PROJECT WORK

A STUDY ON DIGITAL PAYMENT SYSTEM IN INDIA

SEM VI EXAMINATION 2025

B.COM HONOURS

PREPARED BY :-
NAME : RAHUL DAS
COLLEGE ROLL : 22-BCOM-ACCA-0039
UNIVERSITY ROLL : 220240400043
UNIVERSITY REGN. NO. : 202201043504 OF 2022-23
SEMESTER : VI
NAME OF THE SUPERVISOR : SAMIRAN MALLIK
 ABSTRACT

Demonetization created huge growth opportunity for digital payment in India

and the digital wallet companies garbed the opportunities with both the hands
to expand their market share. The Government of India has been taking several
measures to promote and encourage digital payments in the country. As part
of the Digital India campaign, the government aims to create a digitally
empowered economy that is Faceless, Paperless, and Cashless. There are
various types and modes of digital payments. Some of these include the use of
debit/credit cards, internet banking, mobile wallets, digital payment apps,
Unified Payments Interface (UPI) service, Unstructured Supplementary Service
Data (USSD), Bank prepaid cards, mobile banking, etc. Digital payment
methods are often easy to make, more convenient and provide customers the
flexibility to make payments from anywhere and at any time The future of
digital payments in India looks bright with the expected growth in the number
of internet users and e-commerce market size.

Keywords: Cashless, Digital Payment, USSD, UPI, PoS, Mobile Wallets,

Banking Cards.
 SELF DECLARATION & COPYRIGHT

DECLARATION

The project entitled “A Study on Digital Payment system in India” is conducted

under the supervision of Prof. / SAMIRAN MALLIK, Designation :

ASSOCIATE PROFESSOR IN ACCOUNTANCY of Chandernagore College

, Department of Commerce.

I declare that the information reported in the current paper is the result of my own
work except where due to reference is made. The project work has not been accepted
for any degree and is not concurrently submitted to any candidature for any other
degree or diploma.

Signature

Date : Time: College Roll No.: 22-ACCA-BCOM-

0039

University Roll 220240400043

No.:

Registration No.: 202201043504 OF

2022-23
 ACKNOWLEDGMENT

I am sincerely thankful to Prof. SAMIRAN MALLIK, under whose guidance I

have successfully completed this project and time spent with him had been a great
learning experience. I think him constant encouragement, warm responses and
for filling every gap with valuable ideas has made this project successful. He
made it possible for me to put all my theoretical knowledge to work out on the
topic: “A STUDY ON DIGITAL PAYMENT SYSTEM OF INDIA”.

A mammoth project of this nature calls for intellectual nourishment,

professional help and encouragement from many people. We are highly thankful
to all of them for their help and encouragement. We wish to acknowledge our
great debt to all of them whose ideas and contribution influenced me to complete
the project work.
TABLE OF CONTENTS
 INTRODUCTION

The last decade has seen tremendous growth in use of internet and mobile phone in India.
Increasing use of internet, mobile penetration and Government initiative such as Digital
India are acting as catalyst which leads to exponential growth in use of digital payment.
Electronics Consumer transaction made at point of sale (POS) for services and products
either through internet banking or mobile banking using smart phone or card payment are
called as digital payment. The consumer perception of digital payment has a significant and
positive impact on adoption of digital payment. It has been said that every disruption
creates opportunities and one such disruption was the announcement of demonetization by
Prime Minister Mr. Narender Modi on 08 November 2016. Demonetization created huge
growth opportunity for digital. payment in India and the digital wallet companies garbed the
opportunities with both the hands to expand their market share. Demonetization has
presented a unique platform for adoption of digital payment, as an alternative to cash for
Indian consumers. Adoption of cashless transaction has been significantly pushed by Prime
Minister Mr. Narender Modi as part of government reforms after demonetization of high
value currency of Rs. 500 and 1000 (86% of cash circulation). The demonetization resulted in
unprecedented growth in digital payment. By February this year, digital wallet companies
had shown a growth of 271 % for a total value of US$2.8 billion (Rs. 191 crores), Indian
government.
Private sector companies such as Gpay, Paytm, Freecharge and Mobikwik had been
aggressively pushing several digital payment applications, including the Aadhaar 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 behavioural
change and helped in the adoption 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
many foreign investors want to invest in digital payment industry which is new attractive
destinations because of scope of tremendous expansion in India. There are number of
facilitators which are leading to the growth of digital payment and transition from cash
economy to less cash economy. These facilitators include penetration of internet
connectivity on smart phones, nonbanking financial institution facilitating digital payment,
one touch payment, and rise of financial technology sector and push by government either
by giving incentives or tax breaks. These all factors are creating positive atmosphere for
growth of digital payment in India.

