As more and more people in India embrace digital and cashless payments, they are using the Unified Payments Interface (UPI) to purchase not only daily essentials but also expensive home appliances, high-end gadgets, and designer clothing. However, experts warn that the seamless and quick digital transaction process via UPI may lead people to overspend on items they may not need. The convenience of UPI/QR code payments via smartphones has been the driving force behind this trend.
According to a recent survey by IIIT Delhi, nearly 74 per cent of people in the country are ‘overspending’ as a result of using UPI and other digital payment methods.
"The convenience and ease of digital transactions through UPI, in comparison to cash, may indeed lead to lower awareness of spending, as transactions are seamless and reduce the tangible feel of money leaving one's possession," Prabhu Ram, Head, Industry Intelligence Group at market intelligence firm CMR, told IANS.
According to the latest data from the National Payments Corporation of India (NPCI), the number of transactions made through the Unified Payments Interface (UPI) reached 1,330 crore in April. This represents a 50 percent increase in UPI transactions on a year-on-year basis. Last year, UPI transactions increased by almost 60 percent, reaching a record 11,768 crore. Ramesh Narasimhan, Chief Executive Officer-India, Worldline, stated that UPI continues to lead by a wide margin, driven by significant growth in mobile transactions.
"This trend underscores users' growing confidence and familiarity with smartphone-based payment methods," Narasimhan added.
The average ticket size (ATS) of UPI transactions has decreased by 8%, from Rs 1,648 to Rs 1,515. Experts suggest that consumer spending in India is increasing, with people buying cars, smartphones, TVs and other items, which is contributing to the country's economic growth. However, this trend has also led to some people overspending on expensive items, due to UPI. A recent report by Nielsen Media India, on behalf of Amazon India, indicates that digital payment methods are becoming more popular in the country, with 42% of consumers stating that they will use UPI for online festive shopping.
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Inputs from IANS
