As India shifts towards digital payment to purchase daily essentials, expensive home appliances, gadgets, clothing and more, experts have cautioned that using Unified Payments Interface (UPI) may lead one to overspend in most cases.
The seamless digital payment system facilitated by UPI has led to increased overspending on items that individuals may not necessarily require.
A recent survey conducted by IIIT Delhi revealed that approximately 74 per cent of individuals in the country are engaging in 'overspending' due to utilizing UPI and other digital payment methods.
Around 74% of the 276 people surveyed by IIIT Delhi, in what it claims to be the first study on spending behavior of people using the government's UPI, said they were spending more after adopting the e-payments system, reported India Today.
Last year, the UPI transactions increased by almost 60 per cent to reach a record 11,768 crore.
The preference to pay through UPI/QR codes can largely be attributed to the convenience of completing digital transactions swiftly using smartphones.
"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 CyberMedia Research (CMR) was quoted as saying by IANS.
According to the recent data from the National Payments Corporation of India (NPCI), the number of Unified Payments Interface (UPI) transactions reached 1,330 crore in April. On a year-on-year basis, the UPI transaction count has increased by 50 per cent.
Ramesh Narasimhan, Chief Executive Officer-India, Worldline, also said that UPI, undisputedly has been dominating the digital payments space.
"This trend underscores users' growing confidence and familiarity with smartphone-based payment methods," Narasimhan added.
The average ticket size (ATS) of UPI transactions has also declined by 8 per cent from Rs 1,648 to Rs 1,515.
Experts have noted that consumer spending in India is increasing with people splurging on cars, smartphones, TVs and other items, boosting the country's economic growth.
However, the trend has also led people to overspend on certain high-priced items enabled by UPI.
A recent report by Nielsen Media India, on behalf of Amazon India, showed that digital payment methods are on the rise in the country, with 42 per cent of consumers saying they will choose UPI for online festive shopping.
