For decades, cash was the king, and cards were a matter of convenience. Fast forward to 2024, Unified Payments Interface (UPI) is the new king, and cash seems to have relegated to the second spot.
The incoming of digital payment system has revolutionised how individuals make financial transactions that offer greater convenience, security, and efficiency. UPI, developed by the National Payments Corporation of India (NPCI), is now a popular mobile-based real-time payment system within the country and abroad. Many people, especially the younger generation, have majorly moved on from cash-in-my-pocket to scan-and-pay mode.
But this shift has also brought to light new spending habits, security concerns, and financial management challenges.
Here’s what users are saying about how UPI has changed their financial landscape.
Frequency Of UPI Transactions
According to a dipstick online survey by Outlook Money, about 86 per cent of respondents have said ‘yes’ to using UPI more than cash or card payments on a daily basis. Only 3 per cent of respondents said ‘no’, while over 10 per cent of people said they used UPI more than ‘10 times’ a day to make different kinds of payments.
Says Parth Upadhyaya, co-founder of BMDI Consultants, a market research and business consultancy firm: “On average, I make 10 transactions a day, including small payments for tea and snacks. Out of these, 7-8 are generally through UPI only.”
This reflects a significant shift from traditional cash transactions, with many now relying almost exclusively on digital payments.
Another user noted, “I make 8-9 transactions a day. I barely use cash these days.”
The ease of use and widespread acceptance of UPI are key reasons behind this shift. From street vendors to high-end retailers, UPI has permeated every level of the market. As one respondent pointed out, “I use it for everything from groceries to paying the auto fare. On a normal day, I make at least 3-4 transactions.”
Scan To Pay: Convenience At Its Best
The convenience of UPI is unmatched, and most Indians seem to favour UPI over cash.
“Do you have a change, sir?” the e-rickshaw driver would ask you whenever I would offer him a Rs 20 note for a Rs 15 ride. Loose change is difficult to come by these days. But that’s not the case with UPI anymore. You can tender the exact fare,” said another user.
Frequently, they highlight how easy it is to make payments without worrying about carrying cash. “The hassle-free payments, coupled with not needing to worry about carrying cash, is what I find most convenient about UPI,” said another user.
This sentiment is echoed by another, who adds, “It’s fast and convenient, especially with the barcode method. Payments are done in just a few seconds.”
This ease of use has led to a reduction in the need for small change, which was often a point of friction in cash transactions. “I don’t have to bother about change anymore. It’s also accepted in most places—even phuchka sellers have QR codes now,” says Aniket Panja, a Kolkata resident.
Security Concerns: A Mixed Bag
While the convenience of UPI is undeniable, some users have expressed security concerns.
“Sometimes, I face security concerns when making payments through online gateways,” one respondent said, while others seem less worried, stating that as long as basic precautions are followed, UPI is safe.
“As long as you don’t share your PIN with anyone and just keep a lookout before making a payment, I don’t think there’s too much to worry about,” said a user.
However, many users are majorly concerned about potential scams rather than the inherent security of the UPI system itself. “It’s a digital payment mechanism, so for me, the only concern is being scammed by someone else or a fake account access,” a user said.
Managing Finances: Easier But Riskier
UPI seemed to have eased the burden of maintaining monthly budget too for those who have a habit tabulating their daily expenses in petty account book.
“My father used to make weekly accounting notes of all the payments or transactions he made, but now he doesn’t do that anymore,” said a respondent. When asked why, he said his father is also using UPI, and since the history is all available digitally, even for the smallest of expenses at the supermarket, he doesn’t feel the need to maintain a daily accounts book.
UPI has also changed the way how people manage their finances. The digital trail left by every transaction helps users keep track of their spending. “You get a trail of every transaction, so it definitely helps. I can keep track of my expenses. Also, immediate transfer means immediate settlement of dues,” says Aastha Gupta, a chartered accountant.
However, this ease of spending has also led to changes in spending behavior.
A Shift In Spending Behaviours
A recent study by IIT Delhi found that approximately 75 per cent of the people surveyed reported increased spending due to UPI, with only 7 per cent indicating reduced spending. Significantly, over 91 per cent of people reported satisfaction with their UPI usage while 95.2 per cent of the survey respondents found making payments via UPI convenient.
“UPI has increased our spending behaviour. The speed and ease of payments have increased the spending capacity, coupled with the fact that money is just a tap away,” a user said.
“UPI has changed my spending behaviour. I spend much more than I would with cash,” added another user.
The psychological aspect of spending has also shifted with UPI. Says Parth: “With UPI, we don't even realise at times that we’re spending money. Taking money out of the wallet and paying someone has a very tangible feeling of spending. With UPI, it’s just a tap.”
Over 15 per cent of people who responded to Outlook Money said that they are ‘worried’ about UPI making them spend more than usual.
“UPI is so easy and quick, so I spend more than I would with cash,” said a user.
“Previously, I would save more and pay less due to the limited number of withdrawal options, but today I spend more and more because of the sudden need,” said another user.
For some users, UPI is a ‘yes and no’ situation when it comes to financial management. Says Pratibha Chaudhary, nursing officer, Govt. of NCT of Delhi, “We can keep track of payments we’re making, so there is no need to write it down or remember it. And because of the feasibility of UPI, we do tend to make unnecessary spends (impulse buying), there’s no real, physical sense of spending money.”
While UPI has majorly replaced physical wallets, it has also reshaped how users think about and handle money. Even though the convenience and speed of UPI are undeniable, it also comes with new challenges in managing spending and ensuring security.
As UPI continues to grow in popularity, it will be interesting to see how these trends evolve and what innovations will emerge in the digital payments landscape vis-a-vis security and containing spending behaviours of a million users.
