Business

India’s Digital Payments Boost Spending

India’s digital journey is booming, with a significant rise in consumer spending through digital transactions, mainly using the Unified Payments Interface (UPI).

This surge in digital transactions is reshaping India’s retail landscape, marking a notable shift towards cashless transactions.

While essential purchases were the initial focus, the trend has evolved to encompass high-value items such as home appliances, gadgets, and luxury apparel.

Experts highlight a concerning side effect of this digital spending spree: an increasing tendency towards overspending.

The ease and seamlessness of UPI transactions have significantly reduced the barrier to impulse purchases, leading to lower awareness of expenditure among consumers.

A recent survey conducted by IIIT Delhi revealed that a staggering 74 percent of individuals in the country admit to overspending due to the convenience of UPI and other digital payment methods.

Prabhu Ram, Head of the Industry Intelligence Group at CMR, attributes this phenomenon to the diminished tangibility of digital transactions compared to cash transactions.

What Does The National Payments Corporation Of India Say?

Data from the National Payments Corporation of India (NPCI) underscores the rapid adoption of UPI, with transactions reaching 1,330 crore in April alone, marking a substantial 50 percent year-on-year increase.

Last year, UPI transactions soared by nearly 60 percent, totaling a record 11,768 crore.

Ramesh Narasimhan, CEO-India of Worldline, notes that UPI’s dominance persists, driven by a significant surge in mobile transactions.

This trend reflects the growing confidence and familiarity of users with smartphone-based payment methods.

Despite the surge in transactions, the average ticket size of UPI transactions has witnessed a slight decline, dropping by 8 percent from Rs 1,648 to Rs 1,515.

Experts suggest that while consumer spending is on the rise, particularly on items like cars, smartphones, and TVs, there’s a notable trend of overspending on high-priced items facilitated by UPI.

A recent report by Nielsen Media India, commissioned by Amazon India, affirms the escalating preference for digital payment methods, with 42 percent of consumers expressing their inclination towards UPI for online festive shopping.

As India’s digital payment ecosystem continues to evolve, the challenge lies in fostering responsible spending habits while leveraging the convenience and efficiency offered by digital transactions.

Balancing the benefits of digital finance with the need for financial prudence remains a pivotal task in India’s ongoing economic transformation.

Also Read: Global Debt Crisis Impacting Nearly 95 Countries: G20 Sherpa Amitabh Kant

Mankrit Kaur

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