A Study on the Adoption of Digital

Payments by Indian Youth

Harsimran Kaur1, Richa Mehta2

{[email protected] , [email protected]}

Rukmini Devi Institute of Advanced Studies, Delhi, India1, 2

Abstract. There are many instances in the near past like Demonetization, Digital India
campaign etc. where payments which do not require any physical contact came in
demand. But after the lockdown due to a pandemic hit India, the demand for digital
payments saw a tremendous increase as people did not want to come in contact with
anyone. So digital payments played a very important role during these times. As youth
forms a major and important part of our country, this study tries to uncover and
comprehend the key elements driving Indian youth's adoption of digital payments. After
reviewing the literature, three variables were identified as independent while one variable
was identified as dependent. For this, primary research with the help of a questionnaire
was conducted. The sampling technique adopted here was purposive sampling (non-
probability sampling) and 205 responses were collected and analyzed by using statistical
tool SPSS.

Keywords: Digital Payments, Security, Acceptance, Convenience, Digital Payment

platform, youth

1 Introduction

Digital payment is clearly a form of a transaction which lacks physical exchange of cash. The
aforementioned arrangement takes place with the help of a mobile phone and the internet. It
eliminates the hard currency exchange. It is also known as electronic payments. The extensive
use of smartphones, continuous improvements in the mobile and broadband industry, cutting
edge technology and certain movements like Demonetization, Digital India and the sudden
pandemic had an instrumental impact on the adoption of Digital Payments. This is crucial as it
is growing at a rapid speed and it has the potential to curb black money.

The Digital Payment mechanism is a milestone in the era of a cashless economy of Digital
India. It has been observed that till 2020, less than 5% of total payments take place
electronically. The volume of digital payments in India has increased by 33% during the
financial year 2021-2022. Digital payments save our time and are convenient to use butcash is
still a major part of Indian Youth’s life. A report on the topic “Digital payments in India
projected to reach $10 trillion by 2026” [1] stated that UPI had observed a 9 times transaction
volume increase in the last 3 years. RBI has unveiled a Payments Vision 2025 which has the
core theme of ‘E-Payments for Everyone, Everywhere, Every Time’ (4Es) [2] and aims to

ICASDMBW 2022, December 16-17, Delhi, India

Copyright © 2023 EAI
DOI 10.4108/eai.16-12-2022.2326162
provide every user with safe, secure, fast, convenient, accessible and affordable e-payment
options.
Digital Payment Mode used in India:
• UPI: the Unified Payment Interface (UPI)
• Online or mobile wallets
• Debit Cards
• Credit Cards
• Mobile Banking
• Internet Banking

2 Scope of The Study

This study will help to study different factors which have a major impact on the adoption of
Digital Payments. In this study, the focus will be on youths (Ages 15- 29) as they cover a
major part of India’s population and are the major tech-savvy people.

3 Rationale and Research Gaps

Even though the use of Digital Payment is increasing day by day still there are some setbacks
which slow its growth. It has been observed that the factors stated by some scholars are
rejected by other scholars. It has also been observed that the scholars have focused more on
gender than the factors that are impacting the adoption of digital payments. There has been no
specific study on the adoption of digital payments by Indian youth even though they form
major part of India’s population. The research will help to understand the barriers and factors
that affect the growth of digital payment and what could be the solutions or strategies for
increasing the adoption of digital payments among Indian youth.

