impact of digital payment system,advantages

CALICUT UNIVERSITY TEACHER EDUCATION CENTRE
CALICUT - 673003
CERTIFICATE
This is to certify that the project report entitled " A STUDY ON THE IMPACT OF
DIGITAL PAYMENT SYSTEM IN SMALL BUSINESS" is a record of project work done
by ANUSREE V P, student of Calicut University Teacher Education Centre, Calicut during
the course of her study. This project report is the outcome of the original work done by her
and the same has not been previously submitted for the award of any other Degree.

DECLARATION
I ANUSREE V P, hereby declare that this project report entitled "A STUDY ON THE
IMPACT OF DIGITAL PAYMENTS SYSTEM IN SMALL BUSINESS " is a Bonafide
record of work done by me under the valuable guidance and supervision of Mr. MANOJ T.
K, Assistant Professor in Commerce, CUTEC, Calicut, in partial fulfilment of the
requirements of the award of degree of Bachelor of Education from the University of Calicut.
I also declare that this project report has not been published in any journals or magazines or
submitted in any university for the award of any Degree, Diploma or any other similar

ACKNOWLEDGEMENT
With great pleasure, I would like to express my gratitude to all those who helped me to make
this study a successful one. First and foremost, I remain thankful to God, for his kind
blessings and support for the successful completion of this project. I convey my sincere
gratitude to Dr. BINDHU K VARGHESE, Principal, CUTEC, Calicut, for encouraging me
in completing the project work. I extend my gratitude to my guide Mr. Manoj T. K, Assistant
Professor in Commerce, CUTEC, Calicut, for all the guidance throughout the project. I
extend my sincere gratitude to all the faculties in Calicut University Teacher Education
Centre, Calicut, for their valuable guidance and encouragement in completion of this project
work. I am very thankful to my beloved parents and my dear friends for their best efforts in
the successful completion of this project.

TABLE OF CONTENT
CHAPTER NO TITLE PAGE NO
1 INTRODUCTION
2 REVIEW OF LITERATURE
3 THEORATICAL FRAMEWORK
4 DATAANALYSIS AND
INTERORETATION
5 FINDINGS SUGESTIONS AND
CONCLUSION
ANNEXURE
BIBLIOGRAPHY
QUESTIONNAIRE

LIST OF TABLES
TABLE
NO
TITLE PAGE
NO
4.1 Gender wise classification
4.2 Age wise classification
4.3 Educational qualification
4.4 Type of business operate
4.5 Year of conducting business
4.6 Do you use digital payment system
4.7 Which digital payment do you prefer
4.8 How long you use digital payment
4.9 Do you think that digital payments are safe enough
4.10 Percentage of transactions
4.11 Reason for adopting digital payment system
4.12 Digital payment adoption increased your revenue
4.13 Digital payment adoption affected your sales volume
4.14 Challenges you have faced
4.15 Benefits of digital payment adoption
4.16 Satisfaction level of customers
4.17 Frequency of repeat customers
4.18 Convenient mode than cash payments
4.19 Do you plan to expand digital payment in future

LIST OF CHARTS
TABLE
NO
TITLE PAGE
NO
4.1 Gender wise classification
4.2 Age wise classification
4.3 Educational qualification
4.4 Type of business operate
4.5 Year of conducting business
4.6 Do you use digital payment system
4.7 Which digital payment do you prefer
4.8 How long you use digital payment
4.9 Do you think that digital payments are safe enough
4.10 Percentage of transactions
4.11 Reason for adopting digital payment system
4.12 Digital payment adoption increased your revenue
4.13 Digital payment adoption affected your sales volume
4.14 Challenges you have faced
4.15 Benefits of digital payment adoption
4.16 Satisfaction level of customers
4.17 Frequency of repeat customers
4.18 Convenient mode than cash payments
4.19 Do you plan to expand digital payment in future

1.1 INTRODUCTION
Digital payment is a way of payment which is made through digital modes. In digital
payments, payer and payee both use digital modes to send and receive money. It is
also called electronic payment. No hard cash (currency notes) is involved in the
digital payments. All the transactions in digital payments are completed. through
online. It is an instant and convenient way to make payments. Currently available
digital payment systems include Banking cards, Digital wallets, Unified Payment
Interface (UPI), Unstructured Supplementary Service Data (USSD), Immediate
Payment Service (IMPS), Real Time Gross Settlement (RTGS), National Electronic
Fund Transfer (NEFT), Aadhar Enabled Payment System (AEPS) and Mobile
banking. With recent advances technologies, digital payments is having an impact on
our daily lives and beginning to offer interesting and advantageous new services.
According to RBI Bulletin cashless transaction in India increasing day by day.
In the contemporary business landscape, digital payment systems have emerged as a
transformative force, especially in developing economies like India. These systems
have redefined traditional business operations, offering new avenues for transactional
efficiency and customer interaction. The shift towards digital payments has been
particularly notable in the context of small businesses, which form the backbone of
the Indian economy (Smith, 2019; Patel & Kumar, 2020). The integration of digital
payment methods in these enterprises is not just a trend but a strategic move towards
modernization and increased competitiveness. Studies have shown that the adoption
of digital payments can significantly enhance operational efficiency and customer
engagement, one of the most significant shifts has been in the domain of financial
transactions, where digital payments have experienced an unprecedented surge in
adoption and usage. Before the pandemic, digital payments were already on a growth
trajectory, driven by advancement in technology and changing consumer preferences
The adoption of digital payment systems has revolutionized the way transactions are
conducted globally, and India is no exception. With the advent of technology and
increased internet penetration, digital payment methods such as net banking and

Unified Payments Interface (UPI) have become prevalent. This shift towards digital
payments has had a profound impact on various sectors, particularly small traders
1.2 OBJECTIVES
1. To assess the impact of digital payment adoption on sale and revenue of small
business.
2. Identify different modes of system used by small business.
3. Assess the benefit and challenges of using digital payments.
4. To identify the impact on digital payment on customer satisfaction and
business performance.
1.3 STATEMENT OF THE PROBLEM
Small business in traditionally relied on cash transactions. However, the increasing
acceptance and use of digital payment systems by customers present both
opportunities and challenges for these traders. This study aims to investigate the
impact of digital payment adoption on small trader business, focusing on business
operations, customer relations, and financial outcomes.
1.4 SCOPE OF THE STUDY
This study focuses on small traders in Tirupur city, including those in the retail,
wholesale, and service sectors. It examines the use of net banking and UPI
transactions exploring both the positive and negative impacts on business operations,
customer satisfaction, and financial performance. The study is limited to the
geographic boundaries and considers data from the past two years to ensure
relevance and accuracy.
1.5 RESEARCH METHODOLOGY
This chapter outlines the research methodology to study the impact of digital
payment systems on small businesses. It includes the research design, sample
selection, data collection methods, and data analysis techniques. The data for the
present study mainly classified into two: primary data and secondary data.

