Understanding of important factors for the adoption of Digital Payments

 

Ms. Dimpal Singhania¹, Dr. Goutam Tanty²

¹Research Scholar, Sarala Birla University, Jharkhand.

 

ABSTRACT:

Financial Inclusion refers to the accessibility of financial products and services like bank accounts, insurance, remittance and payment services, financial advisory services etc., to vulnerable groups such as weaker sections of society and low-income group at an affordable cost. Digital payment system plays a significant role in the upliftment of Financial Inclusion. After demonetization, Digital payments system has gained high growth. Now a days, there is an inclusive growth focused on financial inclusion. Collectively, these are achieved with the enabling of new banking technology. Many banks have arrived with new banking technology that took place in the new scenario of banking customers that is called “Digital Finance”. Thus, digital finance has given a new shape to the banking industry. This research paper focuses on the examination of various factors affecting the adoption of Digital Payments services on Financial Inclusion among the young generation. The primary data has been collected from the students of various colleges and universities situated in Jharkhand state. The collected data has been analyzed, and interpretation is based on the output-derived and factor analyzed. The critical factors which influence the adoption of digital payment services among the students majorly depend on accessibility, availability, and financial feasibility. However, the data collection from the backward rural areas of Jharkhand is difficult as they hesitate to share their financial information and data collection was a challenging task. In this research article, an attempt has been made to study significantly on the factors affecting the adoption of Digital payments on Financial Inclusion in the Jharkhand Region, which to the best of my knowledge has not been broadly attempted, which is a unique contribution to the literature. For more insight on the topic a similar study can be done with addition to various mediating factors in various geographical areas by applying advance research analysis tools and techniques.

 

 

 

1. INTRODUCTION:

In the traditional banking system, people are more inclined towards cash basis system rather than online mode of payment. In recent years, technological advancement has provided many opportunities and innovative solutions to traditional finance. The usage of internet in finance can help to achieve high growth in this sector.

 

After our Prime Minister, Shri Narendra Modi, announced the Demonetization on 8^th November 2018, the citizens of India faced many problems in the currency exchange, and due to this they shifted towards online mode. During the phase, Digital Finance gained high growth in this sector.

 

In India, the financial Inclusion can be defined as the accessibility of financial products and services to the vulnerable or low-income group of the society at a lower cost. Financial Inclusion can help increase the living standard of the people and growth of the economy as it will reach all the ‘unbanked’ sections of the society. Financial products and services include- Banking, Insurance, Mutual Funds, Stock markets, Debit cards, Credit Cards, and many other facilities for the citizens. In the present scenario, digital payments method has become a pillar for financial inclusion policies. Digital payments system has various benefits like less risk of carrying cash, time-saving, less traveling cost, increased transparency, and having all the records of transactions on a single platform. Consumers are reluctant to utilize different digital payment systems, including mobile payment, not only in India but also in other countries, despite the benefits of these systems and broad promotion. Adoption of Digital Payment methods can help to achieve high economic growth. This offers inspiration and motivation for conducting this kind of research. According to a literature review, many studies have been done to determine how digital payments affect financial inclusion, but relatively few studies have been done regarding the factors that encourage young people to adopt digital payments.

 

2. LITERATURE REVIEW:

To understand the conceptual framework and theory related to the factors influencing the adoption of online banking products and services by the students, the following literature review has been studied critically to support the analysis and interpretations.

 

According to Durai and Stella (2017) conducted a study to analyze the impact of digital finance on financial inclusion using different modes like Convenience, Adaptability, affordability, Security, User-friendly, Low Service charges, Accurate timing, Online Monthly statement, Quick financial decision-making, Easy interbank account facility, Internet Connectivity, and Usability. They find out the results using one-way ANOVA and DMRT on the primary data collected by them, concluding that digital finance (Internet banking, mobile banking, mobile wallets (apps), credit card, and debit card has a significant impact on financial inclusion. Though digital finance has many negative impacts on an issue like affordability, security, adaptability, etc., as these are major concerning areas for people.

 

According to Patil et al. (2017) This study conducted a study on the acceptance and use of digital and mobile payments to identify the significant drivers and obstacles of digital payment uptake. According to the findings of this research review, performance expectancy and perceived usefulness are the two factors that consumers' behavioral intentions to utilize mobile payments are most significantly influenced by (PEOU). It was discovered that a key barrier to the adoption of mobile payments was perceived risk. Most studies used TAM and its extensions to analyze consumer acceptance of mobile payments, with UTAUT coming in second. The author concludes that providing financial services to the unbanked section of society can help in the upliftment of citizens in developing countries.