DIGITAL PAYMENT SYSTEM

The Government of India has been taking several measures to promote and encourage
digital payments in the country. As part of the Digital India campaign, the government aims
to create a digitally empowered economy that is Faceless, Paperless, and Cashless. There
are various types and modes of digital payments. Some of these include the use of
debit/credit cards, internet banking, mobile wallets, digital payment apps, Unified Payments
Interface (UPI) service, Unstructured Supplementary Service Data (USSD), Bank prepaid
cards, mobile banking, etc. Digital payment methods are often easy to make, more
convenient and provide customers the flexibility to make payments from anywhere and at
any time. These are a good alternative to traditional methods of payment and speedup
transaction cycles. Post demonetization, people slowly started embracing digital payments
and even small time merchants and shop owners started accepting payments through the
digital mode.

What is a Digital Payment?

To put it in simple words, a digital payment occurs when goods or services are purchased
through the use of various electronic mediums. There is no use of cash or cheques in this
type of payment method.

What is a Cashless Economy?

In a cashless economy, all transactions are carried out using different types of payment
methods and this does not involve the physical use of money for the purchase of various
goods and services.

DIGITAL PAYMENTS
A digital payment, sometimes called an electronic payment, is the transfer of value from
one payment account to another using a digital device such as a mobile phone, POS (Point
of Sales) or computer, a digital channel communication such as mobile wireless data or
SWIFT (Society for the Worldwide Interbank Financial Telecommunication). This definition
includes payments made with bank transfers, mobile money, and payment cards including
credit, debit and prepaid cards.

There is no single, universally accepted definition of digital payments because digital

payments can be partially digital, primarily digital, or fully digital. For example, a partially
digital payment is one in which both payer and payee use cash via third party agents, with
providers making digital bank transfers in the backend. A primarily digital payment might
be one in which the payer initiates the payment digitally to an agent who receives it
digitally but the payee receives the payment in cash from that agent.

So, the definition must be fit-for-purpose. One definition emphasizes the payer-payee
interface as the defining element. Another defines digital payments based on the payment
instrument, or some other variable. These definitional choices become particularly
relevant when the objective is to estimate the number or share of digital payments in a
specific use-case, organization, company, country, or region.

The traditional system is replacing by the digital system. The traditional payment
systems are Cheques, withdrawals, drafts, money orders, letters of credits, travel cheques
etc. why Payment systems also turning into electronic payment system using computer
and internet there are several reasons of adaption . The most common reason is that
the traditional system has some leakages and inefficiency and that’s overcome by the
digital payment system. But in India digital system is in emerging trend and not so
popular and generalized. Today India is using most common electronic payment
systems include Debit Cards, Credit Cards, but the use of Electronic Fund Transfer,
Internet Banking, Unified Payment System (UPI), e-commerce payment system, internet
banking, and many more payment system popular in india.
BENEFITS OF DIGITAL PAYMENTS
Faster, easier, more convenient: Perhaps, one of the biggest advantages of cashless
payments is that it speeds up the payment process and there is no need to fill in lengthy
information. There is no need to stand in a line to withdraw money from an ATM or carry
cards in the wallet. Also, with the move to digital, banking services will be available to
customers on a 24/7 basis and on all days of a year, including bank holidays. Many services
like digital wallets, UPI, etc, work on this basis.

1) Economical and less transaction fee: There are many payment apps and mobile
wallets that do not charge any kind of service fee or processing fee for the service
provided. The UPI interface is one such example, where services can be utilized by
the customer free of cost. Various digital payments systems are bringing down
costs. Waivers, discounts and cash backs: There are many rewards and discounts
offered to customers using digital payment apps and mobile wallets. There are
attractive cash back offers given by many digital payment banks. This comes as boon
to customers and also acts a motivational factor to go cashless. Digital record of
transactions: One of the other benefits of going digital is that all transaction
records can be maintained. Customers can track each and every transaction that is
made, no matter how small the transaction amount this.

