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This article was published in the Journal - Studies in Indian Place Names.
Volume: 40 Issue: (75). March 2020. ISSN: 2394-3114. Impact Factor: 6.2
Author
Krishnan Ramchandran
Assistant Professor,
SIES College of Arts, Science and Commerce (Autonomous), Sion(W), Mumbai - 400022
Email ID: krishmania555@gmail.com
Mob No: +918097657177
Abstract
Business has taken its path in establishing itself on every corner of the earth and money has been playing the most crucial role in defining its existence and survival. There has been a progressive change with respect to modes of payment and the same holds significance when it comes to consumers, as they are the bearers. With a majestic growth in communication and technology, there has been a paradigm shift in the methods of setting business deals. To be precise, technology has provided a high level aid for general consumers to make cashless payments for their purchases. Though cash has not lost any battle and still holds its physical existence and significance, but somewhere cashless mode of payments is taking a steady lead in establishing itself in the global economy.
This research paper aims to understand consumer’s preference pertaining to the most appropriate mode of making payments during their purchases. Focus has been made to measure the degree of acceptance of online payment options by consumers in relation to their daily purchases considering certain qualitative and quantitative factors such as awareness, trust, volume of transaction, nature of the goods and services, accounting, convenience, etc. The study has geographically covered only the jurisdiction of Mumbai and has considered respondents of age groups from 18 to 70 years. The study has involved only getting responses from technologically able consumers with respect to their personal expenditures. Possible outcome of the study is to not only to understand consumer’s payment preference but also identifying reasons for the same, which would be highly beneficial for business enterprises to mould their style of accepting payments. This paper enhances consumers to believe and opt to head to a cashless state of economy as projected by our Hon’ble Prime Minister.
Introduction
Business has been marking progression at global level with the help of technology, being the key element. It is technology that has favoured dynamism in business models and has made the audience to embrace them. One such area where technology has remarkably played its game is the facilitation of online payment mode when it comes to buying and selling. Undoubtedly, physical cash has been the ruler in the market all these days, but there has to be some element to replace them partially. And this is where the digital mode of payment comes.
Electronic payments took head in 1870s, when Western Union debut the electronic fund transfer (EFT) in 1871[1]. Hence, a lot of consumers have hacked the idea of sending money electronically for goods and services they purchase. Technology has played a steering role in the progress of electronic payments. Comparatively, it has become an easy task today to make payment through various modes to anywhere on the globe.
In the 1910s, the Federal Reserve Bank of America began using the telegraph to transfer money. In the 1950s, Diner’s Club International established itself as the first independent credit card company, followed by American Express. In 1959, American Express introduced the first plastic card for electronic payments. In 1972, the Automated Clearing House (ACH) was developed in the United States to process large volumes of transactions and since then, electronic mode of payment has steadily been accepted worldwide.
Today, there are numerous ways to make payment for a transaction. Cash do exist, but is somewhere losing the aura. Electronic and online means such as credit cards, debit cards, USSD, AEPS, UPI, Internet Banking, e-wallets, payment banks, payment applications, etc. has been taking a good momentum in spearheading its position not only globally, but also in a developing country like India, thereby leading to faceless, paperless and cashless economy.[2] In this research paper, the above factors have been analysed so as to conclude and recommend about awareness and acceptance of online mode of payment from the perspective of the consumers.
Research Objectives
To understand the most preferred method of payment by consumers in small and unorganized retail shopping.
To study the factors influencing selection of payment modes.
Hypotheses
H0 – Very few consumers prefer using online mode for making payments.
H1 – Most of the consumers prefer using online mode for making payments.
H0 - There is no significant relationship between transaction value and the preferred mode of payment.
H1 - There is a significant relationship between transaction value and the preferred mode of payment.
Research Statement
Online payment has been trending globally and has penetrated India up to 35% [3] of the masses by upgrading consumers and shopkeepers with dynamic technological changes, yet there is limited clarity about small retail shopping and payment habits of consumers in India’s financial capital, Mumbai.