 

Sivathanu (2019) conducted a study to investigate the actual usage (AU) of digital payment systems by citizens during the period of demonetization (from November 9, 2016 to December 30, 2016) in India. The unified theory of acceptance and use of technology (UTAUT 2) and innovation resistance theory serve as the intellectual foundation for this investigation. A pre-tested questionnaire was used to survey a total of 766 sample respondents. The framework and analysis were empirically validated using the partial least squares (PLS)-structural equation modeling (SEM) technique. The findings of the study imply that innovation resistance (IR) and behavioral intention to use (BI) influence the utilization of digital payment systems. The stickiness to cash payments moderates the relationship between the intention to utilize digital payment systems and the uptake of those systems. However, the author confined the duration as it was during the demonetization phase, which was a significant limitation of the study.

 

According to Wang et al. (2020) concluded that Digital finance slightly improves the efficiency of the financial sector, enhancing the efficiency ranking of the financial sector in the eastern region, but reduces the efficiency ranking of the financial sector in the non-eastern region. Secondly, the efficiency of the financial sector positively correlates with the efficiency of digital finance and many more. The author concluded that there is a significant gap in financial efficiency between the eastern and non-eastern regions.

 

Alkhowaiter (2020) aims to fill the research gap by providing a comprehensive analysis of factors influencing the adoption of Digital Banking and Digital payments methods in Gulf Countries using weight and meta-analysis. From the previous theories, it was found that best predictors for digital payment and banking adoption in GCC countries are trust, perceived security and perceived usefulness which can play a significant role in the adoption of digital payment methods. The author proposed a model for the factors influencing the adoption of digital payments and banking in Gulf countries from the existing literature, which can also be used for further study.

 

According to Sahi et al. (2021) provide a comprehensive study of the factors influencing the adoption, use, and acceptance of Digital Payments methods. Through a systematic process, 193 research papers were identified and analyzed, which resulted in the fact that a single theory can’t explain the complexity of the adoption of digital payments. The author concluded that the limitation of the previous theories is their inability to consider social and cultural factors for adopting new technology. In this paper, the author has fulfilled the limitation, providing a structure to the previous findings and scope for future study on digital payments adoption.

 

According to Daud et al. (2022) conducted a study to analyze the effect of digital finance, digital marketing, and digital payment variables on financial performance through primary data by sending the questionnaire to 190 SMEs in Banten, Indonesia. The study reveals that there is a positive and significant effect of Digital Finance, Digital Marketing, and Digital Payments on the financial performance of SMEs. The author concludes that Digitization and Financial literacy both play a crucial role in the overall development of SMEs.

 

3. OBJECTIVES OF THE STUDY:

From the literature reviewed and conceptual this study is focused on the given objectives:

1.     To understand the current status of Financial Inclusion in Jharkhand.

2.     To study the major factors influencing the adoption of Digital payments among the students.

3.     To understand the impact of Digital Finance on Financial Inclusion.

 

4. RESEARCH METHODOLOGY:

The study is descriptive in nature, where students were selected as respondents studying in various institutes in Ranchi city. The chapter is divided into two parts:

 

Sources of Data:

Primary data were collected primarily through direct administration of the questionnaire. The questionnaire was distributed among the students of different Institutes, and data was collected from them.

· Sample Size: 120 respondents from different Institutes.

· Sampling Technique: In the Probability method of sampling, the Random sampling technique was applied to find out the results.

 

Part: A

Demographic Profile

 

Particulars	Frequency in percentage
Age
21 to 30 Years	98.80
31 to 40 Years	1.2
41 to 50 Years	0
Above 50 Years	0
Occupation
Student	96.3
Private Employee	2.5
Government Employee	0
Businessman	1.2
Others	0
Income
Upto Rs.2.5 Lakh	78.8
Rs. 2.5 Lakh – Rs. 5 Lakh	8.8
Rs. 5 Lakh - Rs. 10 Lakh	5
> Rs. 10 Lakh	7.5
Gender
Male	60
Female	40
Marital Statuts
Married	1.2
Unmarried	98.8
Family Size (No. of Members)
1	2.5
3 to 5	71.3
>5	26.2
Education
Graduate	72.5
Post Graduate/ Masters	2.5
Others	25

Source: Primary data collected and analyzed from Questionnaire

 

Demographic Profile:

A survey was conducted on the students of Jharkhand from various Institutes. In the survey, 120 people filled the questionnaire and we find the demographic character of respondents. It was found that out of 120 respondents 60% of the respondents are male, and rest 40% is female. In which, around 99% of respondents are between the age group 21-30 years old, and rest 1% belongs to the age group of 31-40 years which reflects high students involvement in the survey. About 72.5 students are graduated and 25% are studying some additional courses and 2.5% student have done their post-graduation, this shows that the education level is good in Ranchi district. As most of the respondents are student i.e. 96.3% due to which their income level falls under Upto Rs. 2.5 lakhs per year which includes 78.8% of the total respondents. The respondents who are employee or having their business falls under the income category of Rs. 2.5- Rs. 5 Lakhs per year or more which is very less in number i.e. 21.2% of the total respondents. Respondents mainly belongs from the nuclear family as 71.3% respondents are having 3 to 5 family members.

 

Part: B

Particulars	Frequency in Percentage
Do you have a smart phone?
Yes	100
No	0
Are you having a Bank Account?
Yes	91.3
No	8.7
Which type of Bank Account are you using?
Current	10
Savings	81.3
FD	0
RD	0
Others	8.7
Are you aware of online banking services provided by the bank?
Yes	97.5
No	2.5
Are you availing online banking services?
Yes	87.5
No	12.5
If yes, which online banking channel are you using?
Net Banking	23
Mobile Banking	28
E-Wallet	10
UPI	34
Others	5
How often do you use online banking services?
Daily	56.3
Once a week	21.3
Once a month	6.3
Not used in the last few months	16.1
For what purpose have you used a digital payments system?
Payment to the third party.	30
Payment for online shopping.	40
Paying for various domestic bills.	23.8
Others	6.2
Why do you prefer to use a digital payment method?
Easy to Use	51.2
No risk of Cash	22.5
Offers and Discounts	5
Time Saving	21.3
Will you encourage others to use online banking services?
Yes	98.8
No	1.2
If Yes, what are the reasons for your reference?
Time saving	50
Convenient	42.5
Availability	5
Low Cost	1.2
Easy to use	1.2
If No, what are the reasons
Internet Connection	51.2
Security	23.8
Trust	13.8
High Charges/Cost Involved	6.3
Delay in processing of transaction	25
If UPI, which payment App you use frequently?
G-Pay	26.3
PhonePe	47.5
BHIM	3.7
Paytm	21.3
Others	1.2
Which mode of banking is more secured?
Online Banking	60
Traditional Banking (Offline Mode)	40

Source: Primary data collected and analyzed from Questionnaire

 

In the above table, we can identify that 100% of respondents are having a smartphone which can be used for digital payments. From the collected data, we can analyze that 91.3% of respondents have bank accounts which include Savings accounts at the highest i.e. 81.3%, followed by current accounts and others. As most of the respondents are students who are well educated, this concludes that they are well aware of the banking services provided by their bank, but only 87.5% are availing of those services among 97.5% out of the total. People who are aware of the banking services are primarily using UPI, followed by mobile banking and net banking for various payments. On a regular basis, UPI is used by the respondents for various purposes like Payment for online shopping, payment to a third party, and for many other payments. Payment through digital mode has been adopted by students as it has many benefits like easy to use, no risk of carrying cash, saves time and also gives offers and discounts to the people. After finding the digital mode is convenient and time-saving, they also encourage other people to use those methods for payment. In contrast, internet connection, trust, delay in processing transactions, and security are some major barriers to using a digital mode of payment. They mostly prefer Phonepe for payment over other UPI Apps like G-Pay, Paytm, BHIM, and many others. Finally, it can be concluded that online mode is more convenient and easier to use rather than traditional banking as per the research.

 

5. ANALYSIS AND INTERPRETATION:

As per the first research objectives, it was found that to understand the current status of Financial Inclusion in Jharkhand, the analysis indicates that 91.3% of students are having bank accounts which include savings accounts the most, and 100% of them are using smartphones, out of which almost 88% respondents are using online banking services. This data indicates that the students are aware of the banking services provided by their bank, and most of them are also using it frequently.

