A Study on Imapct Of Upi Transaction and Cashless Economy with Reference to Coimbatore City

In the realm of Humanities, the study of the impact of UPI transactions and the transition to a cashless economy offers a unique perspective on how technology intersects with society, culture, and history. By delving into this subject, researchers can explore how digital payment systems like UPI shape human interactions, financial behaviours, and even ethical considerations within the broader context of Humanities IT. Analysing the implications of UPI on human experiences, values, and societal structures can provide valuable insights into the evolving relationship between technology and the human experience in the digital age. In recent years, the financial landscape in India has undergone a remarkable transformation, primarily driven by the rise of digital payment systems, with the Unified Payments Interface (UPI) leading the charge. Launched in 2016, UPI has revolutionized the way people conduct transactions by enabling instant money transfers through smartphones, thus reducing reliance on cash and traditional banking methods. This study aims to explore the multifaceted impact of UPI transactions on consumer behaviour, financial inclusion, and economic growth, while also addressing the challenges faced by those who remain dependent on cash.

REVIEW OF LITERATURE :

A Mahesh & Bhat G (2021) remarked that Due to consumers’ preference for contactless payments over alternative options, UPI had experienced impressive growth over the past two years. The survey found that the UPI platform’s retail payment sector has seen the most significant rise in digital payments.

Kumari D (2016), Her article shed light upon fundamental idea of cashless transactions &safety concerns. She claims as significance barrier to cashless transactions is inadequate infrastructure. According to a UNESCO report, one of the main obstacles to cashless transactions is illiteracy. According to the economic climate, one of the problems with cashless transactions is hacking.

Kumari and Krishna, Cashless Payment (2017): The research, "Cashless Payment: A Behaviour Change to Economic Growth.2017," analyses the impact that being cashless has on economies in transition. Based on the research presented in the article, a country's financial stability may improve if it adopts a cashless economy strategy. It seems that considerable progress has been made in raising public awareness of cashless economy while a sizable percentage of population is eagerly anticipating its implementation.

Ritika Bhat eatl (2020) UPI offers its users unquestionable benefits in the form of the amenities that are carefully covered in this article. The components in this study were identified and divided into two categories: adoption factors and trust factors, in order to comprehend the insights obtained from the replies received in our survey. The adoption factors are primarily associated with UPI's increasing customer demand, growing popularity, and decreased difficulties handling cash. On the other hand, the benefits UPI offers in terms of convenience, a consistent and positive transaction experience, a decrease in safety concerns, and numerous other areas, support the factors for trust.

Ashish Das and Rakhi Agarwal (2010), Cashless Payment System in India, a Technical Report, “The country needs to move away from cash-based towards a cashless payment system. This will help reduce currency management cost, track transactions, check tax avoidance, fraud etc, enhance financial inclusion and integrate the parallel economy with mainstream”.

Kolte D. M. & Dr . Humbe V. R., (2020) reveal that the most commonly used UPI/BHIM App is the 3rd Party Apps like Phone Pe. Narayanan J, (2021), remarked that the growth of UPI apps in India post-2020, its contribution to digitalization, the development of many fintech companies and startups, and the payment system’s two billion monthly transactions are astonishing in the digital payment industry.

J. Salomi Backia Jothi (2019), argued that UPI had become an efficient alternative to net banking with faster, easier and smoother technology for millions of people in India, and being a part of techno-economic development, youth has accepted this concept.

STATEMENT OF THE PROBLEM :

Despite the rapid adoption of the Unified Payments Interface [UPI ] in India , there remains a significant gap in understanding how its usage impacts individuals and traditional banking services. As UPI continues to facilitate seamless digital transactions , it is crucial to explore how this shift influences access to financial services , particularly for those who rely on cash transactions , access their effects on traditional banking and cash services , and evaluate how the transactions to a cashless economy is reshaping individuals access to financial resources .

OBJECTIVES OF THE STUDY :

• To identify the usage of UPI transactions.
• To assess the effects of UPI on traditional banking and cash services.

• To determine the cashless economy affects me access to financial services.