Questionnaire method was used for the collection of primary data from the
respondents. Pre –designed questionnaire was given to individual investors to obtain
the desired data. The sample size of the project is limited to 50 investors only. The
secondary data were collected from the books and internet. Data has been presented
with the help of bar graphs, pie charts etc
1.6 SOURCES OF DATA
Both primary data and secondary data were used for the present study.
 Primary sources
The primary sources include the information and data are collected through
questionnaire and discussion with working women directly. The primary data were
collected from working women with the help of a semi structured questionnaire
covering various aspects of the saving and investment under the study.
 Secondary sources
Secondary data are collected from publication like newspaper, journals,
magazine and through internet
1.7 TOOLS FOR DATA COLLECTION
 Questionnaire:
A structured questionnaire was used for data collection. A structured questionnaire
consists of closed questions which produce data that can be analysed quantitatively.
 Direct interview:
A semi structured interview has been carried out with the respondents in order to
pursue
response in more detail.
 Telephone interview:
Telephone interviews consist in contacting respondents on telephone itself. For data
collection in this method was also adopted.
1.8 TOOLS OF DATAANALYSIS
Data analysis is an application of reasoning to understand, clear and interpret the data
or interpretation that have been collected through the questionnaires.
The various tools of data analysis used in this study in this study are as follows:

 Percentage
1.9 TOOLS OF DATA PRESENTATION
 Pie chart
 Bar chart
1.10 LIMITATIONS OF THE STUDY
1. The study is limited to the sample of 50 respondents only. so this can’t be a full
proof.
2. The researcher collected data by convenient sampling method using schedule and
there is a possibility of certain deviations.
3. The research was carried based on primary and secondary data only.
4. The scope of the study is limited to the district only.
5. Some persons are not ready to cooperate with study.
6. Data collection is time consuming

CHAPTER 2
REVIEW OF LITERATURE

There have been a lot of studies conducted in the field the impact digital payment system in
small business. Some of the previous related research studies are given below:
CGAP (2015) Digital financial inclusion will boost the well-being of individuals and
companies with a responsible digital platform for accessing funds in their bank accounts for
financial transactions
DR.G. Vincent (2016), defined the performance of E-Wallet. The use of traditional payments
using either debit cards or credit card is replaced by E-Wallet. This paper analyses the e-price
system and throws mild on E-wallet device of digital payment
Lee (2019) in their recent study found out the reciprocal relationship between user perception
and retailer perception on platform-based mobile payment service. This study argue that the
mass adoption of mobile payments will only be triggered when the benefits - both perceived
and real become clear to consumers and merchants.
Singh (2017) in his study showed that how digital payment and digital wallet in India was
get popularized due to demonetization. As there was a tremendous growth in the usage of
internet and the no. of smart phone users were also increasing so people found it convenient
to use as an alternative for cash. In this study he also pointed out that how different digital
wallet companies were having competition to enter and expand the Indian market as it was
the best opportunity for them to establish their company. It was also predicted that in future
India will become a cashless economy and with digitalization people will surely adopt the
digital mode of payment. ANOVA was used in this study to show that there is no significant
variance in the consumer perception with respect to its demographic factors.
Nitsure (2014) in his study highlighted the issues that were being faced or observed in

developing country like India in using the e-payment system which was due to the low
spread of internet and technology. The paper focused on major issues such as security, rules,
etc. IN a country like India there is a high risk where the poor’s are given a chance to
be informed about such facilities neither they are given any such information.
Oladejo, Morufu et.al (2012) in their study examined the improvement of e-payment system
in Nigeria. They explored what initiated the people to adopt the e-payment system A
structured questionnaire and some financial statements were collected to analyse the data.
The results were such that when bank adopted e-payment system there was a change in the
performance level of the banks. With the advent of e-payment system there was a rise
in usage of ATMs.
Nitsure (2014) in his study highlighted the issues that were being faced or observed in
developing country like India in using the e-payment system which was due to the low spread
of internet and technology. The paper focused on major issues such as security, rules, etc. IN
a country like India there is a high risk where the poor’s are given a chance to be informed
about such facilities neither they are given any such information.
Kevin Foster, Scott Schuh, and Hanbing Zhang (2010) they examined the consumer
payment methods with respect to cash holdings and withdrawals which was decreasing since
2010.There was an increase in card payment system with respect to 2009 in the year 2010,
which resulted in less usage of paper currency. Since 2010 there was an increase in usage of
debit and credit card compare to cash transaction which slowly took a decline giving rise to
prepaid payments.
Sanghita Roy, DR. Indrajit Sinha (2014), discussed in their paper that in India there has
been a sudden surge in the usage of digitalised payment. But still there is almost 90%
transactions which are done through paper currency. They had used the TAM (Technology
Acceptance Model) in this study to find out the factors which are strengthening the e-
payment system the factors are innovation, incentives, and legal frame work and
customer convenience.
Dennehy & Sammon (2015) has analysed how in the 21st century the usage of digital
payment has increased over the years. The main focus here was to find out how where will in