Literature Review
R. Elavarasi in her paper [4] “A study on the customer perception towards e-banking” about Customer Awareness and Preference towards E-Banking Services of Banks has studied about customer awareness & has tried to find out their most preferred e-banking services. Inputs have been put to identify better service providing commercial banks with regards to e-banking services to customers. The researcher has identified the level of customer satisfaction for internet banking. The paper shows that age, educational qualification, occupation, income level of customer are major factors that decide usage of e-banking services.
J.B.Valand in his research paper titled [5] “A study on consumer awareness & perception towards the usage of mobile banking in Anand district” has tried to explore people’s mindset towards using of mobile phones for banking. His paper states the technology is the best medium attracting and retaining customers which is giving a good exposure to the banking and finance industry.
D. N. V. Krishna Reddy , Dr. M. Sudhir Reddy in their paper [6] “A Study On Customer’s Perception And Satisfaction Towards Electronic Banking In Khammam District” have studied the perception and electronic banking services usage level of consumers and have attempted to measure the satisfaction level of people towards E-Banking services in Khammam district, Telangna. The paper states that around 70% of people have positive perception towards e-banking services and have suggested promotional measures by Banks to improve the usage of e-banking services.
A. Samsunisa, in her paper titled [7] “Adoption of Internet Banking: An Empirical Study in Chennai”, stated the link brick and mortar to click and portal focusing on utmost satisfaction to users. Her study says that customers are ready to accept internet banking because of certain values and benefits, convenience, time saving and effort, which is possible in the future only by obtaining maximum trust from the customers.
Research Methodology
Research Design
This study has depended on surveyed research allowing the use of questionnaires to pull data from the respondents.
Study Population
The population targeted for the study are Mumbai based individuals ranging from the age group of 18 to 70 years. This includes post graduate students, working professionals, entrepreneurs and senior citizens.
Sample
A sample of 150 respondents were randomly sent questionnaire through communication means like e-mail, sms, Whatsapp, etc., out of which 114 promptly responded and the task was reported to be completed efficiently by them.
Source of Data
There has been a use of both, Primary and Secondary source of data.
Primary source for obtaining first hand information from respondents.
Secondary source for understanding the researches so as to analyze technological advancements in the field of online payments.
Methods of Data Analysis
Categorical data has been obtained through multiple choice questions and analytical data has been obtained using Liket scale technique. Data analysis involves various statistical tools such as frequency table and pie charts, highly supporting respondent’s opinion for measuring their attitude with respect to effectiveness.
SPSS has been used as a special statistical tool for testing the hypotheses using Binomial Test and Chi Square Test.
Data Presentation and Analysis
Gender wise Analysis
Findings and Conclusions
The following findings have been drawn from the interaction with the target respondents.
1. Purchase of Consumer Goods from Local Shops
One of the primary visions of the study was to understand the physical shopping habits of the respondents. The data so collected reveals that 57% of the total respondents step out of home regularly for availing goods and services. Out of which, 53.30% are males and the rest are females. Whereas, 43% of the respondents are not so regular in stepping out of home for shopping, which means there is no particular frequency in their shopping habits.
In general, more number of transactions will require more money to be carried and during such scenarios, online payment applications like GPay / PAYTM / BHIM / PhonePe, etc. can be a better option in order to keep a track on such expenses. The 43% of irregular shoppers could be shopping their daily essentials online and may be using debit cards or credit cards for making payments along with cash on delivery.
There can be more boost towards using of mobile phone and online payment system only when people, irrespective of gender step out of home for regular shopping.
2. Payment Options available at Local Shops
It’s very vital to determine the availability of various payment options available at local shops, as this is the key point in influencing the mode of payment by the consumers. It’s availability can also have a significant impact on purchasing decisions from the consumer’s corner. For instance, if a consumer is not willing to pay using cash and if the shopkeeper is accepting only cash, then the consumer may refrain from buying goods and may switch the shop. In practical approach, the modus operandi for receiving payments by local shop owners should be to accept online payments along with cash in order to retain and sustain their sales. As per experience, 90.4% of the respondents agree to have noticed online payment options such as PayTM / GPay / BHIM / PhonePe, etc. available in most of the local shops. Surprisingly, only 9.6% respondents have seen very few local shops having online payment options. This means there is still not complete digital payment inclusion in Mumbai and necessary promotions must be done by the app developers and promoters to enhance online payment acceptance by local shopkeepers.