2) One stop solution for paying bills: Many digital wallets and payment apps have
become a convenient platform for paying utility bills. Be it mobile phone bills,
internet or electricity bills, all such utility bills can be paid through a single app
without any hassle.

3) Helps keep black money under control: Digital transactions will help the
government keep a track of things and it will help eliminate the circulation of black
money and counterfeit notes in the long run. Apart from this, this may also give a
boost to the economy as the cost of minting currency also goes down. Digital
payments are slowly gaining popularity in India and there are many apps that are
being launched in this sector. It has become a hassle-free and secure way to make
payments.

4) Transparency and security by enhancing traceability and accountability,

reducing corruption and theft as a result. For example, a recent report analyzes risks
 incurred by individual purchasing clerks in cocoa value chains (including assault),
due to the prevalence of cash. As of March 2019, the Government of India has saved
almost $14 billion in social protection payments through electronic Debit Benefits
Transfers.
5) Inclusive growth Cumulatively, the benefits outlined above help unlock
economic opportunity for the financially excluded, and enable a more efficient flow of
resources in the economy. There is robust academic evidence about the impact of the
widespread adoption of digital payments on poverty reduction (see Jack and Suri, 2016)
and on SDG progress.

TYPES OF DIGITAL PAYMENTS

Banking Cards - A bank card is any card issued against a depository account, such as an
ATM card or a debit card. Sometimes the phrase is also used to refer to Visa and Mastercards since
these are also issued by banks, but they are credit cards and not linked directly to a depository
account

Banks Pre-Paid Cards - Prepaid cards are the payment cards which come with money
preloaded by you or someone else. The motto of the Prepaid card is 'Pay Now, Use Later'.
These types of cards are issued by a bank or a non-bank institution.

USSD - USSD (Unstructured Supplementary Service Data) is a Global System for Mobile
Communications (GSM) protocol that is used to send text messages. USSD is similar to Short
Message Service (SMS). USSD uses codes made up of the characters that are available on a mobile
phone.

Point of Sale - A point of sale (POS) is a place where a customer executes the payment for
goods or services and where sales taxes may become payable. A POS transaction may occur in
person or online, with receipts generated either in print or electronically.
Cloud-based POS systems are becoming increasingly popular among merchants.

AEPS - Aadhaar Enabled Payment System (AEPS) is a payment service that allows a bank
customer to use Aadhaar as his/her identity to access his/her Aadhaar enabled bank account and
perform basic banking transactions like balance enquiry, cash withdrawal, remittances through a
Business Correspondent.

Internet Banking - an electronic payment system that enables customers of a bank or other
financial institution to conduct a range of financial transactions through the financial institution's
website.

UPI - Unified Payments Interface is an instant real-time payment system developed by National
Payments Corporation of India facilitating inter-bank peer-to-peer and personto-merchant
transactions.

Mobile Banking - Mobile banking is a service provided by a bank or other financial

institution that allows its customers to conduct financial transactions remotely using a mobile
device such as a smartphone or tablet.

Micro ATMs - Micro-ATMs are portable devices that allow banking transactions including cash
deposit, withdrawal and fund transfer using debit or RuPay cards. The micro-ATM identifies the
customer through an identity proof, generally the Aadhaar, which is linked to their bank account.
Mobile Wallets - Mobile wallets allow people to use their phones to pay for everyday services.
With complex encryption and security features, using a mobile wallet can actually be safer than
using a physical card.

TYPES OF MOBILE WALLETS

Open wallets - An open wallet is used directly by a bank or through a third party. Open wallets
allow customers to use the funds in the mobile wallet for making payments for transactions or
withdrawing the funds deposited to the account in cash. An example of an open mobile wallet is
Google Pay which allows users to make payments for in-store and online purchases and still
withdraw the funds in cash.

Closed wallets - Closed wallets are linked to specific merchants, and users can only use the funds
to make payments for transactions initiated with the specific merchant. Users cannot use the
money to make payments for transactions with other merchants and thirdparty service providers
or withdraw the funds in cash. An example of a closed wallet is Amazon Pay.

Semi-closed wallets - Semi-closed mobile wallets allow users to use the funds in the wallet to
make payments for transactions with multiple merchants, as long as there is an existing contract
between the merchant and the mobile wallet company. Users can also withdraw the funds into a
bank account. However, semi-closed wallets do not allow users to withdraw funds in cash.