the digital payment system in future stand. Many papers have been examined to find out what
are the views regarding the digital payment system. With the passage of time the technology
has been shifting very fast so with the innovation of technology the aim was to make people
familiar with digital payment. The merchants also got a new platform to invest so as to cater
the customers. Data was collected by following empirical method i.e. survey, interviews, etc.
Lastly the study was only focused on Google data base that was a limitation about the study.
Vally & Divya (2018) stated that a study on Digital Payments in India with perspective of
consumers adoption from the objectives of the study was to examine the age of respondents
impact on digital payments, analyse the impact of customers education and customer income
usage of digital payments. The data used for the study was primary drawn from the
convenience sampling. They have collected data through structured questionnaire and they
analysed by using the simple percentage analysis and chi square test have been taken for the
study. The finding of study the effect of adopting digital payments impact on banking sector
by consumer in India. The results gives important policy that our country to increase cashless
payments. The study gives percentage of awareness on maximum utilization of technology
bank should take effective measures in creating awareness towards the effective usage of
technology and security.
Aathira,2020, stated that” an overview on digital payment methods” the objectives of the
study to explore the various digital payment method, analyse the opportunities and
challenging in digital payment system. The study is completed based on secondary data. The
findings of the study are way to future of digital payments because it makes all financial
transactions more transparent and accountable. It is simplest and easier way to make the
transactions money all over the world without time consuming. This should be
awareness among people.
Martina & Selvi , 2017 stated an overview on Digital Payments the objective of the study to
explore the various modes of digital payment transaction that is offered by various financial
institutions, the extent of operations of digital payments while dealing with online
transactions and offer suitable suggestions in handing digital payments as easy and
convenient one. The study is based on secondary data the materials were used books, journal,
newspaper and websites. The finding of the study Government ensure that the operation of
digital payment transaction free from transaction cost which help to customer to purchase, it
could give concession to the retailers, merchants who sell the product and services via digital

mode, training programmes could be organized by the government to train people to use of
digital payments, Government can give continuous media coverage through TV news, radio
or social networking about the benefits of digital payments to the society.
CHAPTER 3
THEORETICAL FRAMEWORK

1.1 INTRODUCTION
Digital payment is a way of payment which is made through digital modes. In digital
payments, payer and payee both use digital modes to send and receive money. It is also called
electronic payment. No hard cash (currency notes) is involved in the digital payments. All the
transactions in digital payments are completed. through online. It is an instant and convenient
way to make payments. currently available digital payment systems include Banking cards,
Digital wallets, Unified Payment Interface (UPI), Unstructured Supplementary Service Data
(USSD), Immediate Payment Service (IMPS), Real Time Gross Settlement (RTGS), National
Electronic Fund Transfer (NEFT), Aadhar Enabled Payment System (AEPS) and Mobile
banking. With recent advances technologies, digital payments is having an impact on our
daily lives and beginning to offer interesting and advantageous new services. According to
RBI Bulletin cashless transaction in India increasing day by day. The statistics in report
shows that in Nov.2016 and Dec. 2016 the total value transaction done using E-Wallet was
50.74 Billion and 97.70 Billion respectively and in Jan. 2017 it is increased up to 108.69
Billion. According to the survey conducted by Cash-Karo India, E-Wallet payment method is
more preferred by customers than other payment methods. The users of Smart phone has
been increased randomly, this has also paved the way for digital transactions. In 2015-2016, a
total of Rs. 4018 billion transacted through mobile banking as compared to Rs. 60 Billion in
2012-2013.An e-commerce payment system (or an electronic payment system) facilitates the
acceptance of electronic payment for offline transfer, also known as a subcomponent of
electronic data interchange (EDI), e-commerce payment systems have become increasingly

popular due to the widespread use of the internet-based shopping and banking. Credit cards
remain the most common forms of payment for e-commerce transactions. As of 2008, in
North America almost 90% of online retail transactions
were made with this payment type. It is difficult for an online retailer to operate
without supporting credit and debit cards due to their widespread use. Online merchants must
comply with stringent rules stipulated by the credit and debit card issuers (e.g. Visa and
Mastercard) in accordance with bank and financial regulation in the countries where the
debit/credit service conducts business. For the vast majority of payment systems accessible
on the public Internet, baseline authentication (of the financial institution on the receiving
end), data integrity, and confidentiality of the electronic information exchanged over the
public network involves obtaining a certificate from an authorized certificate authority (CA)
who provides public-key infrastructure (PKI). Even with transport layer security (TLS) in
place to safeguard the portion of the transaction conducted over public networks—especially
with payment systems—the customer-facing website itself must be coded with great care, so
as not to leak credentials and expose customers to subsequent identity theft. As a part of
Digital India movement, government of India also emphasized on digital payment system. To
give boost and better settlement of digital payment system Government initiated number of
new modes of digital payment under National Payments Corporation of India (NPCI). It is an
umbrella organization for all retail payments system in India. NPCI was set up with the
guidance and support of the Reserve Bank of India (RBI) and Indian Banks’ Association
(IBA) in December 2008 and the Certificate of Commencement of Business was issued in
April 2009. It was aimed to operate for the benefit of all the member banks and their
customers. NPCI has ten promoter banks namely, State Bank of India, Punjab National Bank,
Canara Bank, Bank of Baroda, Union Bank of India, Bank of India, ICICI Bank, HDFC
Bank, Citibank and HSBC. Board for Regulation and Supervision of Payment and Settlement
Systems (BPSS) at its meeting held on September 24, 2009 had given an in-principle
approval to issue authorization to NPCI for operating various retail payment systems in the
country and granted Certificate of Authorization for operation of National Financial Switch
(NFS) ATM Network with effect from October 15, 2009 and it taken over NFS operations on
December 14, 2009. Membership regulations and rules had been framed for enrolling all
banks in the country as members. This was done so that when the nation-wide payment
systems are launched, all would get included on a standardized platform. NPCI took various
initiatives to improve digital payment systems. In this regard it launched various product and