4 Literature Review

Mohammed Arshad Khan in his research article on “Netizens’ Perspective towards Electronic
Money and Its Essence in the Virtual Economy” (2021) [3] examined the impact of
demographic factors and other variables like satisfaction, reliability etc. on the adoption of the
digital payment system. It also mentioned that the Indian economy will take considerable time
to adopt digital payments.
Kartik Aggarwal , Sushant Malik , Dharmesh K. Mishra , Dipen Paul in their research on
”Moving from Cash to Cashless Economy: Toward Digital India” (2021) [4] [5] indicated that
consumers’ age group, educational qualification etc. has an impact on the adoption of a
cashless economy.[6] It stated that two types of amenities, wallet- based and UPI-based
platforms have been trending in recent years.
Dr. Dilip Singh, Ms. Aishwarya Singh in their research on “E-Wallets: An Innovation and its
Perception Among Youth” (2022) [7] provided how various factors like convenience in ease
of use, quick online transaction, prompt customer services and usefulness of e-wallet in terms
of prioritizing the transactions play an important role in the adoption of digital payments (E-
wallets). They observed that the most liked feature of E- wallets is that they are a hassle-free
and quick way to make payments.
Sudiksha Shree, Bhanu Pratap, Rajas Saroy, Sarat Dhal in their research on “Digital payments
and consumer experience in India: a survey based empirical study” (2021) [8] [9] studied how
consumer’s experience with online fraud affects their payment behaviour. They also stated
that the socio-economic development of the population will increase with the adoption of
digital payments.
Mala Goplani, Jewel Sabhani, Akash Gupta in their research journal on “A Study on Use
of Digital Payment Application for E-Commerce among Youth” (2021) [10] observed that
majority of people are users of digital payments and they use it for shopping of clothes,
electronic gadgets, paying utility bills, booking tickets etc.
Ashish Baghla in his research on “A Study on the Future of Digital Payments in India” (2018)
[11] [13] stated that the biggest challenge faced is the lack of education, digital literacy,
knowledge and awareness amongpeople and fear of loss of money.
Shamsher Singh in his research on “Study of Consumer Perception of Digital Payment Mode”
(2027) [12] [14] observed that only education is the factor that influences the adoption of
digital payments. The increasing use of the internet and smartphones in India is acting as a
major factor in the growth of digital payments.
C. Chaudhari and A.Kumar in their research on “Study on Impact of Covid-19 Outbreak on
Digital Payment in India” [15] [16] stated that the value of digital payments in 56the retail
sector increased during the pandemic-hit period which shows how the Indian economy was
ready to absorb and adjust to the economicshocks.
M. Thirupathi, Dr.G. Vinayagamoorthi, Dr. Sp. Mathiraj (2019) [17] in their research on “Effect
Of Cashless Payment Methods: A Case Study Perspective Analysis” emphasised that the
number of digital payment users have been increasing day by day, especially the students and
employees working in the private and government sector. There has been a 440% increase after
demonetization.
Dr Ranjith P.V.1 , Dr. Swati Kulkarni2 , Dr. Aparna J Varma in their research on “A
Literature Study Of Consumer Perception Towards Digital Payment Mode In India” (2021)
[18] predicted that the technology like blockchain and bitcoin along with artificial intelligence
will play a major role in the overall development of digital payment in India. Majority of
consumers are comfortable using digital transactions.
Gagandeep Singh in his research on “A Review of Factors Affecting Digital Payments and
Adoption Behaviour for Mobile e-wallets” (2019) [19] observed that latest technologies for
digital payments have improved the banking sector’s performance and is moving towards the
motive of cashless country.
Ms. Rashi Singhal in her research on “Impact and Importance of Digital Payment in India”
(2020) [20] stated that digital payments are one of the engaging frameworks in India that helps
in the advancement of the Digital India campaign started by Prime Minister Narendra Modi,
which aims at controlling the black money of the country.
Ms. S. Ruthrani and Dr. V. Darling Selvi in their research on “Consumer Perception Towards
Digital payment” (2019) [21] [22] observed that internet is playing an important role in the
field of digital payments. The 24 hours availability, customer loyalty, easy access to
information etc. are important factors that give strength to digital payments.
K. Pushparaj in his research on “Digital Payment System–Innovative Practices of Banks and
Perception of Customers” (2021) [23] [24] suggested that banks should organize awareness
programs regarding the Digital payment system to overcome the misconceptions about the
Digital Payment system and develop confidence in the customers.
Pachpande Bhagyashri R. in the research on “Study of E-wallet Awareness and its Usage.”
(2018) [25] stated that the presence of mobile wallets spreading from urban to rural areas on a
large scale. Hence, wallet money sees a bright future in near time.
G. Raghunath in his research on “Digital Payments in India” (2022) [26] [27] observed that
Google Pay is the most used mode of digital payments. He also advised that people should be
made aware of the safety procedures that are being taken to make digital payments safer to
use.

5 Research Objectives

• To study the adoption of digital payments by Indian Youths.

• To study factors (Awareness, Convenience and Security) affecting the adoption of
digital payment.
• To find out the most used digital payment platform.

6 Hypothesis

• Hypothesis 1: There is a significant relationship between the dependent variable

“Acceptance” and independentvariable “Convenience”.
• Hypothesis 2: There is a significant relationship between the dependent variable
“Acceptance” and independentvariable “Security”.
• Hypothesis 3: There is a significant relationship between the dependent variable
“Acceptance” and independentvariable “Awareness”.
• Hypothesis 4: There is a significant impact of variables on adoption of digital
payments.