Mostly people prefer to open wallets as it is easy to liquidate cash at times of need and Google pay
is one of the preferred choices amongst users of fin-tech apps in general because of its brand name
and easy use interface.
TYPES OF MOBILLE WALLET METHODS IN INDIA
1. GOOGLE PAY

Google LLC is an American multinational technology company that focuses on artificial

intelligence, search engine, online advertising, cloud computing, computer software,
quantum computing, e-commerce, and consumer electronics. It has been referred to as
the "most powerful company in the world" and one of the world's most valuable brands
due to its market dominance, data collection, and technological advantages in the area of
artificial intelligence. It is considered one of the Big Five American information technology
companies, alongside Amazon, Apple, Meta, and Microsoft.

Google Pay (stylized as G Pay; formerly Android Pay) is a digital wallet platform and online
payment system developed by Google to power in-app, online, and in-person contactless
purchases on mobile devices, enabling users to make payments with Android phones,
tablets, or watches. Users in the United States and India can also use an iOS device, albeit
with limited functionality. In addition to this, the service also supports passes such as
coupons, boarding passes, campus ID cards, car keys, event tickets, movie tickets, public
transportation tickets, store cards, health records, and loyalty cards.

Originally launched as Android Pay, the service was released at Google I/O 2015. Android
Pay was a successor to and built on the base established by Google Wallet which was
released in 2011. It also used technology from the carrier-backed Softcard—Google had
acquired its intellectual property in February 2015. At launch, the service was compatible
with 70% of Android devices and was accepted at over 700,000 merchants. Google Wallet
still powered web-based Play Store purchases and some app-based peer-to-peer
payments, for instance, in Gmail.

On September 18, 2017, Google launched a payments app in India known as Tez, utilizing
the Unified Payments Interface (UPI). On August 28, 2018, Google rebranded Tez to Google
Pay.

Google Pay is currently available at 42+ country worldwide as of March 2022, Wikipedia.

OTHER LEADING MOBILE WALLETS

PayTM
2. PayTM is one of the largest mobile commerce platforms in India, offering its customers
a digital wallet to store money and make quick payments. Launched in 2010, PayTM
works on a semi-closed model and has a mobile market, where a customer can load
money and make payments to merchants who have operational tieups with the
company. Apart from making e-commerce transactions, PayTM wallet can also be used
to make bill payments, transfer money and avail services from merchants from travel,
 entertainment and retail industry. Capitalizing on the scope and growth of India‘s
education market segment, they recently partnered with premium educational
institutions in India to introduce cashless payments for fees, bills and other expenses.
Number of installs: 100 Million (or 10 crores) on Android Play Store
3. Amazon Pay

Amazon Pay is an online payments processing service that is owned by Amazon. Launched in
2007 globally and in India in 2017, Amazon Pay uses the consumer base of Amazon and
focuses on giving users the option to pay with their Amazon accounts on external merchant
websites, including apps like BigBazaar etc. You also get to Shop on Amazon using Amazon
Pay. Number of installs: Undisclosed .

4. PhonePe (now part of Flipkart)

PhonePe started in 2015 and in just 4 years it has been able to cross the 100 million
download mark. From UPI payments to recharges, money transfers to online bill payments,
you can do it all on PhonePe. It’s got a very good user interface and is one of the safest and
fastest online payment experiences in India. Number of installs: 100,000,000+ (100 Million
or 10 crore) on Android Play Store .

5. Mobikwik
MobiKwik is an independent mobile payment network that supposedly connects 25 million users
with 50,000 retailers and more. This mobile wallet lets its users add money using debit, credit
card, net banking and even doorstep cash collection service, which can in turn be used to
recharge, pay utility bills and shop at marketplaces. Owing to the growing need for convenience,
MobiKwik has also recently tied up with large and small time grocery, restaurants and other
offline merchants. Another unique feature they have is their expense tracker which allows to set
budget for your expenses across all payment instruments and it uses your SMS data to analyse
and control spends. Number of installs: 10,000,000+ (10 Million or 1crore) on Android Play Store

6. Yono by SBI
This mobile wallet application was launched by State Bank of India to let users transfer money to
other users and bank accounts, pay bills, recharge, book for movies, hotels, shopping as well as
travel. This semi-closed prepaid wallet offers its services in 13 languages and is available for non-
SBI customers as well. This app also allows its customers to set reminders for dues, money
 transfers and view the mini-statement for the transactions carried out. Number of installs:
10,000,000+ (10 Million or 1 crore) on Android Play Store.

