AN ANALYSIS OF THE IMPACT OF DIGITAL PAYMENTS

ON BEHAVIORAL CHANGES IN CONSUMERS AND

VENDORS
DR. AJAY KUMAR
Assistant Professor
Department of Commerce
College of Vocational Studies
( University of Delhi)

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Abstract

This study examines the effects of digital transactions on the behaviour of consumers and
merchants, aiming to analyze how the adoption of digital payment solutions influences
transaction behaviours and operational practices. This study examines three main goals as
financial transactions shift more and more from traditional methods to digital platforms:
assessing the acceptance and preference levels of digital payments, recognising the difficulties
faced by vendors and customers, and offering suggestions for improving digital payment
systems. Using a structured survey technique, the study focusses on the experiences of 61
suppliers and 246 customers with digital payments in order to collect primary data. The
findings show that a sizable majority of suppliers (85.25%) and customers (72.75%) consider
digital payments to be "More Convenient" or "Convenient," with considerable advantages in
terms of efficiency and usability. But obstacles still exist: 48.37% of customers and 47.54% of
suppliers say they have experienced severe problems, such as technical problems and security
concerns. While the results show that consumer behaviour has generally shifted in favour of
digital payments, they also highlight the need for focused changes to solve the remaining
issues. In order to contribute to a more effective and user-friendly financial ecosystem,
recommendations are made to improve user experience and optimise digital payment systems.

Keywords: Digital, Payments, Behavioural, Changes, consumers, Vendors,

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 1. INTRODUCTION

The financial environment has changed significantly in the digital era as digital payment
technologies replace traditional cash and card payments. This change in the way that customers
and suppliers interact with financial transactions is a result of technological improvements as
well as the need for more convenience and security. Digital payment systems, which include
electronic transfers, internet banking, and mobile wallets, provide quicker, more secure, more
efficient means to make payments. As a result, there have been noticeable behavioural changes
in both vendors and customers, with differences showing up in overall financial management
methods as well as transaction habits and preferences. Digital payment methods are becoming
more and more popular among customers due to their real-time tracking capabilities, simplicity
of use, and convenience compared to traditional payment methods. Features like tools for
creating budgets, exclusive deals, and improved security encourage people to use digital
payments more.

In a similar vein, vendors have adjusted to the incorporation of digital payment systems, which
have expedited corporate processes by minimising cash handling and enabling more rapid and
seamless transactions. In addition to raising customer happiness, accepting several digital
payment methods has given businesses useful information into consumer preferences and sales
patterns, allowing them to make better business decisions and maximise their marketing efforts.
Notwithstanding these benefits, there are drawbacks to using digital payments, including the
requirement for a strong technology foundation, security issues, and possible system failures.
To comprehend these changes, pinpoint areas for development, and resolve any potential
problems, studying the effects of digital payments on vendor and customer behaviour is crucial.
This will help to create a financial ecosystem that is more efficient and user-friendly.

1.1.Objectives of the study

● To Analyse the Adoption and Preference Levels of Digital Payments
● To Identify the Challenges Faced by Consumers and Vendors
● To Provide Recommendations for Enhancing Digital Payment Systems

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 2. LITERATURE REVIEW

Patil et al. (2017) investigates the broad acceptance of digital payment systems in a range of
industries and geographical areas, identifying and evaluating the critical elements that propel
the transition from cash payments to electronic transactions The research that has already been
done is categorised by Patil et al. into categories including user acceptability, adoption issues,
security concerns, and the necessity of a strong digital ecosystem. The study emphasises how
smart cities provide an ideal environment for the growth of digital payment systems because
of their emphasis on innovation and connection. They come to the conclusion that although
there are many benefits to digital payments in terms of effectiveness and ease, the shift
necessitates tackling important issues including cybersecurity, digital literacy, and the digital
divide. This report offers a fundamental overview of the state of digital payments and identifies
the areas that require more investigation to boost use, particularly in poorer nations where
infrastructure constraints continue.

Liu et al. (2019) compile and analyses a variety of research that investigate the variables
impacting consumers' behaviour towards the adoption of mobile payments. The report also
emphasises how important users view simplicity of use, with users preferring payment systems
that are simple to use and don't take much effort to run. The meta-analysis also highlights the
importance of social impact, since peer behaviours and societal trends frequently affect
consumers' adoption decisions. According to Liu et al., adoption of mobile payments is more
common in settings like metropolitan regions with greater degrees of digital infrastructure
where technology is easily incorporated into daily life. Policymakers, companies, and
developers hoping to increase mobile payment acceptance rates by tackling the obstacles noted
in the research will find this meta-analysis to be helpful.