RESEARCH METHODOLOGY :

Research design

A research design defines the structure or framework within which the research is conducted. For this study, a descriptive research design has been adopted to assess customer satisfaction with the UPI transactions and cashless economy in Coimbatore. The objective is to provide a comprehensive understanding of the factors influencing satisfaction among the users of UPI .

Area of Study :

The study has been conducted in Coimbatore City, which represents a diverse range of consumers uses , and is a key value of cashless economy .

Sample Size :

The sample size adopted for this study is 150 respondents. This sample size is considered sufficient for drawing meaningful conclusions regarding customer satisfaction with UPI transaction and with cashless economy in Coimbatore city.

Primary Data :

The primary data has been conducted through the questioner from the customer. The questionnaire is designed in a systematic manner covering adequate and relevant questions which is useful to study.

Secondary Data :

The theoretical aspect of the study is collected from various sources which includes  journals, magazines, websites and other related projects.

Data Collection :

In this study, the researcher has used the questionnaire method for collecting relevant information. The data has been collected from the respondents using the questionnaire. Data collection is carried out in the month of August 2024.

LIMITATION OF THE STUDY :

  1. The study is focused on Coimbatore city, and thus, the findings may not be generalized to other regions or cities with different socio-economic profiles or infrastructural developments.

2. The study may only capture data over a limited time period, which might not fully reflect the long-term trends or impacts of UPI adoption on the cashless economy.

3. The study may not adequately account for the diverse economic disparities within Coimbatore, as different income groups may have different access to and use of digital payment systems.

Data Analysis And Interpretation :

This chapter deals with the analysis and interpretation of the study on the topic, “A Study On Imapct Of Upi Transaction And Cashless Economy With Reference To Coimbatore City”, is presented based on a sample of 160 respondents. This is collected data are classified and tabulated. The data are analysed using following statistical tools.

• Percentage Analysis
• Chi square Analysis

PERCENTAGE ANALYSIS

Percentage analysis is carried out for specific questions given in the questionnaire. This analysis describes the classification of the respondents falling under each category. The percentage analysis is used mainly for standardization and comparison.

Table 1 : How long UPI transaction using.

The age distribution of respondents shows that the largest group (35.6%) is aged 18 to 30 years, indicating this as the most active or engaged demographic. This is followed by 15 to 18 years (25%), showing significant participation among younger individuals. Those aged 31 to 40 years constitute 21.9%, while the smallest group, at 17.5%, is aged 45 years or older. This distribution highlights that younger and middle-aged individuals dominate the respondent pool, suggesting a focus on these age groups for activities or offerings, while the lower representation of older respondents may indicate lesser engagement or relevance for this demographic.

Table 2 : Gender.

The gender distribution of respondents is nearly balanced, with females slightly outnumbering males at 51.2% compared to 48.8%. This indicates a fairly even representation of both genders, suggesting that the subject of the study or survey is of interest to and engages both males and females almost equally, with a marginally higher participation from females.

Table 3 : Martial status

The marital status distribution shows that the majority of respondents (52.5%) are married, while 47.5% are unmarried. This indicates a relatively even split, with a slightly higher representation of married individuals. The data suggests that the survey or study appeals to both groups, with a slight inclination toward the married demographic.

Table 4 : Types of family.

The distribution of family types shows that a slight majority of respondents (53.1%) belong to nuclear families, while 46.9% are from joint families. This indicates a nearly balanced representation, with a marginally higher preference for nuclear family structures, reflecting contemporary trends toward smaller, independent family units while still maintaining a significant proportion of joint families.   

Table 5 : No. of members in family.

The data on family size shows that the majority of respondents (50.6%) belong to families with more than 3 members, followed by 35% in families of 3 members, indicating a preference for moderately sized or larger families. Smaller families with 2 members account for 13.1%, while single-member families are rare at 1.3%. This suggests that most respondents come from family-oriented households with a significant representation of larger family units. 

Table 6 : Residential area.

The distribution of residential areas shows that the majority of respondents reside in urban areas (37.5%), followed closely by those from semi-urban areas (35.6%), with a smaller proportion from rural areas (26.9%). This indicates that the respondent pool is primarily urban and semi-urban, reflecting greater engagement or accessibility in these areas, while rural representation, though significant, is comparatively lower.

