UPI payment apps in 2019. Amazon Pay and WhatsApp Pay have yet
to make a name for themselves. To attract Fintech firms, regulators must create a platform for
innovation and healthy competition. Another risk for these fledgling ventures is investor support. In
a post-covid scenario, businesses are also reducing their unsecured loans.

4
 Purpose of the Study
According to a review of the literature, there has been research that emphasizes the importance of
digital payment systems. Various research studies suggest that in the last few years, India has made
tremendous progress in implementing digital payment methods, demonstrating the benefits of a
cashless or digital economy.

We've also run into a few roadblocks that we need to overcome in order to keep moving forward in
the correct way.

However, there appears to be a research void regarding the reasons for people's delayed adoption
rate. Despite the government's innovative measures, a sizable portion of the populace still relies
largely on cash transactions. This study is a start in identifying the elements that cause the problem
and highlighting the gaps.

The project also considers the perceived usability of digital payment methods as well as behavioral
issues associated with them. It will help us go forward and overcome these obstacles so that we can
genuinely become a digital economy. Moreover, the study lays a special focus on the dramatic rise
of the Unified Payment Interface (UPI) in India.

Research Objectives
• To research and assess digital payment systems, as well as customer perceptions of their
adoption. Also, to figure out the reasons behind the slightly poor adoption rate and the dramatic
rise of Unified Payment Interface (UPI) payments in India.

Research Methodology
The research methodology includes-

• Secondary data from RBI, credit rating agencies and government reports, as well as numerous
academic articles, to be investigated and analyzed.

• Consumer banking habits to be assessed, especially in the post COVID era. Primary research to
be done by gathering data via an online survey and analyzing the results.