services. Such products are services are Bharat Interface for Money (BHIM), Unified
Payment Interface (UPI), Immediate Payment Services (IMPS), National Automated Clearing
House (NACH), Cheque Truncation System (CTS), Aadhaar Enabled Payment System
(AEPS), Repay, Bharat Bill Payment System (BBPS), Bharat QR (BQR) and National
Electronic Toll Collection (NETC). NACH has implemented for Banks, Financial
Institutions, Corporate and Government a web-Based solution to facilitate interbank, high
volume, electronic transactions which are repetitive and periodic in nature. It can be used for
making bulk transactions towards distribution of subsidies, dividends, interest, salary, pension
etc. and also for bulk transactions towards collection of payments pertaining to telephone,
electricity, water, loans, investments in mutual funds, insurance premium etc.
RuPay is a new card payment scheme that has been conceived to fulfill RBI’s vision to offer
a domestic, open-loop, multilateral system which will allow all Indian banks and financial
institutions in India to participate in electronic payments. AEPS is a bank led model which
allows online interoperable financial inclusion transaction at Pos (MicroATM) through the
Business correspondent of any bank using the Aadhaar authentication. BBPS is a one-stop
payment platform for all bills providing an interoperable and accessible “Anytime
Anywhere” bill payment service to all customers across India with certainty, reliability and
safety of transactions. The payment modes options facilitated under BBPS are Cards (Credit,
Debit and Prepaid), Account transfer, IMPS, Internet banking, UPI, Wallets, AEPS and Cash
also provides instant
confirmation of payment via an SMS or receipt. UPI is a system that powers multiple bank
accounts into a single mobile application (of any participating bank), merging several
banking features, seamless fund routing & merchant payments into one hood. It also caters to
the “Peer to Peer” collect request which can be scheduled and paid as per requirement
and convenience. BHIM is an app that lets you make simple, easy and quick payment
transactions using Unified Payments Interface (UPI). You can make instant bank-to-bank
payments and Pay and collect money using just Mobile number or Virtual Payment Address
(VPA). *99# service works on Unstructured Supplementary Service Data (USSD) channel
launched by the Honorable Prime Minister of India Shri Narendra Modi on 28th August 2014
as part of Pradhan Mantri Jan DhanYojana (PMJDY). Bharat Interface for Money (BHIM)
is an app that lets you make simple, easy and quick payment transactions using Unified
Payments Interface (UPI). You can easily make direct bank to bank payments instantly and
collect money using just Mobile number or Payment address. Bharat Interface for Money

(BHIM) is an initiat to enable fast, secure, reliable cashless payments through your mobile
phone. BHIM is based on Unified Payment Interface (UPI) to facilitate e-payments directly
through bank. It is interoperable with other Unified Payment Interface (UPI) applications,
and bank accounts. Unified Payment Interface (UPI) is an instant payment system built over
the IMPS infrastructure and allows you to instantly transfer money between any two parties'
bank accounts. BHIM is developed by the National Payment Corporation of India (NPCT).
You can send money using the BHIM Money app from your UPI enabled bank account. If
your beneficiary's bank account is also linked to UPI, you can simply use their mobile
number or Payment Address to transfer. If not, you can use IFSC code, Bank account or
MMID, Mobile number to send money. Once you complete a transaction, you should see a
success status on the Bharat Interface for Money screen and receive an SMS from your bank.
Banking customers can avail this service by dialing *99# and transact through an interactive
menu displayed on the mobile screen. Key services offered under this service include,
interbank account to account fund transfer, balance enquiry, mini statement besides host of
other services. BQR is Person to Merchant (P2M) Mobile payment solution. Merchants need
to display QR codes in their premises. User can scan these QR via BQR enabled mobile
banking app and pay using Card linked account / VPA / IFSC + Account / Aadhaar. NETC is
national wide cashless payments of toll fee with nationwide inter-operable network Thus, all
these product and services are great initiatives of government towards development of digital
payment system in India. Following literature study help me in better understanding of
current state of annotations in digital payment system in India. Despite widespread use in
North America, there are still many countries such as China and India that have some
problems to overcome in regard to credit card security. Increased security measures include
use of the card verification number (CVN) which detects fraud by comparing the verification
number printed on the signature strip on the back of the card with the information on file with
the cardholder's issuing bank. There are companies that specialize in financial transaction
over the Internet, such as Stripe for credit cards processing, Smart pay for direct online bank
payments and PayPal for alternative payment methods at checkout. Many of the mediaries
permit consumers to establish an account quickly, and to transfer funds between their on-line
accounts and traditional bank accounts, typically via automated clearing house (ACH)
transactions. The growth of Information and Communication Technology has bought a lot of
changes in the lifestyle of the people . ICT and digitalization has bought great advancements
if fields of finance, marketing, economics operation, etc. (Slozko & Pelo, 2015).In the period
of Digital innovation and ICT there have been a lot of changes in the world where business

transactions have shifted from cash to digital once. (Muhamad, Haroon, & Najiran,
2009).The arrival of development in technology in the worldwide business environment had
challenged almost all organizations to shift from traditional paper currency to digital payment
platforms which is commonly known as digital payment or e-payment system. Digital
payment can be defined as platform which is used for making monetary transaction for
various goods or services purchased over the internet. (Roy & Sinha, 2014). With the
introduction of Digital payment system the payment system in the world had to shift its
method of payment to align with the current or latest payment technology for individuals,
organizations, businesses, government, etc.(Odi & Richard, 2013). The digitization has
forced to change the payment system around the world from paper, coins , people stated to
shift towards the digital payment system as it was very fast, convenient, and beneficial for
individuals, organization (Premchand& Choudhury,2015). Digital or E-Payments are very
important mode of payments used by the population which is a very secured, fast and
convenient mode of making any payment using the internet and it is also an opening for an
economy to grow and excel its technological advancement in the world economy (Slozko &
Pelo,2015).Further adding to it at has become a great facilitator to the e-commerce as they are
heavily dependent on digital payment. Digital payment not only provides the e-commerce or
e-business with advance money but it brings in efficiency, reduced cheat activities and Its
adding on to the new innovation in the payment system across the globe (Oladeji,2014).
Furthermore, digital payment system engages many digital or e-payment system which many
financial institutions are able to provide easy services to their customers such as debit cards,
credit cards, net banking, etc.(Premchand&Choudhury,2015). The rise of this mode of
payment system is having a great increment in adoption in today’s time (Balogun,2012). As
there is so much of convenience and benefits associated with digital payment, there is still a a
lot of concern about the security that the ICT knows and they are working to resolve this fear
of security which is the only concern about this payment system mong all users and experts
(Khairun & Yasmin,2010). The PM Narendra Modi started a mission Digital India in 2017 for
removing hidden money and black money from the country. The digital payment system is a
part of the mission from this cashless transaction will made all over the India and the progress
black money or money laundering can be reduce. It is also important that development of
techniques influences the traditional system and there also have to face some problems while
newly adaption. In India ICICI bank stated the online banking services and Digi bank is also
ahead in digitalization of transaction digital services provides to customer. SBI is a public
sector bank which is enriched of digitalization. In 2011 SBI launched green Channel to