Table 7 : Family income.

The family income distribution reveals that the largest group of respondents (43.1%) has a monthly income of ?40,000 to ?60,000, followed by 29.4% earning less than ?20,000. A smaller portion (15.6%) earns above ?60,000, while the lowest representation (11.9%) falls in the ?20,000 to ?40,000 range. This indicates that the majority belong to middle-income households, with a significant portion in lower-income brackets and relatively fewer in higher-income groups.   

Table 8 : Occupation.

The occupation distribution shows that the largest group of respondents (30.6%) are professionals, followed by students at 25%. Business persons account for 17.5%, employees make up 15%, and homemakers represent the smallest group at 11.9%. This indicates a diverse respondent pool with a strong representation of professionals and students, suggesting that the survey appeals to both young learners and working individuals, while homemakers and employees form a smaller segment of the audience.

Table 9 : Using UPI Transaction.

The data on UPI transaction access reveals that an overwhelming majority of respondents (96.9%) are using UPI for transactions, while only 3.1% are not. This highlights the widespread adoption of UPI among the respondents, indicating its popularity and convenience as a mode of payment, with only a small minority not engaging with this digital payment method.      

Table 10 : Use of  digital payments APPS.

The distribution of digital payment app usage shows that the majority of respondents use BHIM (30.6%), followed closely by Phone Pe (29.4%). Google Pay is used by 23.7%, while Paytm accounts for 13.8%, and a small group (2.5%) uses other apps. This indicates that BHIM and Phone Pe are the most popular digital payment platforms among the respondents, with Google Pay also having a significant share, while Paytm's usage is comparatively lower.

Table  11 :  Main reason for UPI Usage.

The main reason respondents prefer using UPI transactions is security, with 35% of respondents citing it as their primary reason. This is followed by ease of use (23.1%) and faster transactions (21.25%), indicating that convenience and speed are also significant factors. Cashback and rewards motivate 16.25% of users, while only 4.4% value UPI transactions for eliminating the need to carry cash. This suggests that security and efficiency are the leading drivers behind UPI adoption, with financial incentives also playing a role.

Table 12 :  UPI payments.

The frequency of UPI usage shows that 45% of respondents use UPI for payments on a daily basis, indicating regular reliance on this payment method. A significant portion (35%) uses UPI weekly, while 18.1% use it monthly, and only 1.9% use it rarely. This highlights the strong adoption and regular usage of UPI for transactions, with most respondents engaging with it frequently, either daily or weekly.    

Table 13 :  Challenges while using UPI.

The data shows that a majority of respondents (62.5%) have not faced any challenges or issues while using UPI, while 37.5% have encountered problems. This indicates that while UPI is widely used and generally perceived as efficient, a notable portion of users still experience difficulties, highlighting areas where improvements could be made to enhance the overall user experience. 

Table 14 :  Preference on UPI.

The data shows that a majority of respondents (45%) use a combination of UPI, cash, and cards for payments, indicating a preference for flexibility in payment methods. While 31.9% still prefer using cash or cards, only 18.1% exclusively prefer UPI. This suggests that while UPI is popular, many users continue to rely on traditional payment methods or a mix of both, reflecting a gradual shift rather than a complete transition to digital payments.

Table 15 : Types of  UPI transactions.

The majority of respondents (40.625%) use UPI for Peer to Peer transfers, highlighting its popularity for sending money directly to others. A significant number (28.75%) also use UPI for online shopping, while 22.5% use it for bill payments. Only 8.125% have used UPI for all of these transactions. This suggests that while UPI is widely used for peer-to-peer transfers and online shopping, its usage for bill payments is somewhat lower, and few respondents utilize UPI for all transaction types. 

Table 16 : Visiting branches.

The data shows that 36.9% of respondents have somewhat reduced frequency to visits the a bank branch due to using UPI . However, 32.5% report no change in their bank visits and 23.8% seeing a significant decrease and 6.8% do not use UPI at all. This suggests that UPI has notably reduced the need for in-person banking for a majority of users, with a significant portion still maintaining their visits or not using UPI at all.

Table 17 :  Inconvenience Faced.

