The research paper aims to delve into the awareness, preferences, and challenges surrounding digital transactions among rural communities in Bangalore, while also examining the hurdles faced by rural residents in embracing digital payments.

1. Kristu Jayanti College Effectiveness of Digital Payments in Rural Bangalore
“EFFECTIVENESS OF DIGITAL PAYMENTS IN RURAL BANGALORE”
By
Ayesha Ali (21BBAA16)
Rachel Zuannah Lobo (21BBAA55)
Under the guidance of
Prof. Geethu Anna Mathew
Department of Management
Kristu Jayanti College
Abstract:
Rural India has a major impact on the economic development of the country. Cashless economy
is the main mantra in digital reforms and has completely transformed how consumers make
payments. Digital payments provide a convenient way to transact money using methods like
debit/credit cards, internet banking, mobile wallets, UPI, etc. However, while digital payments
offer numerous benefits, rural areas face challenges like internet connectivity and technical
support. Digital India is the government’s dream project to restructure India which was launched
on 1st
July 2015 by Prime Minister Narendra Modi. This study focuses on understanding how
consumers in rural areas, specifically in Kuvempu Nagar and Singapura district, perceive and use
digital payment methods.
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2. Kristu Jayanti College Effectiveness of Digital Payments in Rural Bangalore
Introduction:
The Digital India program is the result of many innovations and technological advances which
will bring about new developments in all sectors and produce a new system for the next
generation. The motivation for this concept is to create a participatory, transparent and
responsive system Digital India has three main components. These include: Digital infrastructure
development, digital service delivery and digital learning.
Digitalization and Rural India
In India 70% of the population live in rural areas and they contribute a major part in the growth
of the Indian economy. Earlier in urban areas the technology is very much more developed than
rural areas. The rural areas lag behind those of urban areas in the use of the technology; they do
not use the technologies in their works. Nowadays Literacy level of rural people is also
increasing at the same time they use the latest technology, modern gadgets, internet facilities etc.
The necessity for increasing the trends of digital payment system models in rural India is very
important considering the benefits like transparency in each transaction. Transformation towards
digital payment system in the rural economy is empowered. This study is mainly focused on
digital payment system adoption in the rural area of Kuvempu Nagar and Singapura district.
Digitalization and Demonetization
In the past, Indian businesses relied on cash transactions. However, since the Central
Government's demonetization in 2016, businesses have been transitioning to digital payments.
Many people now use apps like Paytm, PhonePe and Google Pay, as well as bank apps to pay
their bills. To encourage digital payments, e-wallet companies offer incentives like cashback and
discounts on products. The Indian government is also actively promoting digital payments
through apps like BHIM. As a result, cash transactions are becoming less significant, and
technology now plays a crucial role in business activities.
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3. Kristu Jayanti College Effectiveness of Digital Payments in Rural Bangalore
Statement of the Problem:
In India 70% of the population resides in rural regions whereas in Bangalore 23-25% of the
people live in rural areas. They predominantly rely on cash transactions despite the increasing
popularity of digital payments.
Digital India Drive is the Indian Government's dream project to restructure India which was
launched on 1st July 2015 by Prime Minister Narendra Modi.
This is study seeks to focus on a variety of factors affecting the adoption of digital payment
systems in rural areas of Bangalore.
Objectives of the study:
•To study the awareness level of rural people regarding digital payment
•To study the opinion and preference of rural people for cashless transactions
•To analyse how digital transactions are better than cash transactions
• To find out the challenges and benefits of going cashless faced by rural people
Literature Review:
1. Dr. K. A. Rajanna (2018): “A cashless economy is a situation in which the financial
transactions are made by digital currencies. In India, too much of transactions are made
through cash. Less than 5% of total payments happen through electronically. Financial
literacy and awareness about cashless transactions is paramount in India. Banks and
financial institutions offering discounts on purchases with credit/debit cards and online
wallets offering attractive deals for payments have made Indians comfortable with
paperless transactions”
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4. Kristu Jayanti College Effectiveness of Digital Payments in Rural Bangalore
2. Ashish Bagla (2018), made a study on “A study on the future of Digital Payments in
India” by taking a sample of 110 respondents. This paper tries to identify the reasons for
adoption of digital payments by people in India and it also tries to find out the problems
faced by people in making digital payments. This study has found that 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 and risk of hacking.