promote digital system and save environment. The traditional system is replacing by the
digital system. The traditional payment systems are Cheques , withdrawals, drafts, money
orders, letters of credits, travel cheques etc. why Payment systems also turning into electronic
payment system using computer and internet there are several reasons of adaption . The most
common reason is that the traditional system has some leakages and inefficiency and that’s
overcome by the digital payment system. But in India digital system is in emerging trend and
not so popular and generalized. Today India is using most common electronic payment
systems include Debit Cards, Credit Cards, but the use of Electronic Fund Transfer, Internet
Banking, Unified Payment System (UPI), e-commerce payment system, internet banking, and
*99# USSD based payment system etc are not in popular use. Therefore, it is important to
know the problems of digital payment system and its progress in India.
Banking and Financial Sector has undergone many changes and improvements in the last
few years and is in a constant state of development. Digitalization has brought the banking
industry new business models, development concepts and areas of improvements, from
internet banking to monetary transactions. These New implementations to the Financial
Sector require the employees as well as the customers to be aware of the rapidly changing
banking environment and the overall state of change in the financial sector. Now,
digitalization and change management are one of the major turbulences that are changing the
banking business forever and with bad management, the results can be long-lasting. (Ref.
Digitalization of the financial sector and change management by Lauri Piirainen) During the
next decades, banking and financial sectors are developing faster than ever and therefore
changmanagement and digitalization are at a key position on how to gain market advantage
against rivalling banks. The digital revolution is taking the world by storm and no other area
has witnessed a metamorphosis as has been seen in the payment and settlement arena,
resulting in a myriad of payment options for the consumer. In the last 10 years, India has
witnessed an exponential growth in payment systems and a significant shift in payment
preference. 1.9 The shift in payment preference in the last 10 years is evidenced by the fact
that the volume of paper clearing, which comprised of 60% of total retail payments in the
financial year (FY) 2010-11, shrunk to 3% in the FY 2019-20. This striking shift in payment
preference has been due to the creation of robust electronic payment systems such as RTGS,
NEFT and ECS that has facilitated seamless real time or near real time fund transfers. In
addition, this decade has witnessed introduction of innovative payment systems that provide
instant credit to the beneficiary, with the launch of fast payment systems such as IMPS and

UPI that are available to consumers round the clock for undertaking fund transfers, and
introduction of mobile based payment systems such as Bharat Bill Payment System (BBPS),
PPIs to facilitate payment of bills and purchase of goods and services and National Electronic
Toll Collection (NETC) to facilitate electronic toll payments. The convenience of these
payment systems ensured rapid acceptance as they provided consumers an alternative to the
use of cash and paper for making payments. longer time. In case you have not received your
confirmation within an hour please contact our customer support at your bank. This
transaction will remain pending until the payment is received. You will be notified when the
money is transferred to you. Under the Referral bonus scheme both the existing user who
refers BHIM and the new user who adopts BHIM would get a cash bonus credited directly to
their account Hence, the bonus will be paid to both the refernd the new user of BHIM
(referee) and the referral will be considered successful only after three successful financial
transactions (to any valid UPI user “valid receiver”). The need for payments and settlements
is as old as the need for goods and services. The earliest known Payment and Settlement
System (PSS) was the barter system facilitating exchange through goods and / or services.
With the concept of money, people progressed to settling their economic transactions using
currency notes and coins. The evolution of the banking system and advent of bank accounts
led to an easy and safe method for making payments by transfer of money through bank
accounts. This transaction required a payment instrument, and cheque emerged as the primary
instrument for payment transactions. Thus, started the tale of payment systems. An efficient
payment system promotes market efficiency and reduces the cost of exchanging goods and
services. By the same token, its failure can result in loss of confidence in the financial system
and in the very use of money
 DEFINATION
In the past 20 years there has been an evolution of the digital payment which started to
get slow attraction from users, researchers as it was bringing change in the modern e-
commerce. As it was getting attraction the researcher’s started to define it in various ways
it focused on various fields namely business, IT, accounts & finance. According to Briggs
and Brooks (2011) digital payment is a form of payment which is supported by banks and
inter connected between individuals and banks for making monetary transaction digitally.
Peter and Babatunde(2012) saw digital payment as a mode of payment ,transaction or
transfer of money with the help of internet.

In the same context Adeoti and Osotimehin (2012) referred digital payment as an way of
making payment online or in any particular place using the digital mean. Kaur and
Pathak(2015) suggested that digital payments are payments which are done for e-
commerce purpose where money is exchanged through digital mode. Going by the above
definition we can conclude that digital payment is a mode of payment which involves
various digital platforms or application to make transaction, using digital means.
In Today's Technology savvy customer base, it is very important for Banks to adapt the
latest technology, such that banks can catch up with the pace with which customer
preferences changes. Adaption of newer technology is also critical to challenge
competitor banks and other institutions in offering products and services in the market
place. (Ref. Indian Banking sector in transition). Also with the New age of Digitalization
in the banking sector, the daily operations. are becoming faster, economical, and easier for
customers to use and therefore every bank is grasping to adjust their own operations to fit
the needs of a demanding customer.
3.2 DIGITAL PAYMENT
Digital payments are transactions that take place via digital or online modes,
with no physical exchange of money involved. This means that both parties, the payer
and the payee, use electronic mediums to exchange money.
The Government of India has been undertaking several measures to promote and
encourage digital payments in the country. As part of the ‘Digital India’ campaign, the
government has an aim to create a ‘digitally empowered’ economy that is ‘Faceless,
Paperless, Cashless’. There are various types and methods of digital payments.
Please note that digital payments can take place on the internet as well as on physical
premises. For example, if you buy something from Amazon and pay for it via UPI, it
qualifies as a digital payment. Similarly, if you purchase something from your local
Kirana store and choose to pay via UPI instead of handing over cash, that also is a
digital payment.
3.3 METHODS OF DIGITAL PAYMENT SYSTEM