3. Most preferred mode of payment
As per latest study issued by the Reserve Bank of India, the aggregate of digital transactions in India increased from 1.06 Billion in December 2017 to 1.1 Billion and the number of transactions growing at the rate of 14% for which prepaid instruments or mobile wallets have been used[8]. The study has focused on getting consumer views pertaining to the most preferred mode of payment. Amongst various options like cash, debt cards, credit cards and mobile based payment application such as GPay / BHIM / PhonePe / PAYTM, maximum number of respondents have chosen cashless form. 59% of respondents between the age group of 18-30 have opted for cash as their most preferred mode of payment. Surprisingly, only 23%, 25%, 17% and 2% from the age group of 3 - 40, 41 - 50, 51 - 60 and 60 above have opted cash as their most preferred mode of payment. The data shows that most of respondents who are earning well and settled are gradually opting for cashless mode of making payments. Overall analysis shows that only 21.1% of the respondents highly prefer mobile based applications for making payments. Most of the youth population prefers cash payments whereas respondents above 31 years old prefer debit and credit cards for making payments.
4. Items commanding online payment
Since the study is mainly focusing on small retailers, it was found that house hold utilities like phone / electricity and restaurants / food joints are the major areas where payment through mobile apps like PAYTM / BHIM / PhonePe / GPay, etc. is done. Out of the total respondents, 56% votes each have gone for household utilities and restaurants / food joints where they make use of such online payment applications. Clothes, stationery, books, medicines along with railway, bus and metro tickets stand second with 52% votes by respondents preferring online payments. Grocery stands third with 36% votes, followed by personal hygiene expenses like haircut, laundry, spa, etc. with only 25.4% respondents making online payment. This data shows the growing scope of online payment system in our country which is parallelly boosting the demand and efficiency of these industries. Small vendors selling grocery and vegetables must be educated about online payment mechanism and more promotion must be done where a layman can step out of home cash free for making all necessary daily purchases.
The table below shows most preferred (age-wise) areas where online payments are accepted and used.
5. Transaction amount and payment mode
It is hypothetical that using a particular payment mode can be highly influenced by amount of payment. This has been tested with a questionnaire asking whether respondents make use of online payment for transactions less than Rs. 500/-. Surprisingly, the amount of transaction has no significant association with the perception of the respondents for selecting a particular mode of payment. This proves that other factors like convenient handling and compliance, friendly interface, quick in time, safety and security, tracking and record-keeping, etc. definitely induce people to make use of online apps like PAYTM / GPay / PhonePe / BHIM, etc. for making petty payments.
6. A note on influencing factors
(i) Tendering change - Tendering exact change has always been an issue when it comes to using cash mode of payment. People usually complain about receiving stale notes in return from vendors and they also find it difficult to tender exact change for the amount of transaction. This point has been validated here in this study that cashless payments would definitely serve the need of staying away from stale / fake notes and even tendering exact change.
(ii) Convenience – It is a fact that online mode of payment is relatively convenient in terms of handling and using compared to cash. Around 80% of the respondents find online payment apps like GPay / PAYTM / BHIM / PhonePe, etc. convenient compared to cash payment. The reason is carrying and retaining cash becomes an additional burden for people as it is subject to counting errors and also, there is possibility of it getting lost. Whereas only 7% of the respondents disagree to the argument that cashless mode of payments is relatively convenient than cash.
(iii) Agility – This is one such point worth an argument. Considering the present IT and networking infrastructure, there seems to be 100% internet services across Mumbai and that’s a big aid in promoting the use of online payments. But the story isn’t true in every corner. Network at times, seems to break down or perhaps run slow thereby hindering the smoothness of online payment process. Because of this, a lot of initiated payments get cancelled leading to a breakdown of trust people hold towards using online mode of making payments. In this study, 65% of respondents agree that online mode of payment is quick, provided there is good network infrastructure and balance in the e-wallet. Rest of the respondents aren’t convinced with the speed, perhaps for the trouble they might have encountered.