 

As per the second research objective, it was found that various factors influence the adoption of digital payment among students. As per figure 1, factors like ease of use, no risk of carrying cash, offers and discounts, and mainly time-saving influence the students to adopt digital payment modes. There are various reasons why they don’t refer to digital payment adoption to others, like internet connection, security, trust, low-cost involvement, and delay in transaction processing. They mostly prefer UPI over various other modes of payment like mobile banking, net banking, e-wallets, etc. According to figure 2, almost 48% of the respondents prefer Phone pe over G-pay, BHIM, Paytm, and many other apps due to convenience, time-saving, and low cost. Internet connection, security, trust, delay in processing a transaction, and High charges are certain barriers to students’ adoption of digital payment methods. After analysing all the merits and demerits of digital payment modes, almost 60% of the students prefer online banking over traditional banking as per figure 3.

 

Figure 1: Factors influencing adoption of digital payment.

 

Source: Primary data collected and analyzed from Questionnaire

 

Figure 2: Most frequently used UPI Apps

Source: Primary data collected and analyzed from Questionnaire

 

Figure 3: Which mode of Banking is more secured

Source: Primary data collected and analysed from Questionnaire

 

Lastly, as per the third objective, it was found that most of the respondents belong to the age group of 21-30 years, which indicates a young generation; they are aware of the banking services provided by their bank, and even though 87.5% of them are also using it for various purposes like payment to a third party, payment for online shopping, payment of various bills and many more. They can also use this for investment purpose as well. Though the young generation is well educated, they also refer this to others, but the awareness among the senior citizens is less due to which they are not using it.

 

6. CONCLUSION:

The emergence of digital financing has changed traditional models into modern models in which the financing gap is bridged. Financial inclusion provides a broader scope of facilities, including savings, loans, payments, leasing, insurance, investments, remittances, etc., with access for everyone. By making financial services accessible to all people and delivering high-quality, effective, and efficient financial services, a nation's economic growth and financial inclusion can help to alleviate poverty. The research results prove that digital finance positively impacts financial inclusion through digital financial services, facilitating access to financial services.

 

According to the census 2011, the literacy rate of India is 73%, which the govt. is trying to increase every year. As per our survey, we found that the young generation who are well educated are more inclined towards the use of technology and they are also referring it to others as well. But there is a need of awareness among the senior citizens about the usage of technology in different fields. Though technology has many benefits but it has certain limitation as well which we need to identify and then use it. Fishing is a major concern nowadays during Digital payment. So, we need to be well aware about it, and then we should adopt it.

 

7. REFERENCES:

1.      Alkhowaiter, W. A. Digital payment and banking adoption research in Gulf countries: A systematic literature review. International Journal of Information Management. 2020; 53: 102.

2.      Bara, D. A. Digital Payment Adoption during COVID-19 Situation among Urban Smartphone users in Ranchi, Jharkhand, India. Journal of Advanced Research in Humanities and Social Sciences.  2022; 8(4): 1-5.

3.      Daud, I., Nurjannahe, D., Mohyi, A., Ambarwati, T., Cahyono, Y., Haryoko, A. E. and Jihadi, M. The effect of digital marketing, digital finance and digital payment on finance performance of indonesian smes. International Journal of Data and Network Science. 2022; 6: 37-44.

4.      Durai, T., and Stella, G. Digital finance and its impact on financial inclusion. Journal of Emerging Technologies and Innovative Research. 2021; 6(1): 122-127.

5.      Patil, P. P., Dwivedi, Y. K., and Rana, N. P. Digital payments adoption: an analysis of literature. In Digital Nations–Smart Cities, Innovation, and Sustainability: 16th IFIP WG 6.11 Conference on e-Business, e-Services, and e-Society, Delhi, India, November 21–23, 2017, Proceedings 16 (pp. 61-70). Springer International Publishing.

6.      Sahi, A. M., Khalid, H., Abbas, A. F., and Khatib, S. F. The evolving research of customer adoption of digital payment: Learning from content and statistical analysis of the literature. Journal of Open Innovation: Technology, Market, and Complexity. 2021; 7(4): 230

7.      Sivathanu, B. Adoption of digital payment systems in the era of demonetization in India: An empirical study. Journal of Science and Technology Policy Management. 2019; 10(1): 143-171.

8.      Sinha, S. N., Tanty, G., and Panigrahi, R. R. E-commerce and m-commerce growth, issues and challenges in india. International Journal of Scientific and Technology Research. 2019 https://www. ijstr. org/final-print/dec2019/E-commerce-M-commerce-Growth-Issues-Challenges-In-India. pdf.

9.      Wang, Q., Yang, J., Chiu, Y. H., and Lin, T. Y. The impact of digital finance on financial efficiency. Managerial and Decision Economics. 2020; 41(7): 1225-1236.

 

 

 

Accepted on 15.07.2023     ©AandV Publications All right reserved