The Impact of Digital Payments on Consumer Spending Habits: A Case Study of Young Adults Aged 18-25 in Kerala, India

Abstract

This dissertation investigates the effect of digital payment systems on the spending habits of young adults aged 18-25 in Kerala, India. The main goal is to examine the ways in which digital payments affect consumption and monetary practices of this population. In this study, the quantitative research approach was employed hence the structured questionnaires were responded to by 158 participants out of which 100 were valid responses and were analyzed using the SPSS software. This research also concludes that young people have benefited from digital payments in making the transactions easier going by the fact that 79% of the participants preferred digital methods of payment to cash. However, this convenience of digital payment does not even create a significant shift in the total expenditure ratio. The perception of security in digital payments is also positive though it does not influence the spending of the respondents and was also liked by 53% of the respondents. This was done in a bid to show that even though security is essential for adoption, it is not sufficient to influence change in the financial behaviour of people in the long-run. Some important discoveries indicate that trust and reliability in mobile payments are critical drivers of spending. It is also evident that participants who have positive attitudes towards reliability of digital payments exhibit greater shifts in their consumption behavior than those who are concerned with the security of the payment methods. Also, there is the convenience of buying goods and services online and eating out due to the availability of digital payments. Nonetheless, entertainment spending reduces slightly, and this shows that digital payments have a differential influence on spending. Thus, it is important to conclude that, despite the increased convenience and features, such as expense tracking, digital payments have a multifaceted effect on spending behavior. The research emphasize on the trust regarding the digital payment systems and it is also indicating that more research could be done on the long term behavioral modification and the impact of digital payments on various consumer segments.