LIMITATIONS OF DIGITAL PAYMENT

🔒 1. Security Risks

 Cyber frauds like phishing, hacking, and identity theft can compromise user data.
 Weak passwords or unprotected devices can increase vulnerability.

📶 2. Internet Dependency

 Digital payments require stable internet or mobile networks.

 Users in rural or remote areas may struggle with connectivity.

📱 3. Digital Literacy

 Not everyone, especially elderly or less-educated populations, is comfortable using

apps or digital platforms.

🏦 4. System Downtime

 Payment gateways or banking systems can face technical failures or maintenance,

causing transaction delays or failures.

💰 5. Hidden Charges

 Some services (especially credit cards, wallets) have transaction fees, convenience
fees, or processing charges that users may not be aware of.

🛡 6. Privacy Concerns

 Personal and financial data are collected by apps and providers, raising concerns
about data privacy and misuse.
⚖️ 7. Dispute Resolution

 Resolving issues like failed transactions, unauthorized deductions, or refunds can be

slow and complicated.

🧾 8. Acceptance Issues

 Small vendors or businesses may not accept digital payments, especially in cash-
dominant regions.

⚙️ 9. Device Dependence

 Requires smartphones, computers, or POS machines—users without access to such devices

are excluded.
 LITERATURE REVIEW
There have been a lot of studies conducted in the field customer awareness towords digital
payment system both at national and international level. Some of the previous related
research studies are given below

Krishnakumar etal (2017) explored the university students’ intention to use

mobile wallets (M-Wallet), using Technology Acceptance Model (TAM) 439 students from
the reputed Indian University were respondents. The study used five constructs viz.,
Intention to use mobile wallets, Subjective norms, Awareness, Perceived security and Cash
crunch . A structural equation modelling (SEM) method was used for modelling and data
analysis.
The proportion of variance explained in University students’ intention to use Mobile
wallets by its antecedents was 50 percent and the results indicated that Cash Crunch
Technology Acceptance Model (CCTAM) could be an extension of TAM as a model. The
findings revealed that Subjective norms exerted direct and indirect influence on Intention
to use Digital wallets.

Ravi (2017), has examined that India’s two third population are residing rural areas so
they play a very important role in the development of the economy, with the emergence of
IT and Communication it is predicted that rural areas will have 50% of India’s Internet users
by 2020. Digital wallets should be used in rural places so that the people know the
significance of using it and what benefit they will be getting by using it. The Government of
India has also taken up the initiative of making rural people aware about Digitization.
Adoption of technology has always been low in India compare to other countries but in
case of Digital wallet our country is going with the pace of other countries to become a
cashless economy. As the two third population of India is in rural part so if the rural people
with time adopt the digital payment system then in the coming years India will become a
cashless economy. The government of India has taken up various initiatives to make the
rural people become familiar with digital wallet. The urban people have adopted the digital
system of payment, now it’s time for the rural people too. If the rural people are made
aware about digitalization soon it will roll out all over India. The best step that the National
Payments Corporation of India has taken is that digital wallet will work on all mobiles with
or without internet.

Baghla.A (2018) in his study identified the trends for adopting the digital payment
system India. Further the paper talks about how after demonetization people started to use
the digital platforms for transactions. How the government initiative to make our economy
a cashless one and how consumer will be adopting such system are further discussed. A
structed questionnaire was used to collect data and find out the future of digital payment
system in india.

Dennehy & Sammon (2015) has analyzed how in the 21st century the usage of
digital payment has increased over the years. The main focus here was to find out how
where will in the digital payment system in future stand. Many papers have been examined
to find out what are the views regarding the digital payment system. With the passage of
time the technology has been shifting very fast so with the innovation of technology the
aim was to make people familiar with digital payment. The merchants also got a new
platform to invest so as to cater the customers. Data was collected by following empirical
method i.e. survey, interviews, etc. Lastly the study was only focused on Google data base
that was a limitation about the study.

Bappaditya Mukhopadhya Y (2016) The study revealed that an extremely small

correlation exists between cashless payments and education level as well as between
cashless payments and income earned. It also revealed that a very high positive correlation
exists between the people who collect the payments in their bank accounts and of those
who are engaged in cashless payments. Prepaid cards and mobile payments showed
maximum growth.

