CHAPTER – 1

INTRODUCTION

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 CHAPTER – 1

1.1 INTRODUCTION

The rapid adoption of digital payments and the transition towards a cashless economy are reshaping
economies worldwide. A cashless economy, defined by the dominance of electronic payments over
physical currency, is seen as a driver for innovation, efficiency, and economic growth. In recent years,
India has joined the global trend of shifting towards digital payments, with the government and
financial institutions working together to foster an environment conducive to the widespread use of
cashless transaction systems. The rise of mobile wallets, UPI (Unified Payments Interface), digital
banking services, and QR code-based payments have revolutionized financial transactions across the
nation.

India’s government has recognized the significant potential of a cashless economy in fostering
economic growth and transparency. Initiatives such as the Digital India program and the Pradhan
Mantri Jan Dhan Yojana (PMJDY) have aimed at increasing digital literacy and financial inclusion
across the country. The rollout of UPI has simplified digital payments, making it accessible to a wider
range of people. Through these initiatives, India has made remarkable progress in reducing its reliance
on cash-based transactions.

Among India’s rapidly growing cities, Chennai stands out as a major economic hub that has
increasingly embraced cashless systems. Known for its role in the information technology sector,
automobile manufacturing, and healthcare, Chennai is at the forefront of India's economic
transformation. As a modern, cosmopolitan city with a population of over 10 million, it provides an
ideal context for studying the transition to a cashless economy. Its citizens, both in urban and semi-
urban areas, have embraced digital payment systems at an accelerating pace, influenced by factors
such as increased smartphone penetration, internet accessibility, and government support for financial
digitization.

This report focuses on the adoption and impact of the cashless economy in Chennai, specifically
examining how digital payment systems are reshaping daily transactions, businesses, and government
services in the city. The research explores the various facets of cashless systems, including their
benefits, challenges, and the role they play in modernizing the city’s financial ecosystem.

The study also aims to understand the underlying infrastructure that supports cashless transactions in
Chennai. This includes the role of the banking sector, payment gateways, and fintech innovations that
have made digital payments more accessible and secure. The introduction of UPI, for example, has
been a game-changer, allowing consumers to make quick, low-cost payments directly from their bank

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accounts, bypassing the need for physical cash or credit cards. Similarly, mobile wallets like Paytm,
PhonePe, and Google Pay have seen rapid adoption, offering users a seamless experience for making
payments across a wide range of services, from groceries to utilities.

An important dimension of this study is the socio-economic impact of the cashless economy in
Chennai. By examining the adoption rate of cashless transactions among different demographics—
such as young professionals, senior citizens, and the low-income population—the report will explore
how inclusive the cashless revolution has been. Financial inclusion, which aims to provide accessible
banking and payment services to underbanked or unbanked individuals, is central to India’s vision
for a cashless society. In Chennai, the ability of digital payment systems to reach rural and remote
areas is crucial in bridging the gap between the urban elite and marginalized communities.

While the shift to a cashless economy holds considerable promise, it is not without its challenges.
The report will explore the digital divide that exists in Chennai, where some population segments,
particularly older generations and individuals in economically disadvantaged areas, face barriers to
adopting digital payment methods. Digital literacy, internet connectivity, access to smartphones, and
trust in technology are key factors that hinder the widespread adoption of cashless systems. This
research will assess these barriers and examine how they can be overcome through government
initiatives, public awareness campaigns, and improvements in infrastructure.

The issue of cybersecurity also plays a pivotal role in shaping the future of the cashless economy in
Chennai. While digital payments offer convenience and security, they also expose users to the risks
of fraud, identity theft, and hacking. The report will analyse the security measures implemented by
financial institutions, fintech companies, and government agencies to safeguard digital transactions.
Furthermore, the role of regulatory bodies such as the Reserve Bank of India (RBI) and the Securities
and Exchange Board of India (SEBI) will be discussed in terms of ensuring consumer protection and
promoting secure digital financial services.