3. Dr. Venkateswararao Podile and P. Rajesh (2017) “After demonetization initiatives, most
of the people in India started electronic payments for their transaction. Slowly India is
moving from cash to cashless economy. A cashless economy is one in which all the
transactions are done using cards or digital means”
Different Modes of Digital Payment:
1. Banking Cards: Banking cards are the most widely used digital payment system in India. It
offers a great set of features that provides convenience as well as security to the users. Cards
offer the flexibility of making other types of digital payments. Customers can store card
information in the mobile application and pay for the services using the stored card information.
Banking cards (debit and credit cards) can be used for a variety of digital transactions like PoS
terminals, online transactions, as a payment medium in mobile apps, which provide any kind of
service like grocery, healthcare, rental cab booking, flight tickets, etc. The most popular cards are
issued by service providers like VISA, MASTERCARD, RuPay, AMEX etc.
2. AEPS (Aadhaar enabled payment system): AEPS can be used for all the following banking
transactions such as balance enquiries, cash withdrawal, cash deposit, aadhaar to aadhaar fund
transfers. All such transactions are carried out through a banking correspondent which is based
on Aadhaar verification. This service can be availed if the aadhaar is registered with the bank
where an individual has a bank account.
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5. Kristu Jayanti College Effectiveness of Digital Payments in Rural Bangalore
3. UPI (Unified Payment Interface): UPI is the latest digital payment standards where the user
having a bank account can transfer money to any other bank account using UPI based app. UPI
enabled payments occur throughout the day and all 365 days in a year. Payment can be done
using a Virtual Payment Address (VPA). To use UPI services, one must have a bank account and
a mobile number registered with that bank account.
4. Mobile Wallets: Mobile wallets are another popular payment option. Here the users can add
money to their virtual wallet using debit or credit cards and use the money added in the wallet to
perform digital transactions. Some of the most popular mobile wallets are Paytm, Mobikwik,
PhonePe, etc.
5. Point of Sale Terminals: PoS terminals are installed in shops or stores where payments for
purchases can be done through debit and credit cards. There are variations of PoS, one which can
be Physical PoS and the other one is mobile PoS. The mobile PoS does away with the need of
maintaining a physical device.
6. Mobile Banking: Mobile banking is a service provided by the banks through their mobile apps
in a smartphone for performing transactions digitally. The scope of mobile banking has expanded
extensively after the introduction of UPI and mobile wallets. Mobile banking is a term used to
describe a variety of services that are availed using mobile/smartphones.
7. Internet Banking: Internet banking is the process of performing banking transactions from the
comfort of your home using a mobile phone/laptop/ desktop and an active internet connection.
The major type of transactions can all be done using internet banking. Internet banking services
can be availed round the clock and all 365 days in a year, which makes it a popular choice for
performing digital transactions.
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6. Kristu Jayanti College Effectiveness of Digital Payments in Rural Bangalore
Digital Payment in Rural Bangalore:
More than half a million volunteers helping job seekers in different Rural areas schemes now
have a new target: To enroll people and shops in e-economy and train them in cashless
transactions. And despite an incentive of Rs 100 for making each village shop accept any form of
digital payment, volunteers across India are facing a daunting task. So far, just 55,000 merchants
have gone digital and 2.5 million Rural areas Indians enrolled in cashless transactions after the
government recalled Rs 1,000 and Rs 500 notes on November 8. The National Payment
Corporation of India (NPCI), to ease formats of two payment systems
USSD and UPI. In villages, people prefer fingerprints over other security features and it will help
in higher rates of enrolment. But even the rural areas development ministry’s own set-up for
cashless economy needs major improvements. Out of the 1.1 million active workers of the
Centre’s Rural areas job scheme Mahatma Gandhi National Rural Areas Employment Guarantee
Scheme just 34% have an Aadhaar-linked bank account. Now, the rural areas ministry has set an
ambitious target to get Aadhaar-linked bank account in another 35 million job accounts. But
mere enrolment will not be enough, as opportunities to transact cashless is still limited. In a
review meeting, the Kant panel found that out of 160,000 ration shops in the country, only 35%
had machines to identify biometrics of MGNREGA workers. But there is a massive interest
among people, particularly the rural areas youth, to adopt new ways to go cashless.