The data indicates that 45% of respondents have experienced some inconvenience in accessing cash due to the increased usage of UPI, while 41.3% have not faced any such issues. Additionally, 13.7% consider the question not applicable, possibly due to not using UPI or preferring cash. This suggests that while UPI usage has become widespread, a significant number of users still face challenges in accessing cash, possibly due to reduced cash withdrawals or limited availability of ATMs.

Table 18 :  Benefits on UPI rewards.

The majority of respondents (30.6%) find UPI rewards programs to be very beneficial, with an equal percentage (30.6%) considering them somewhat beneficial. Additionally, 18.8% of respondents believe the rewards programs are extremely beneficial, while 16.9% find them slightly beneficial, and only 3.1% do not find them beneficial at all. This suggests that UPI rewards programs are generally seen as a positive feature, with most respondents appreciating the added benefits compared to traditional payment methods.

Table 19 :  Challenges faced in financial services.

The data shows that  40.6% have not encountered any issues ,  34.4% of respondents have faced challenges in accessing financial services due to the increased emphasis on cashless transactions. Additionally, 19.4% consider the question not applicable, likely because they haven't been affected, and 5.6% prefer using cash, indicating that a small portion of users still prefer traditional methods. This suggests that while cashless transactions are widely adopted, a significant number of people still face difficulties or have reservations about fully transitioning to digital methods.

Table 20 : Cashless economy.

The data shows that 41.3% of respondents believe the cashless economy has improved the availability of financial services to some extent, while 25.6% think it has significantly improved. However, 27.5% feel that it has not made much of a difference, and 5.6% still prefer using cash. This indicates that while many respondents acknowledge improvements in financial service availability due to cashless transactions, a notable portion remains unconvinced or continues to prefer traditional methods.

Table 21 : Factors influence your decision to use UPI for payments.

The data reveals that the primary factor influencing respondents' decision to use UPI for payments is the security of transactions, with 43.8% prioritizing it. Ease of use is also a significant factor for 28.1%, while availability of cashback offers influences 13.8% of users, and speed of payments is a deciding factor for 14.3%. This suggests that security and convenience are the most important drivers for UPI usage, while financial incentives and speed play a smaller role in decision-making.

Table 22 :   Overall experience with UPI transaction.

The overall experience with UPI transactions is rated positively by the majority of respondents, with 55% describing their experience as "Good" and 18.75% rating it as "Excellent." A smaller portion, 21.25%, considers their experience "Average," while only 5% have a "Poor" experience. This indicates that UPI transactions are generally well-received, with most users satisfied with the service, though there is a small minority who have less favourable opinions.

Chi Square Analysis

The Chi-Square Analysis is used mainly test the independence of the attribute factors. In others words chi-square test is used to the whether one factor has significant influence over the other. The relationships between the two factors are calculated at 5% (0.05) level of significance. The formula for calculating the Chi-square test is: Chi – square test

                χ² = ∑(O – E)²/E

Where:

χ² is the value for chi square

∑ is the sum

O is the observed frequency

E is the expected frequency

Degree of freedom is calculated as follows :

               Degree of freedom = (r-1) (c-1)

Where :

R = number of rows;

C = number of columns;    

1. Age and frequency of UPI payments

The result of chi – square test reveals that the calculated chi – square value (20.18) is greater than the table chi – square value (16.91) at 5% level of significance and therefore, there is no  relationship between age and frequency of UPI payments . Thus, the hypothesis is that the relationship between the two factors does hold good. Hence, the null hypothesis is rejected .

2. Residential area and frequency of UPI payments

The result of chi – square test reveals that the calculated chi – square value (13.86) is greater than the table chi – square value (12.59) at 5% level of significance and therefore, there is no relationship between residential area and frequency of UPI payments. Thus, the hypothesis is that the relationship between the two factors does hold good. Hence, the null hypothesis is rejected .

3. Family income and frequency of UPI payments

Interpretation

The result of chi – square test reveals that the calculated chi – square value (10.95) is less than the table chi – square value (16.91) at 5% level of significance and therefore, there is no relationship between family income and frequency of UPI payments. Thus, the hypothesis is that the relationship between the two factors does not hold good. Hence, the null hypothesis is rejected.

4. ccupation and cashless economy