1. Plastic Cards- These are cards issued by banks to their account holder,
by using it they can withdraw money from any ATM by using their
password. These cards are used for depositing money in banks to so that
there is less wastage of paper. There are two type of cards issued by
banks i.e. debit and credit card. Debit cards are issued to all account
holders whereas credit cards are issued to the once according to
their interests.
2. UPI -Unified Payment Interface is a payment mode this is used to make
fund transfers through the mobile app. One can transfer funds
between two accounts using UPI apps. One should have a registered
mobile banking facility to use UPI apps Currently, this service is only
available for android phone users.
3. Mobile Wallet - It’s the other way of storing or keeping digital cash and
using it for various transactions. A person can download any mobile
wallets namely Paytm, GPay, Phone pay, SBI buddy, Jio money, etc. They
just need to link their bank account or their plastics cards number to use
the amount required and which is further used for making payments,
paying bills etc.
4. Internet banking - There are various types of internet banking which
are
NEFT (National Electronic Fund Transfer), RTGS (Real Time Gross
Settlement), ECS (Electronic Clearing System), IMPS (Immediate
Payment Service) These are e-banking system which allows individual or
organisations to make transfers using the website of their banks.
5. Mobile banking - It is provided by all banks to their customers where
the customers need to download the application of the bank and they
cause it for making transactions. For using such application on should
have a smartphone. There are many more types of digital payment
available in our country and across the globe we have talked about

a few which are known to people.
3.4 THE BENEFITS OF DIGITAL PAYMENT SYSTEM
In a country like India, where disparities are sometimes poles apart,
ensuring financial equality becomes an issue of prime importance. One of
the reasons why our government started vocalizing Cashless Economy
and Digital India was to improve access to financial resources. There are
multiple benefits that digital payments bring to the table.
1. Ease and convenience
One of the most significant advantages of digital payment is the seamless
they provide easy to customers. Reduced dependency on cash, fast
transfer speed, and the ease of transacting makes online payments a
preferred option. Traditional payment methods like cash and cheques add
to factors like risk, steps, and physical presence. With digital payment,
you can send and receive funds from anywhere in the world at the click of
a button.
2. Economic progress
Customers transact more online when they see the ease, convenience, and
security of online payments. This means that more and more people feel
comfortable buying online, investing digitally, and transferring funds via
electronic mediums. The increase in money movement and online business
contributes to the progress of the economy. This is why online ventures are
being launched every day and even more are making profits daily.
3. Safety and efficient tracking
Handling and dealing in cash is a cumbersome and tedious task. Along with
the risk of losing money, there is the hassle of carrying cash everywhere
you go and keeping it safe. With digital payments, one can keep their funds
secured in online format effortlessly. Nowadays, your mobile phone alone
is enough to make and receive payments – thanks to UPI, net banking, and

mobile wallets. Additionally, most digital payment channels provide regular
updates, notifications, and statements for a customer to track his funds.
4. Increased transparency in government system
Earlier cash payments were subject to “leakage” (payments that do not
reach the recipient in full) and “ghost” (fake) recipients, particularly in the
context of social security benefits by government transfers. Now, benefits
are directly transferred to target beneficiary (direct benefit transfer) account
through digital modes of payments.
5. Improved speed and timely delivery
In contrast to a cash payment that travels at the speed of its carrier, digital
payments can be virtually instantaneous, regardless of whether the sender
and receiver are in the same town, district or country.
3.5 DISADVANTAGES OF DIGITAL PAYMENT SYSTEM
Digital payment systems have several disadvantages, including:
1 Security
Digital payments are susceptible to cyber threats, data breaches, and
identity theft.
2 Technical issues
Technical glitches, software bugs, or compatibility issues can cause
transaction failures or errors.
3 Transaction fees
Some payment methods charge transaction fees, especially for high-value
or high-frequency transactions.
4 Dependency on technology
Digital payments rely on the internet and electronic devices, which can be
disrupted by power outages, network failures, or system downtimes.

5 Privacy
Digital payments collect and store large amounts of personal and
financial data, which can be mishandled and lead to reputational damage.
6 Resistance to change
Some people, especially older demographics, may be reluctant to switch
from cash-based transactions.
7 Technological illiteracy
Many people, especially the older generation, may not be familiar with
technology and smartphones, and may be afraid of using online payment
methods.
8 Limitations on amount and time
Some banks limit the number of transactions or the maximum amount
that can be transferred in a day.
9 Service fees
Some services may charge setup costs or processing fees for customers
using online payment gateways.
10 Limited consumer protection
Virtual payments may offer limited consumer protection.

CHAPTER 3
DATAANALYSIS AND INTERRTATION

Table no. 4.1
Gender wise classification
Particulars No of respondents percentages
Male 42 84%
Female 8 16%
Transgender 0 0%
Total 50 100
Source: questionnaire
Chart no 4.1
Gender wise classification

Male Female Transgender
0%
10%
20%
30%
40%
50%
60%
70%
80%
90% 84%
16%
0%
Interpretation
The above table and chart shows gender wise classification. 84% of the business
persons were male and 16% the business persons were female and 0% were
transgender. This means the males are conducted in business activity.
Table no 4.2
Age wise classification
Particulars No of respondents Percentages
Below 30 16 32%
Between 31-40 23 46%
Above 40 11 22%
total 50 100%
Chart no 4.2
Age wise classification

32%
46%
22%
Chart Title
Below 30 Between 31-40 Above 40
Interpretation
The above table and chart show age wise classification. 32% of the respondents
were below the age of 30, 46% of respondents were between the age of 31-40
and 22% of the respondents were above 40. It means above 30 age group
peoples are conducted business.
Table no 4.3
Educational qualification
Primary 0 0%
Secondary 5 10%
Graduate 22 44%
Post graduate 9 18%
Professional degree 14 28%
Total 50 100%
Chart no 4.3