Singh and Rana (2017) investigate how consumers see digital payment methods, emphasising
how attitudes and experiences shape users' adoption of these platforms. The study does,
however, also bring to light worries about security and privacy, as many customers are leery
of possible threats including fraud and data breaches. The study also finds that consumers'
confidence in digital payment systems is greatly aided by trust, as seen by customers'
preference for platforms with robust security measures and clear privacy practices. The study
also covers the impact of incentives and promotional offers on customer adoption, especially

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in areas with high competition and a variety of payment alternatives. In order to increase the
acceptance and ongoing usage of digital payment systems, businesses and service providers
need to take note of the important insights that this research offers.

Kumar and Chaubey (2017), who also look at the possibilities, problems, and difficulties that
emerged during this time. Consumers and companies were compelled to switch to digital
payment methods almost immediately when high-value currency notes were abruptly
demonetised. The transition necessitated significant technological expenditures and a
challenging learning curve for vendors, particularly small enterprises. The authors contend that
although demonetisation generated a strong push for digital payments, tackling the digital
divide, guaranteeing strong cybersecurity, and encouraging public faith in technology are
necessary for sustained adoption. Their research offers insightful information about the
immediate consequences of policy-driven adoption as well as the long-term difficulties in
sustaining an inclusive digital economy.

Sivathanu (2019). The study looks at the main causes and obstacles for consumers' and
vendors' adoption of digital payments, giving readers a thorough grasp of the variables
affecting this change. The study also notes that there are important obstacles to adoption, such
as lack of infrastructure in remote regions, privacy concerns, and cybersecurity concerns.
Sivathanu highlights that although demonetisation provided a rare opportunity for the quick
acceptance of digital payments, ongoing efforts by the government and service providers to
remove these obstacles are necessary for continued use. The study comes to the conclusion that
creating safe and user-friendly payment platforms, increasing digital literacy, and fostering
trust are all necessary for digital payments to become a long-term solution.

3. RESEARCH METHODOLOGY
3.1.Research Design

This study incorporates both quantitative and descriptive approaches to explore the effect,
adoption, and difficulties associated with digital payments among suppliers and customers.
Surveys that are organised are used to gather primary data.

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 3.2. Method of Data Collection

● Primary Data: It is collected through structured surveys administered to 246

consumers and 61 vendors.

● Secondary Data: Literature, journals, and online resources on digital payments and
technology adoption were reviewed for support.

3.3.Sampling Design

● Sample Size: 246 consumers and 61 vendors.

● Sampling Technique: Convenience sampling targeting regular users of digital

payment systems.

3.4.Data Analysis Techniques

Descriptive statistics were used to analyse adoption, preferences, impacts, and challenges
of digital payments using percentages, frequencies, and distributions.

4. ANALYSIS AND INTERPRETATION

Table 1: Consumer Adoption and Preferences in Digital Payment Methods

Serial Level of Adoption and Number of Percentage

No. Preference Consumers (%)
1 In-convenient 67 27.23
2 Convenient 76 30.89
3 More Convenient 103 41.86
Total 246 100

The preference and acceptance levels of digital payments among customers are shown in Table
1. Out of the 246 participants, 27.23% considered digital payments to be inconvenient,
suggesting a degree of discontent or challenges with these platforms. On the other hand,
30.89% of respondents thought digital payments were convenient, indicating a favourable
impression of their use. When compared to traditional methods, digital payments significantly
increase convenience for many customers, as indicated by the considerable majority (41.86%)

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who felt them to be more convenient. The majority of customers recognise the enhanced
convenience of digital payments, and the data overall shows a generally positive perspective
towards them.

120

100

80

60

40

20

0
In-convenient Convenient More Convenient
In-convenient Convenient More Convenient

Figure 1: Adoption and Preference of Digital Payment – Consumers

Table 2: Adoption and Preference of Digital Payment Systems – Vendors

Sl. No. Level of Adoption and Number of Percentage (%)

Preference Vendors
1 In-convenient 9 14.75
2 Convenient 25 40.98
3 More Convenient 27 44.27
Total 61 100

Vendor adoption and preference levels for digital payments are shown in Table 2. Of the 61
vendors, 14.75% said that digital payments were cumbersome, indicating problems or
discontent. On the other hand, 40.98% of respondents said digital payments were convenient,
which is a somewhat favourable but not very strong opinion. Notably, 44.27% of vendors said

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that digital payments were easier, indicating that a sizable percentage thinks these solutions are
very helpful. The research indicates a largely good reaction among sellers, with the majority
viewing digital payments as either convenient or much more convenient, while a tiny minority
of them encounter challenges.