Moreover, the report will investigate the impact of a cashless economy on various sectors in Chennai.
Key industries such as retail, hospitality, transport, and education have all been significantly affected
by the rise of digital payments. E-commerce, for example, has witnessed exponential growth due to
the ease and speed of online payments, and ride-hailing services like Uber and Ola have transformed
urban mobility by offering cashless options. The rise of digital payments has also facilitated seamless
cross-border transactions, benefiting Chennai’s growing export-driven industries.
In addition, Chennai’s role in the global IT sector and the presence of numerous technology firms are
driving innovation in payment systems. Local startups, along with established players, are
continuously exploring new ways to enhance digital payment infrastructure, improve user

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experiences, and ensure financial security. The advent of blockchain technology, for instance, holds
the potential to revolutionize how digital payments are processed, making them more secure,
transparent, and efficient. Chennai, with its robust technology ecosystem, is well-positioned to be a
leader in the adoption of such cutting-edge innovations.

Demonetization played a crucial role in accelerating the shift towards a cashless economy in India.
On November 8, 2016, the Indian government announced the withdrawal of ₹500 and ₹1,000
currency notes from circulation, aiming to curb black money, eliminate counterfeit currency, and
promote digital transactions. This sudden move created an immediate cash crunch, pushing
businesses and individuals to explore alternative payment methods. As a result, digital transactions
through UPI, mobile wallets, debit/credit cards, and online banking witnessed a significant rise.
Demonetization not only encouraged financial inclusion but also contributed to increasing tax
compliance and formalizing the economy. While its short-term impact posed challenges, its long-term
influence strengthened India's digital financial infrastructure, making cashless transactions more
prevalent in everyday life.

Finally, the COVID-19 pandemic has had a profound impact on the adoption of cashless payments.
As a result of the lockdowns and social distancing measures, consumers and businesses turned to
digital payments as a safer alternative to cash. The pandemic highlighted the need for contactless
payments, accelerating the digital transition in Chennai. The report will explore the long-term impact
of COVID-19 on the cashless economy, with particular attention to the lasting behaviour changes
among consumers and businesses post-pandemic.

In conclusion, the study will examine how the cashless economy in Chennai is not only a reflection
of the city's technological and economic progress but also a microcosm of the larger national
movement towards financial inclusion and digitization. The findings of this report will offer valuable
insights for policymakers, businesses, financial institutions, and consumers on how to navigate the
challenges of a cashless economy and fully harness its benefits for sustainable development.

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1.2 ORIGIN OF THE STUDY

The advancement of technology has brought about a dramatic transformation in every sector of
society, and one of the most profound changes has been the emergence of a cashless economy. In
recent years, the global trend of shifting towards digital payment systems has become evident, with
countries like India making significant strides in promoting cashless transactions. With the increasing
use of smartphones, the internet, and digital banking, traditional forms of cash payments have seen a
decline, while electronic payment methods such as UPI (Unified Payments Interface), mobile wallets,
and online banking have gained widespread acceptance.

India, a country with a large population and a historically cash-based economy, has been undergoing
a rapid digital transformation. The Government of India has been at the forefront of this shift,
implementing various initiatives such as the Digital India program, Financial Literacy Campaigns,
and the demonetization of high-value currency notes in 2016, which further accelerated the movement
towards a cashless economy. These policies were designed to reduce cash dependency, curb black
money, promote financial inclusion, and encourage transparency in financial transactions. As a result,
digital payments are now an integral part of daily life for many individuals and businesses.

The city of Chennai, as one of the major metropolitan hubs in India, has experienced significant
growth in digital financial transactions. The city's robust infrastructure, growing internet penetration,
increasing smartphone usage, and rising financial literacy have all contributed to the growing
adoption of cashless methods. Chennai has become one of the leaders in India’s push towards
digitalization, witnessing a rapid rise in e-payment platforms such as UPI, Paytm, Google Pay, and
PhonePe. According to recent reports, the volume of digital transactions in Chennai has been steadily
increasing, with both urban and rural residents embracing these technologies.