Educational qualification
Primary Secondary Graduate Post graduate Professional
degree
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0%
10%
44%
18%
28%
Interpretation
The table states that majority of the respondents are post Graduates (18%) ,28% of the were
professional degree, 44% of the respondents are graduated and 10% were secondary. There is
no respondents in primary level education.
Table no 4.4
Type of business operate
Retail 24 48%
Real estate 6 12%
Hotel 11 22%
Others 9 18%
Total 50 100%
Chart no 4.4
Type of business operate

Retail Real estate hotel others
0%
10%
20%
30%
40%
50%
60%
48%
12%
22%
18%
Interpretation
Table no 4.5
Year of conducting business
Less than 1 year 8 16%
1-5 years 25 50%
5-10 years 10 20%
More than 10 years 7 14%
Total 50 100%
Chart no 4.5
Year of conducting business

Less than 1 year 1-5 years 5-10 years More than 10 years
0%
10%
20%
30%
40%
50%
60%
16%
50%
20%
14%
Interpretation
Table no 4.6
Do you use digital payment system
Yes 50 100%
No - -
Total 50 100%
Chart no 4.5
Do you use digital payment system

100%
Yes No
Interpretation
All respondents are using digital payment system.
Table no 4.7
Which digital payment do you prefer
Credit /Debit card 16 8%
Bank transfer 8 4%
Mobile wallets 56 28%
QR code payment 7 14%
Others 3 6%
Total 50 100%
Chart no 4.7
Which digital payment do you prefer

Credit /Debit
card
Bank transfer Mobile wallets QR code
payment
Others
0%
10%
20%
30%
40%
50%
60%
16%
8%
56%
14%
6%
Chart Title
Interpretation
56% of people are using mobile wallets as a Digital Payment method, 18% of people are
using Credit/Debit card as a digital payment method, 8% of people are using Bank Transfer
as a digital payment method.14% of people are using QR code as a
digital Payment method,6% of people are using other modes as a digital payment system
Table no 4.8
How long you using digital payment system
Less than 1 year 2 4%
1-2 years 8 16%
2-5 years 11 22%
More than 5 years 29 58%
Total 50 100%
Chart no 4.8

How long you using digital payment system
Less than 1 year 1-2 years 2-5 years More than 5 years
0%
10%
20%
30%
40%
50%
60%
70%
4%
16%
22%
58%
Chart Title
Interpretation
Table no 4.9
Do you think that digital payments are safe enough
Yes 34 68%
No 16 32%
Total 50 100%
Chart no 4.9
Do you think that digital payments are safe enough

68%
32%
Yes No
Interpretation
68% people things that Digital payments are safe, 32% people things that
Digital Payments are unsafe.
Table no 4.10
Percentage of transactions are digital payment system
Less than 20% 1 2%
20%-50% 7 14%
50%-80% 26 52%
More than 80% 16 32%
Total 50 100%

Chart no 4.10
Percentage of transactions are digital payment system
Less than 20% 20%-50% 50%-80% More than 80% Total
0%
10%
20%
30%
40%
50%
60%
2%
14%
52%
32%
Chart Title
Table no 4.11
Reason for adopting digital payment system
Convenience 18 36%
Security 5 10%
Customer demand 11 22%
Competition 7 14%
Covid-19 pandemic 6 12%
Others 3 6%
Total 50 100%

Chart no 4.11
Reason for adopting digital payment system
Convenience Security Customer
demand
Competition Covid-19
pandemic
Others
0
5
10
15
20
25
30
35
40
36
10
22
14
12
6
Chart Title
Interpretation
Table no 4.12
Digital payment adoption increased your revenue
Neutral 14 28%
Agree 27 54%
Strongly Agree 4 8%
Dis Agree 3 6%
Strongly Disagree 2 4%
Total 50 100%

Chart no 4.12
Digital payment adoption increased your revenue
Neutral Agree Strongly Agree Dis Agree Strongly
Disagree
0
10
20
30
40
50
60
28
54
8
6
4
Series1 Series2
Interpretation
Table no 4.13
Digital payment adoption affected your sales volume
Increase significantly 44 88
No impact 4 8
Decrease 2 4
Total 50 100
Chart no 4.13
Digital payment adoption affected your sales volume

Increase significantly No impact Decrease
0
10
20
30
40
50
60
70
80
90
Series1 Series2
Interpretation
Table no 4.14
Challenges you have faced
Technical issues 36 72%
Security problem 6 12%
Limited customer adopting 1 2%
Others 7 14%
Total 50 100%
Chart no 4.14

Challenges you have faced
Technical issues Security problem Limited customer
adopting
Others
0
10
20
30
40
50
60
70
80
Series1 Series2
Interpretation
72% People think that technical issue is the one of the challenges when using digital
payment for online transaction,12%People think that security problem is one of the
issue or challenge when using digital payment for online transaction,2% People think
that limited customer adopting is one of the issue or challenge when using digital
payment for online transaction,14% people think that other problems such as lack of
awareness.
Table no 4.15
Benefits of digital payment adoption
Increases sales 22 44%
Improve customer satisfaction 15 30%
Reduce transaction cost 6 12%
Simplified accounting 4 8%
Others 3 6%
Total 50 100%

Chart no 4.15
Benefits of digital payment adoption
Increases sales Improve
customer
satisfaction
Reduce
transaction cost
Simplified
accounting
Others
0
5
10
15
20
25
30
35
40
45
50
44
30
12
8 6
Interpretation
Table no 4.16
Satisfaction level of customers
Very much 23 48%
Some what 14 30%
Neutral 8 16%
Slightly negative 2 4%
Very negative 1 2%
Total 50 100%
Chart no 4.16

Satisfaction level of customers
Very much Some what Neutral Slightly negative Very negative
0
10
20
30
40
50
60
48
30
16
4
2
Interpretation
Table no 4.17
Digital payments affected the frequency of repeat customers
Increased repeat customers 27 72
Degrease repeat customers - -
No impact 14 28
Total
Chart no 4.17
Digital payments affected the frequency of repeat customers