30
27
25
25

20

15

10 9

0
In-convenient Convenient More Convenient

Figure 2: Adoption and Preference of Digital Payment – Vendors

Table 3: Consumers' Level of Impact from Digital Payment Systems

Sl. No. Level of Impact of Digital Payment Number of Consumers Percentage (%)
1 Not much Useful 27 10.98
2 Useful 127 51.62
3 More Useful 92 37.40
Total 246 100

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 140
127

120

100 92

80

60

40
27

20

0
Not much Useful Useful More Useful

Figure 3: Level of Impact of Digital Payment – Consumers

The influence that customers experience from digital payments is summed up in Table 3.
10.98% of the 246 respondents said digital payments were not very helpful, showing a smaller
group that did not see many advantages from these systems. Conversely, 51.62% of
respondents said digital payments were helpful, indicating that most of them saw real
advantages from using them. Furthermore, 37.40% of customers said digital payments were
more helpful, indicating that a sizable majority believes these systems offer considerable
benefits. The majority of customers view digital payments to be either beneficial or more useful
overall, according to the research, underscoring the overall favourable influence of these
payments on consumer experiences.

Table 4: Level of Challenges – Consumers

Sl. No. Level of Challenges Number of Consumers Percentage (%)

1 High level challenges 119 48.37
2 Moderate level Challenges 73 29.68
3 Very Less challenges 54 21.95
Total 246 100
According to the statistics, a considerable proportion of customers (48.37%) report
experiencing high degrees of difficulty while utilising digital payment methods. Another

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29.68% report having to deal with moderate obstacles, indicating that even with fewer serious
problems, they still have an effect on their entire experience. On the other hand, 21.95% of
customers say they have had very few difficulties, indicating a more seamless use of digital
payment methods. All things considered, even if most users have varied degrees of trouble, a
sizable percentage still uses digital payments with just minimal problems. This distribution
emphasises the necessity of making focused changes to address the issues encountered by
people with more problems.

Very Less challenges

22%
High level challenges
48%

Moderate level
Challenges
30%

High level challenges Moderate level Challenges Very Less challenges

Figure 4: Level of Challenges – Consumers

Table 5: Level of Challenges – Vendors

Sl. No. Level of Challenges Number of Percentage

Vendors (%)

1 More challenges 29 47.54

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 2 Moderate Challenges 17 27.87

3 Less challenges 15 24.59

Total 61 100

According to the data, 47.54% of the vendors report having major problems with digital
payment systems, which may have a substantial effect on their business operations. Even if
they are less severe, moderate issues still impact 27.87% of people when it comes to using
digital payments. Conversely, 24.59% of suppliers report fewer difficulties, suggesting a
generally more seamless experience. This distribution shows that a sizeable minority finds the
digital payment methods less onerous, even if a sizable fraction of sellers have issues of varying
degrees. Taking care of the problems that people with more difficulties are facing might
improve vendor satisfaction in general and operational effectiveness.

Less challenges
25% More challenges
47%
Moderate
Challenges
28%

Figure 5: Level of Challenges – Vendors

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 5. RESULT

The data shows that digital payments have a largely positive influence on vendor and customer
behaviour. According to 72.75% of customers, digital payments are either "convenient" or
"more convenient," and 89.02% of consumers think they are "useful" or "more useful,"
indicating the considerable advantages that this group sees in them. In a similar vein, 85.25%
of suppliers say that accepting digital payments is "convenient" or "more convenient,"
indicating that they are generally satisfied. Even said, there are still several issues in spite of
the generally favourable response. It is noteworthy that 14.75% of suppliers and 27.23% of
customers report problems with digital payments, indicating room for improvement in these
systems. The findings highlight that although digital payments are generally improving user
experiences and encouraging positive behavioural changes, resolving the outstanding issues
might increase adoption and satisfaction and result in even more flexibility and efficiency in
financial transactions.

6. CONCLUSION

A research of how digital payments affect vendor and customer behaviour finds a largely
favourable shift in attitudes towards these systems. Most suppliers and customers agree that
digital payments are helpful and easy, with a sizable majority of them expressing this opinion.
To be more precise, 85.25% of suppliers and 72.75% of customers agree that digital payments
are "convenient" or "more convenient," indicating that these methods are widely accepted.
Furthermore, the perceived value of digital payments is further supported by the fact that
89.02% of customers view them as "Useful" or "More Useful." Even with these encouraging
developments, there are still certain difficulties, as shown by the fact that 14.75% of vendors
and 27.23% of customers still regard digital payments to be inconvenient. These results imply
that although digital payments are improving user experiences and encouraging positive
behavioural changes, resolving the outstanding problems might increase adoption rates and
user happiness. In general, digital payments are causing a change in financial transactions that
are more flexible and efficient, but ongoing improvements are required to allay the worries of
a small percentage of consumers.

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DR. AJAY KUMAR

********

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