Singh (2017) in his study showed that how digital payment and digital wallet in India was
get popularized due to demonetization. As there was a tremendous growth in the usage of
internet and the no. of smart phone users were also increasing so people found it
convenient to use as an alternative for cash. In this study he also pointed out that how
different digital wallet companies were having competition to enter and expand the Indian
market as it was the best opportunity for them to establish their company. It was also
predicted that in future India will become a cashless economy in the consumer perception
with respect to its demographic factors.
 RESEARCH AND METHODOLOGY

TOOLS FOR DATA COLLECTION

Data Collection Method: The research is both primary & secondary in nature.

PRIMARY DATA

Primary data is collected from 76 respondents signifying various factors from Chandannagar
Hooghly.

Sample Size: Sample size is 76

Respondents: The respondents of the study would be the students of my college and other

customers of banks retailers and users of digital payment system.

SECONDARY DATA

Secondary data is collected from various researches conducted previously. Books, Magazine,

Joumals, Newspapers as well as from the different Banks website and information present

over the internet. The project requires a brief understanding of working of banks in India,

their digital banking & payments products, and the major changes which have taken place in

banking sector after digitalization.

The data is collected from Articles, Journrals, Internet.

 OBJECTIVE OF THE STUDY

1. To Determine The Growth Of Digital Payment System In INDIA.

2. To Examine The factors Influencing Customers Decision To Use Digital

Payments.

NEED OF STUDY

• To determining growth direction of Digital payments system.

• Promoting digital payment in day to day payment transactions.

• To Explore The Unaddressed Problems Faced While Using The

Platform.
 DIGITAL PAYMENT INDUSTRY IN INDIA

From being primarily a cash-obsessed economy, India‘s digital payment story is new but
exciting. Driven by progressive regulatory policies and increased use of mobile internet,
Indian payment industry is going through a transformational phase. The next few years will
witness a whole new way of how money is moved in the Indian economy.

Digital payments started to pick up pace with the growth of e-commerce companies
followed by emergence of digital wallet companies. To lure the consumers, the digital
wallets doled out lucrative offers and cash backs to get consumers on board using the
payment channel. Thanks to the ease of use, attractive offers and increased Smartphone
pent ration, the digital wallet companies did find their way to the consumer‘s phone as well
as the pocket. To expand their reach, the digital wallets started encouraging customers to
use them for offline point of sale (POS) transactions too like at shopping malls,
supermarkets, grocery stores, restaurants and gas/petrol stations. These POS transactions
are expected to become a majority contributor to the digital payments platform in the
coming years. Clearly, digital wallets are playing a unique role in driving the growth of digital
payments sector. The other important pillar of the digital payment story are the online
ticketing, travel and events companies like IRCTC (Railways), Make my trip, Yatra, Ibibo,
Clear trip (Airlines and hotels), Trivago (hotels), red Bus (buses), and Bookmyshow (movie
and event ticketing). They have got consumers to transact online.

The digital payment industry is gaining momentum and is projected to grow at an

exponential rate. 81 per cent of existing digital payment users prefer the medium over other
non-cash payment methods like cheques or demand drafts. Online shopping, payment of
utility bills (like electricity, mobile bills, water bills, etc.) and movie tickets are the three
things that an Indian user primarily pays for through digital platform.

According to a report by Google and Boston Consulting Group (BCG), the Indian digital
payments industry is estimated to touch $500 billion by 2020, contributing 15 per cent to
the country‘s GDP. An interesting angle to India‘s digital payment story is that it is going to
be dominated by micro transactions (tractions of value lower than Rs 100). In fact, 50% of
person-to-merchant transactions are to be under Rs.100, says the GoogleBCG report.
Alternate digital payment instruments like digital wallets, UPI, payment banks, Bharat QR
are expected to grow fiercely and estimated to double their contribution to 30 per cent in
the digital payment industry. Mobile/Digital wallets: The digital payment industry growth
will be led by the digital/mobile wallets. According to the Capgemini‘s World Payment
Report, mobile wallets will witness a compound annual growth rate (CAGR) of 148 per cent
over the next five years and will be $4.4 billion by 2024. The digital wallets are also
supposed to outshine UPI.
Comparison with global market This exponential growth of the digital payment sector is
driven by multiple factors including convenience to pay, the ever growing Smartphone
penetration, rise of non-banking payment institutions (payments bank, digital wallets, etc.),
progressive regulatory policies and increasing consumer readiness to the digital payment
platform. The convenience to pay along with the availability of lucrative offers, are two key
factors that have been driving the growth of digital payments in India. This coupled with the
increasing Smartphone penetration is proving to be a boon for digital payments sector.
India, currently, has third largest internet user base in the world with 300 million users. 50
per cent of these users are connected to internet through mobile only. This 150 million
mobile only internet users‘ are playing a key role in the growth story of digital payments.
The advent of next-generation payment systems like payment banks, digital wallets and
Bharat QR, is fuelling digital payments furthermore. It is projected that digital payments in
India will supersede cash by 2024, according to the IDC Financial Insights report titled The
Future of Payments in India: More Spectacular Growth Ahead.