72
28
Chart Title
Increased repeat customers Degrease repeat customers No impact
Interpretation
Table no 4.18
Do you feel digital payment as convenient mode than cash payment
Yes 46 92%
No 4 8%
Total 50 100%
Chart no 4.18
Do you feel digital payment as convenient mode than cash payment

92
8
Chart Title
Yes No
Interpretation
92%People think that Digital payments as convenient mode than cash payment, 8% People
think that Digital payments not convenient mode than cash payment.
Table no 4.19
Do you plan to expand digital payment in future
Yes 45 90%
No 5 10%
Total 50 100%
Chart no 4.19

Do you plan to expand digital payment in future
90
10
Yes No
Interpretation

CHAPTER 4
FINDINGS, SYGGESTIONS AND CONCLUSION
FINDINGS

SUGGESTION
 Government can ensure to the public that the operation of digital payment
transaction is free from transactions cost which in turn helps the customers
of various transaction to purchase via online mode.
 Training Programmes could be organised by the government to train all the
people to make use of the digital payments.
 Government can give continuous media coverage through TV news/ shows,
Radio or social networking or newspapers/magazines about the benefits of
digital payments to the society and for the individual
 Customers must be able to comply with the terms and conditions of Digital
payment methods, notify the issuer of the loss/theft of the Electronic

Payment Instrument (EPI) immediately and keep track on the balance,
especially after Each transaction
 Offer responsive and accessible customer support channels to assist users
promptly in case of any issues or queries related to digital payments.
CONCLUSION
The move towards cashless economy is definitely a good one but it will take
much time to have a completely cashless economy. The efforts are going well
by the government as well as the private sector companies having their e-wallets
apps such as Paytm, Phone Pe etc. The biggest challenge in front of government
is the lack of knowledge and awareness among people and fear of loss of money
by use of digital payment methods risk of hacking. The government needs to
tackle these challenges to have cashless economy and to give a boost to digital
payments to provide sustainable economic development to the country in the
long run. In future the digital payments are going to be a must and so the change
in the habits of the people to accept the digital payment is also must. The

cashless transition is not only safer than the cash transaction but is less time
consuming. It also helps in record of the all the transaction done. India has more
than 100 crore active mobile connections and more than 22 crore smart phone
users as of March 2016. This number is going to increase further with a faster
internet speed. The reach of mobile network, Internet and electricity is also
expanding Digital payments to remote areas. So, it is without doubt said that
future transaction system is cashless transaction. India is the global leader in
digital payments, with 89.5 million transactions in 2022. This includes 46% of
all global instant payment transactions through the Unified Payments Interface
(UPI) in 2022, with over 300 million monthly active users as of November
2022. This year, 91 billion digital payment transactions have been recorded and
today India ranks first in the number of digital payments made globally.
QUESTIONNIARE
I AM ANUSREE V P, conducting a survey on " A STUDY ON THE IMPACT
OF DIGHITAL PAYMENT SYSTEM IN SMALL BUSINESS" The survey is a
part of my partial fulfilment of B. ED course please provide relevant
information by filling this questionnaire to make my survey more
comprehensive. All details from your part will be kept confidential.
1.Name
2.Age
a) Below 30

b) Between 30-40
c) Above 40
3.Eduational qualification
a) Primary
b) Secondary
c) Graduate
d) Post graduate
e) Professional degree
5.What type of business do you operate?
a) Retail
b) Real estate
c) Restaurant
d) Others
6.How many years has your business been in operation?
a) Less than 1 year
b) 1-5 years
c) 5-10 years
d) More than 10 years
7.Do you currently accept /use digital payment in your business?
a) Yes
b) No
8.If yes, which digital payment method do you accept?
a) Credit/Debit card
b) Bank transfer

c) Mobile wallets (Paytm, google pay)
d) QR code payment
e) Other
9.How long you been using digital payments?
a) Less than 1 year
b) 1-2 years
c) 2-5 years
d) More than 5 years
10.What percentage of your transaction are digital payment?
a) Less than 20%
b) 20% -50%
c) 50% -80%
d) More than 80%
11.What was your primary reason for adopting digital payment
a) Convenience
b) Customer demand
c) Security
d) Competition
e) Covid-19 pandemic
f) Other
12.Do you think that digital payment are safe enough?
a) No
b) Yes
13.Has digital payment adoption increased your revenue?

a) Natural
b) Agree
c) Strongly agree
d) Dis agree
e) Strongly dis agree
14.Has adopting digital payments affected your sales volume?
a) Increase significantly
b) No impact
c) Decrease
15.What challenges have you faced with digital payment?
a) Technical issues
b) Security problem
c) Limited customer adopting
d) Other
16.What benefits have you experienced since adopting digital payment?
a) Increased sales
b) Improving customer satisfaction
c) Reduce -transaction cost
d) Simplified accounting
e) Other
17.How much has digital payment improved customer satisfaction?
a) Very much
b) Some what
c) Neutral
d) slightly negative
e) Very negative

18.Have digital payments affected the frequency of repeat customers?
a) Increased repeat customers
b) No impact
c) Decreased repeat customer
19.Adoption of digital payment increased customer satisfaction?
a) Significantly improved
b) Moderately improved
c) No change
20.Do you plan to expand the use of digital payment in the future?
a) Yes
b) No
c) Unsure
RFERENCE
1.https://securionpay.com/blog/e-payment-system/
2.https://www.bankbazaar.com/ifsc/digital-payment.html
3.https://www.fisglobal.com/solutions/payment-solutions/digital-payments
4.https://www.ibm.com/support/knowledgecenter/de/SSZLC2_7.0.0/com.ibm.comm
erce.payments.events.doc/concepts/cpparchitecture.htm
5.https://bijlipay.co.in/blog/security-digital-payments
6.https://www.researchgate.net/publication/2613979_SWAPEROO_A_Simple_Walle
t_Architecture_for_Payments_Exchanges_Refunds_and_Other_Operations
7.http://www.bkash.com/
8.http://www.surecashbd.com.

9.https://www.ucash.com.bd/
10.https://www.dutchbanglabank.com/rocket/balance-inquiry.html

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