(iv) Security - One question that comes in mind while making online payment is the level of safety and authenticity. And there comes double authentication. Double authentication in online payments is a mechanism where the payer has to pass through two levels of verification, for executing payment. It is usually by way of OTP (One Time Password) and a MPIN (Mobile Personal Identification Number) set by the user. When these two values are entered correctly by the payer, only then payments can be executed. This study shows that 65.5% of the respondents are aware about the double authentication system in online payments, which means online payments is absolutely safe for them. Study also shows that 57% of respondents agree that online payments are safe and secure.
(v) Cashback and Reward Points - Another interesting feature of using app based payments is sponsored cash backs and reward points. Consumers are benefited with some minimal cash return on making payment through a particular app. Popular applications like GPay, PAYTM and Mobiqwik provide continuous cash backs and reward points which stimulates consumers to shop more for a comparatively lower price, subject to conditions. 61.4% respondents prefer cashless mode of payment simply to avail such cash backs, discounts and reward points. But a good percentage of respondents (45.9) believe that usage of such apps for payment enables frequent spending, thereby leading to an uncontrolled spending desire.
(vi) Technology - The study shows that 73.7% respondents feel updated with the growing technology when they make use of such online payment applications. This is a psychological variable as it is totally dependent on thoughts of individuals. A connection that makes people feel related to the dynamic shift in the country’s financial system.
Conclusion
Primarily, the study proves that 49.90% of pure cash users are ready to shift to cashless mode. The above study and analysis concludes that Mumbai is a city where most people are preferring online mode of making payments which is significantly affected by various factors such as convenience, agility, feel of growing with technology, avoidance of tendering change, avoidance of using stale currency, accurate tracking and record keeping of expenses, etc. Study also says that there is no fear among the respondents with respect to online payments as there is maximum trust and security. Over and above, the present youth is more engaged in using online payment modes for earning cash back and reward points and to grow with the ever changing technology. In a nutshell, online payment is a high time benefit facilitator and it is highly recommended for daily use purpose. The more people switch to online payments, there is going to be more authenticity, less theft, more convenience and less tension of handling money.
Limitations of the Study
Geographically, the study has covered only Mumbai district comprising of urban population and has not touched rural respondents.
Also, the study is limited to the extent of unorganized retail shops and big retail shops have not been considered.
Further Scope
The study can further be extended to understand the most trusted and convenient mobile application for making online payments.
A similar study can be conducted in selected rural areas to understand consumer perception and adaptability with respect to online payments.
Reference
https://blog.forte.net/electronic-payments-history/ as on 22nd February, 2020.
http://cashlessindia.gov.in/ as on 21st February, 2020.
2019 Global Payments Trends Report - India Country Insights
https://www.jpmorgan.com/merchant-services/insights/reports/india as on 12th February, 2020.
R. Elavarasi, (2012) “A study on the customer perception towards e-banking”, International Journal of Multidisciplinary Research, Volume: 2 Issue: 1, January 2012, ISSN 2231 5780.
J.B.Valand, (2018) “A study on consumer awareness & perception towards the usage of mobile banking in Anand district”, Research Guru: Online Journal of Multidisciplinary Subjects. Volume: 12, Issue: 1, June 2018, ISSN 2349266X.
D. N. V. Krishna Reddy, Dr. M. Sudhir Reddy (2015) “A Study On Customer’s Perception And Satisfaction Towards Electronic Banking In Khammam District”, IOSR Journal of Business and Management, Volume: 17, Issue: 12, Dec 2015, ISSN: 2278487X.
A. Samsunisa (2016) “Adoption of Internet Banking: An Empirical Study in Chennai”, Intercontinental Journal of Finance Research, Volume: 4, Issue: 1, January 2016, ISSN: 23210354.
https://www.bankbazaar.com/ifsc/digital-payment.html as on 20th February, 2020.
https://www.betterthancash.org/why-digital-payments as on 18th February, 2020.
https://en.m.wikipedia.org/wiki/Payment_and_settlement_systems_in_India as on 18th February, 2020.
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