7 Research Design

The research design applied in this research is a Descriptive Research Design. Descriptive
Research Design describes the characteristics of a sample and relationships between the
population or phenomenon and events observed by the researcher (Rubin & Babbie, 2008;
Thomlison, 2001). It explains the event under consideration. This design was chosen because
it helps in describing the customers or competitors, understanding market size, segmenting
markets and measuring the performance. The research will also include applied research
which is designed to solve practical problems of the modern world and the quantitative method
which will be used to survey and collect quantifiable data.
Population: The population to be covered in this research is people residing in Delhi/NCR.
Individuals might be eithermale or female.
Sample: The study of this sample reveals and validates information about the entire
population. The sample to be covered in this research is Indian youths between the age group
of 15 and 29 years residing in Delhi/NCR.
Sample Size- The sample size for this research is 200 Indian youths.
Unit of Analysis- The unit of analysis applied is Indian youth.
Sampling Technique- The sampling technique applied in this research is Non-Probability
Sampling- Purposive Sampling. Purposive sampling (also known as judgement, selective, or
subjective sampling) is a sampling technique in which the researcher uses his or her discretion
in selecting members of the population to participate in the study.
Survey Instrument: Both primary and secondary data have been used for the research. For
collecting primary data, a questionnaire was circulated and data was collected from 200
people. Secondary data has been collected from various online sources like research papers,
journals, websites etc.

8 Data Analysis Tools & Techniques

For this research, the tool used for data analysis is SPSS which stands for “Statistical Package
for the Social Sciences”. It is applied because it will help in finding out the relation between
two variables.

9 Data Analysis and Results

9.1. Profile of Respondent

Respondents are categorised on the basis of their demographic factors such as gender, age,
education qualification, occupation and annual family income. 52.2% of respondents are
female, 47.3% are male while .5% preferred not to say gender. Most of the respondents are
students of the age group 20-24. Most respondents are post graduates (42.4%) followed by
under-graduates (40.5%). The annual family income of respondents below Rs 5 lakhs is 41%,
5-10 lakhsis 36.1% and above 10 lakhs is 22.9%.

Table 1: Frequency of Demographics

Statistics
D1 D2 D3 D4 D5
N Valid 205 205 205 205 205
Missing 0 0 0 0 0
Mean 1.54 2.04 4.16 2.50 1.82
Std. Deviation .528 .670 .937 .790 .781
 Chart.1: Demographic(Gender)

Chart 2: Demographic(Age Group)

Chart 3: Demographic(Education Qualification)

 Chart 4: Demographic(Occupation)

Chart 5: Demographic(Annual Family Income)

9.2. Correlation Analysis
A correlation is a single number that describes the direction and the degree of relationship
between two variables. Itis a measure of the extent to which two variables are related. In this
research, it will help in analysing the relation between the dependent variable “Acceptance”
with independent variables “Convenience”, “Awareness” and “Security”.
Hypothesis 1:
Ho: There is no significant relation between the variable Acceptance and Convenience.
H1: There is a significant relationship between the variable Acceptance and Convenience.
Table 2: Correlation between Acceptance and Convenience
Correlations
ACCEPTANCE CONVENIENCE
ACCEPTANCE Pearson 1 .686**
Correlation
Sig. (2-tailed) .000
N 205 205
CONVENIENCE Pearson .686** 1
Correlation
Sig. (2-tailed) .000
N 205 205
**. Correlation is significant at the 0.01 level (2-tailed).
The correlation between Acceptance and Convenience is r = 0.686 and significant values is
0.000. This indicates that Acceptance and Convenience are not independent to each other. The
Value of r=0.686 which shows that it is forminga moderately strong correlation.
Hypothesis 2:
Ho: There is no significant relationship between the variable Acceptance and Security.
H1: There is a significant relationship between the variable Acceptance and Security.

Table 3: Correlation between Acceptance and Security

Correlations
ACCEPTANCE SECURITY
ACCEPTANCE Pearson Correlation 1 .564**
Sig. (2-tailed) .000
N 205 205
SECURITY Pearson Correlation .564** 1
Sig. (2-tailed) .000
N 205 205

The correlation between Acceptance and Security is r = 0.564 and significant values is 0.000.
This indicates that Acceptance and Security are not independent of each other.
The Value of r=0.564 which shows that it is forming a moderately positive correlation.
Hypothesis 3:
Ho: There is no significant relationship between the variable Acceptance and Awareness.
H1: There is a significant relationship between the variable Acceptance and Awareness.
 Table 4: Correlation between Acceptance and Awareness
Correlations
ACCEPTANCE AWARENESS
ACCEPTANCE Pearson Correlation 1 .622**
Sig. (2-tailed) .000
N 205 205
**
AWARENESS Pearson Correlation .622 1
Sig. (2-tailed) .000
N 205 205

The correlation between Acceptance and Awareness is r = 0.622 and significant values is
0.000. This indicates that Acceptance and Awareness are not independent of each other. The
Value of r=0.622 which shows that it is forming amoderately strong correlation.
Hypothesis 4:
Ho: There is no significant impact of variables on adoption of digital payments.
H1: There is a significant impact of variables on adoption of digital payments.