Another key driver of digital payments is positive policy framework changes and government
initiatives like launch of new payments systems like - UPI, Aadhar linked electronic payments and
improvement of the digital infrastructure. Comparison with global market When it comes to the
ecosystem of digital payments, India is pegged to have the most evolved system compared to 25
other countries which were surveyed by FIS, a US-based banking technology company.

This included UK, China and Japan. The parameters that FIS used to measure the digital
payments in these 25 countries include round-the-clock availability of the services,
adoption, and immediacy of payments. FIS Flavors of Fast used the Faster Payments
Innovation Index (FPII) rates different payment system across these 25 countries on a scale
of 1-5, with 5 being the highest rating. According to FPII, India‘s IMPS service was the only
system to get a level 5 5 rating, leaving behind countries like UK, Singapore, Denmark,
Switzerland, China, Japan, and others. This certainly puts India‘s digital payments story to be
an exciting one.

Clearly, the digital payment space is being transformed and the sector has witnessed
tremendous growth, innovations and regulatory support over the last two years. Such has
been the changes that India has become the most evolved country when it comes to the
digital payment ecosystem. The focus should be to keep the momentum going with more
support from the government and innovations, safety and convenience from the players.

DATA ON DIGITAL PAYMENTS IN INDIA

Here are some interesting findings on digital payment adoption from the recent ACI Survey:
While these numbers indicate the growing need for secure, faster and efficient payment
methods for online marketplace, efforts to make payments to individual or brick & mortar
stores is also increasing. Start-ups and huge corporate are constantly on the lookout for
customer-friendly technology, thereby giving more power to the customer.

Digital payments have significantly increased in recent years, as a result of coordinated

efforts of the Government with all stakeholders. The total digital payment transactions
volume increased from 2,071crore in FY 2017-18 to 13,462 crore in FY 2023-24 at a CAGR of
45%. During current FY2023-24, digital payments transactions have reached 11,660 crore till
Dec.2023. Digital Payment Dashboard has been integrated with Integrated with 118 public
sector, private sector, payments, regional rural and foreign banks. In FY 2023-24, 18,737
crores Digital Payment Transactions were achieved with 87.20% Current & Savings Accounts
seeded with Aadhaar Number, 81.05% Current & Savings Accounts seeded with Mobile
Number

The number of digital payment transactions during the last six years and current year
are as below:
Financial Volume (in
Year Crore)

2017-18 2,070.84

2018-19 3,134.36

2019-20 4,571.76

2020-21 5,554.33

2021-22 8,848.29

2022-23 12,008.75

2023-24 18,736.82

Source: Reserve Bank of India (RBI), National Payments Corporation of India (NPCI) &
DIGIDHANPortal
Volume by Financial Year (₹ Crore)
The following bar graph illustrates the volume (in ₹ crore) for each financial year from 2017–
18 to 2023–24.

Digital Payments include modes such as NACH, IMPS, UPI, AePS, NETC, Debit Card, Credit
Card, NEFT, RTGS, Prepaid Payment Instruments, Internet Banking, Mobile Banking and
Others (all intrabank transactions).
Source : NPCI

UPI has revolutionized digital payments in the country, UPI transactions have grown
from 92 crore in FY 2017-18 to 13,116 crore in FY 2023-24 at CAGR of 129%. As per ACI
Worldwide Report 2023, around 46% of the global real-time payment transactions is
happening in India. UPI has been the major driving force in the overall growth of digital
payment transactions in the country accounting for 70% of digital payment
transactions in FY 2023-24. In May 2024, UPI reached another milestone recording
over 1,403 crore transactions in a single month for the first time.