Rate of use of digital payment in rural India after demonetization
(Source: National Informatics Centre)
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7. Kristu Jayanti College Effectiveness of Digital Payments in Rural Bangalore
Data Analysis and Data Interpretation:
Data Analysis
Table 1: Awareness about digitalization system
Interpretation
This chart shows awareness about digitalization in rural Bangalore out of 110 respondents 12.5%
people are highly aware about digital payments, 25% of people are aware, 38.18% of people are
somewhat aware and nearly 24.32% are unaware about digital payments.
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Basis No of Respondents % of Respondents
Highly Aware 14 12.50%
Aware 28 25%
Somewhat Aware 42 38.18%
Not Known 26 24.32%
Total 110 100

8. Kristu Jayanti College Effectiveness of Digital Payments in Rural Bangalore
Data Analysis
Table 2: Frequency of using digital payment mode
Basis No of Respondents % of Respondents
Daily 8 7.27%
Weekly 17 15%
Monthly 38 34.55%
Rarely 47 42.73%
Total 110 100
Interpretation
This chart shows that frequency of using digital payment modes. Out of 110 respondents 34.55%
of the people use digital payment on a monthly basis, 7.27% use it daily, 42.73% rarely and
remaining 15% use it on a weekly basis.
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9. Kristu Jayanti College Effectiveness of Digital Payments in Rural Bangalore
Data Analysis
Table 3: Satisfaction level on digital payments.
Basis No of Respondents % of Respondents
Yes 83 75.45%
No 27 25%
Total 110 100
Interpretation
The above chart shows the satisfaction level of using digital payment system. Out of 110
respondents, 75.45% of the respondents are satisfied by using digital payment whereas remaining
24.55% are not satisfied.
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10. Kristu Jayanti College Effectiveness of Digital Payments in Rural Bangalore
Data Analysis
Table 4: Reasons for not adopting digital payment system
Basis No of Respondents % of Respondents
Fear of security 70 64%
Difficulty in Using 32 29.09%
Other 8 7.27%
Total 110 100
Interpretation
This chart shows that reasons for not adopting digital payment system. Out of 110 respondents
only 47 are not using digital payments system and are not satisfied. 29.09% of respondents are
not using because of difficulties faced in technology and 64% of respondents are not using
because of fear of security, and fraud 7.27% of people are not using due to other reasons.
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11. Kristu Jayanti College Effectiveness of Digital Payments in Rural Bangalore
MAJOR FINDINGS:
1. In this study mainly we found, most of the respondents are aware about the digitalization
system, only few are unaware.
2. Demonetisation also has major effect on digitalization.
3. It was found from the study that majority of the people prefer cashless transactions over cash
transaction.
4. Most of the people are satisfied with the digital payment modes.
5. Some people are not satisfied with the digital payment system because of lack of awareness,
fear of security and fraud.
SUGGESTIONS:
The few suggestions of the study are as follows:
1. Training programmes could be organised by the government for digital literacy.
2. Conducting workshop by banks to their customers about the usage and benefits of digital
payment system.
3. Helping the rural population in installation of digital payment apps.
4. Government can ensure the public that the operation of digital payment transactions are free
from transaction tax.
5. Adopting digital payment system in all retail stores, hotels etc.
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12. Kristu Jayanti College Effectiveness of Digital Payments in Rural Bangalore
CONCLUSION:
The cashless transaction and cashless economy have witnessed a phenomenal growth over the
last decade. This sharp rise of digital payments has not grown only in the developed countries
but also in many of the developing countries. Today most of the market is passing through a
transition phase. The presence of cashless transaction can be experienced from each segment of
the market like grocery stores, hypermarkets to electronic markets and other advanced market
serving products and services. The extensive use of plastic cards, online shopping and electronic
payments are gathering momentum surpassing the tradition payment system. The initiative of
government in providing the high-tech services in coordination with other institutions are
motivating consumer to move from cash-based to a cashless system and thus increasing
efficiency and decreasing the process costs. This has led to the idea of a futuristic, cashless
society. The consumer motivation is the key driver to develop digitalization.
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2. www.Digitalxplore.org
3. http://en.m.wikipedia.org
4. www.iosrjournals.org
5. www.managejournal.com
6. www.ijstm.com
7. www.elkjournals.com
8. www.managejournal.com
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