However, despite the significant progress, several challenges remain in the transition to a fully
cashless economy. Issues such as cybersecurity, data privacy concerns, digital illiteracy, and
resistance from certain sections of society, particularly older individuals and those in low-income
groups, hinder the complete adoption of digital payments. Additionally, cash continues to dominate
in some sectors, such as small businesses, street vendors, and rural areas, where people prefer the
traditional exchange of physical currency. Moreover, the cashless economy may have implications
for informal sectors and underbanked populations who are not yet part of the digital ecosystem.

The focus of this study is to analyse the progress, benefits, and challenges associated with the cashless
economy in Chennai. The research aims to understand the adoption rate of digital payment systems
among various segments of the population, including businesses, individuals, government
institutions, and educational sectors. Additionally, the study seeks to explore the impact of cashless
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systems on small and medium enterprises (SMEs), which play a pivotal role in Chennai’s economy.
The study will also assess the role of government policies and initiatives in facilitating this transition.

Furthermore, the study will explore the social and economic impacts of a cashless economy,
examining factors such as financial inclusion, consumer behaviour, and the ease of doing business. It
will address how the widespread use of digital payments is empowering citizens, especially the
unbanked and marginalized communities, and reducing the dependency on physical cash. Moreover,
the research will investigate the role of government and private sector collaborations in building
secure, reliable, and user-friendly digital payment systems.

The research will also focus on the environmental impact of a cashless economy. As the use of paper
currency declines, the environmental burden of printing, transporting, and disposing of physical
currency could decrease, contributing to a more sustainable economy. On the flip side, the
environmental implications of increased energy consumption due to digital infrastructure expansion
will also be explored.

The findings from this study will not only shed light on the current state of the cashless economy in
Chennai but also provide actionable insights for businesses, policymakers, and citizens. The study
aims to propose strategies to overcome the barriers to cashless transactions, such as enhancing digital
literacy, securing financial systems, and ensuring equitable access to digital platforms for all
socioeconomic groups.

Rationale of the Study:

India's economy has been increasingly moving towards digitalization, and Chennai, as a major urban
center, plays a crucial role in this transition. The city’s experience can provide valuable lessons on
the implementation of cashless systems, identifying successful strategies, and recognizing the
challenges that must be overcome. The findings from this study are expected to help stakeholders
understand how to better promote cashless transactions, address digital divides, and ensure economic
growth in a secure and inclusive manner. Given the complex nature of cashless economies, this
research is essential for guiding future policies and practices in Chennai and similar cities across
India. Moreover, as the trend of cashless economies continues to grow globally, this study will
contribute to the global dialogue on digital payments, offering valuable insights into how cities like
Chennai are navigating the complexities of this transition. By understanding the local challenges and
opportunities, this research could also serve as a model for other cities in India and around the world
to embrace cashless systems while ensuring that all residents have equal access to digital financial
services.

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1.3 MEANING OF CASHLESS ECONOMY

The cashless economy refers to an economic system where financial transactions are carried out
without the use of physical cash, relying instead on digital methods like mobile wallets, online
banking, and UPI (Unified Payments Interface). This shift from traditional cash-based systems to
digital payments is a global trend, and in India, the government has been actively promoting digital
payment methods through initiatives like Digital India. In Chennai, digital transactions have become
increasingly popular as more people and businesses adopt mobile wallets and UPI for their daily
financial needs. While these changes offer convenience, transparency, and efficiency, the transition
to a cashless economy in Chennai comes with its own set of challenges.

One of the major challenges faced in this transition is digital illiteracy. Although younger generations
in Chennai are quick to adopt new technologies, many older people, as well as those in rural or
underdeveloped areas, struggle to use digital payment methods. They may not be familiar with
smartphones or online banking, which makes it harder for them to participate in the cashless economy.
This creates a gap between those who are able to use digital tools and those who are not, slowing
down the shift to a cashless society.