Source : NPCI
UPI transactions are bifurcated into two categories:
. P2P (Person-to-Person) Transactions involve transfer of funds between two
individual users or individual accounts through UPI.
. P2M (Person-to-Merchant) Transactions involve payments through UPI made from
an individual to merchants or service providers.

Source : NPCI

Internationalization of UPI & RuPay:

India’s indigenously developed UPI and RuPay cards are world class platforms for
enabling digital payments. Government is making efforts to promote these products
globally.
. At present UPI is fully functional and live in UAE, France, Bhutan, Sri Lanka,
Nepal, Singapore and Mauritius
. RuPay cards acceptance is live in Nepal, Bhutan, Singapore, UAE, and Mauritius
 FINDINGS
FINDINGS OF THE STUDY

• According to the survey most of the people are using digital payment system and

they are more aware of it.

• Most of the people are using UPI (Paytm, Phonepe, Google pay, Bharat Pay, etc.)

as digital payment method.

• Most of the people thinks digital payment is the safe mode of the payment.

• According to the survey most of the people transit daily.

• According to the survey most of the people think that server issue is the one of the

challenge when using digital payment for online transaction.

• According to the survey most of the people says digital payment is more

convenient than cash payment.

• According to the survey most of the people says digital payment platforms are

very easy as per ease-of-use.

• According to the survey most of the people says digital payment is instant mode

of payment.

• According to the survey people have mix opinion about the income level get

influernced due to adoption of digital payment system.

 CONCLUSION
The move towards cashless economy is definitely a good one but it will take much time to

have a completely cashless economy. The efforts are going well by the government as well

as the private sector companies having there e-wallets apps such as PayTM, PhonePe etc.

The biggest challenge in front of government is the lack of knowledge and awareness among

people and fear of loss of money by use of digital payment methods risk of hacking. The

government needs to tackle these challenges to have cashless economy and to give a boost

to digital payments to provide sustainable economic development to the country in the long run.

In future the digital payments are going to be a must and so the change in the habits

of the people to accept the digital payment is also must. The cashless transition is not

only safer than the cash transaction but is less time consuming. It also helps in record of

the all the transaction done. India has more than 100 crore active mobile connections and

more than 22 crore smart phone users as of March 2016. This number is going to increase

further with a faster internet speed. The reach of mobile network, Internet and electricity

is also expanding Digital payments to remote areas. So, it is without doubt said that future

transaction system is cashless transaction.

UPI Unified Payments Interface (UPI) continues to revolutionize India's financial ecosystem,
processing an impressive ₹23.49 Lakh Crores across 16.58 billion transactions in October
2024. This marks a 45% year-on-year growth, a significant surge from 11.40 billion
transactions recorded in October 2023.

With 632 banks integrated into its platform, UPI’s dominance in digital payments underscores
its role in driving the nation toward a cashless economy. As more individuals and businesses
adopt UPI, the increasing volume and value of transactions highlight its convenience, security,
and efficiency. This rapid expansion signifies the growing trust in digital transactions, paving
the way for a more financially inclusive future.
 ANNEXURE

PROFILE FORM:

NAME:

AGE:

GENDER:

Q1. Do you use Digital payments methods?

1. YES
2. NO

Q2. Which Digital payment methods do customers prefer?

1. Credit/Debit card

2. UPI (paytm, Phonepe, Google pay, Bharat pay, etc.)

3. Bank transfer (NEFT, RTGS)

4. Others

Q3. Do you think that digital payments are safe enough?

1. Yes

2. No

Q4. How often do you transact online?

1. Daily

2. Weekly

3. Monthly

4. Rarely

Q5. Have you ever encountered any issues or challenge when using digital payments for

online transactions?
 1. Server issue

2. Cyber froud

3. Lack of awareness

4. Others

Q6. Do you find Digital payments as convenient mode than cash payment?

1. Yes

2. No

Q7. Do you think education level impact digital payment usage?

1. Highly correlated

2. Modirately correlated

3. Slightly correlated

4. Not correlated

Q8. Do you believe your income level get influenced due to adoption of digital payment

system?

1. Yes, significantly

2. Yes, somewhat

3. No, not much impact

4. Not sure

Q9. Rate Digital payment platform ease-of-use

1. Very easy

2. Somewhat easy

3. Neutral

4. Difficult
Q10. Digital payment system is

1. Instant mode of payment

2. User friendly

3. Time saver

4. Full of risk