9.3. Regression Analysis

The general purpose of regressions is to learn more about the relationship between one
independent and one dependent variable. In this, multiple regression is performed so that the
relation between dependent variable “Acceptance” and independent variables “Awareness”, ”
Convenience” and “Security” can be obtained.

Table 5: Model Summary

Model Summary

Model R R Square Adjusted R Square Std. Error of the Estimate

1 .724a .524 .516 .66082

a. Predictors: (Constant), AWARENESS, SECURITY, CONVENIENCE

Table 6: ANOVA
ANOVAa
 Sum of Mean Square
Squares
Model df F Sig.
1 Regression 96.441 3 32.147 73.615 .000b
Residual 87.775 201 .437
Total 184.215 204
a. Dependent Variable: ACCEPTANCE
b. Predictors: (Constant), AWARENESS, SECURITY,
CONVENIENCE

Table 7: Regression Coefficients

Coefficientsa
Unstandardized Standardized
Coefficients Coefficients

Std. Error
B Beta
Model t Sig.
1 (Constant) 1.595 .302 5.275 .000
CONVENIE .446 .084 .409 5.317 .000
NCE
SECURITY .113 .052 .145 2.170 .031

AWARENES .194 .051 .259 3.798 .000

S
a. Dependent Variable: ACCEPTANCE

The formula used to identify the beta value of standardized coefficients is :

Acceptance: .409*Convenience+ .145*Security+ .259*Awareness
The result indicates that there is significant impact of independent variable “Convenience” on
dependent variable “Acceptance”( B=.446, t=5.317, p=.000). The result indicates that there is
significant impact of independent variable “Security” on dependent variable “Acceptance”(
B=.113, t=2.170, p=.031). The result indicates that there is significant impact of independent
variable “Awareness” on dependent variable “Acceptance”( B=.194, t=3.798, p=.000). This
shows that there is significant impact of variables on adoption of digital payments.
 Table 8: Regression Hypothesis Result:
Hypo theses Regressionweighs B T p- value Results

𝐻1 Convenience > .446 5.317 0.000 Supported

Acceptance

𝐻2 Security > Acceptance .113 2.170 0.031 Supported

𝐻3 Awareness >Accept .194 3.798 0.000 Supported

10 Discussions
1. First, correlation was tested to find out the relation between variables, out of which one
is dependent variable and the other were independent variables. The variables showed
positive correlation.
2. After correlation, multiple regression was performed to understand how different
factors impact acceptanceof Digital payments among Indian youth.
3. The research proved that independent variables “Convenience”, “Awareness” and
“Security” had asignificant impact on dependent variables ”Acceptance”.
4. The findings show that the more the youth will be made aware about digital
payments, the more they will beready to accept and finally adopt digital payments.
5. The findings show that the more secure the youth will feel about using digital
payments platforms, the more accepting they will be about adopting it in their daily
life.
6. It has also been observed that the respondents have used at least one or more
digital payments mode andplatform. The most used platform is PayTM.

11 Implications
Digital Payments have seen growth in the last few years but still a lot of people are not
completely aware about it so digital payment platform providers should try to create awareness
about their platforms. Digital payments platform providers should improve their technology so
that there are less technical glitches as this leads to dissatisfied customers who do not want to
take risk of their money getting stolen or blocked due to some technical error. The study shows
that convenience is very important to consumers so new updates should come in an adequate
manner so that the unnecessary errors can be prevented. More and more youth will start using
Digital Payments when they gain relevant knowledge about it. The bank’s website and
applications should be easy to use and fast. Cashback or Coupons could be given to youth for
using digital payments. This will encourage youth to adopt digital payments as a method of
payment.

12 Conclusion
This research was initiated to analyse some major aspects that influence the adoption of digital
payments by Indian youth. After reviewing a variety of literature, important variables were
recognized which have a great impact on acceptance of digital payments. These variables are
Convenience, Security and Awareness. It was observed that all independent variables had a
favourable relation with dependent variables. They all had a considerable effect on the
acceptance of digital payments.

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