Another challenge in Chennai’s shift to a cashless economy is the lack of infrastructure. While the
central areas of the city have good internet connectivity and access to smartphones, this is not always
the case in suburban or rural parts. In these areas, people may have limited access to reliable internet
or the devices needed to make digital payments. This lack of infrastructure makes it difficult for
people in these areas to fully engage in a cashless economy, which means a portion of the population
continues to rely on cash for transactions.

Cybersecurity and data privacy are also significant concerns when it comes to digital payments. As
the use of mobile wallets, UPI, and online banking increases, so does the risk of fraud, hacking, and
identity theft. People may feel uncertain about the safety of their personal and financial information
when using these systems, leading to a lack of trust in digital payment methods. If users do not feel
secure in using these platforms, they may resist adopting them, which slows down the progress
towards a fully cashless economy.

Cultural factors play a role in why people in Chennai still prefer cash over digital payments. Many
individuals, especially in small businesses or informal markets, are accustomed to using cash for their
transactions. For these people, cash is easier to understand and more reliable. They may fear that
digital transactions could fail or be too complex to use. Changing this mindset will require not only
improving technology but also running awareness campaigns to show the benefits of digital
payments, making them more accessible and easier to use for everyone.
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The informal sector of the economy in Chennai is another area affected by the move to a cashless
society. Many small businesses, street vendors, and local shops still rely heavily on cash transactions
because they lack the necessary infrastructure or knowledge to handle digital payments. These
businesses often miss out on the advantages that come with digital payments, such as easier financial
management, better customer reach, and more efficient record-keeping. To ensure that these
businesses are included in the cashless economy, there needs to be more support for small and
informal businesses, including education on digital payment systems and financial tools.

Despite these challenges, the benefits of a cashless economy are clear. Digital payments can lead to
greater financial inclusion, making it easier for people who don’t have access to traditional banking
systems to take part in the economy. For example, mobile wallets and UPI allow people to make
payments and transfer money without needing a bank account. This is especially beneficial for people
living in rural areas or from lower-income backgrounds who previously had limited access to banking
services. Digital payments are also more convenient, enabling quick transactions without the need for
physical cash, and they provide a clearer record of spending, which helps with budgeting and financial
planning.

Another important benefit is the environmental impact. As the use of cash decreases, the need for
printing and transporting physical currency is reduced, which helps lower the environmental costs of
paper and plastic production. Fewer cash transactions also mean fewer resources are spent on
handling and storing physical money, contributing to a more sustainable economy.

However, to make these benefits a reality, it is essential to overcome the barriers mentioned earlier.
The government, businesses, and financial institutions all have a role to play in supporting the
transition. The government must invest in digital literacy programs to ensure that everyone, especially
older people and those in rural areas, is able to use digital payment methods. They must also improve
infrastructure, ensuring that reliable internet access and smartphones are available in all parts of the
city. Additionally, businesses need to adopt digital payment systems by making them affordable and
easy to use. The government should also create stronger regulations to protect user data and ensure
the security of digital transactions, which will help build trust in the system.

In conclusion, while the cashless economy in Chennai is growing, it faces several obstacles that need
to be addressed. Digital illiteracy, infrastructure gaps, security concerns, and cultural resistance all
pose challenges to the transition.

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1.4 CONCEPTS OF CASHLESS ECONOMY

The concept of a cashless economy is to an economic system in which financial transactions are
carried out without the use of physical cash. Instead, all transactions are made electronically through
digital means such as mobile wallets, credit/debit cards, online banking, or UPI (Unified Payments
Interface). In a cashless society, individuals and businesses rely on technology to make payments,
transfer money, and complete purchases, rather than using physical currency like coins or banknotes.

The main idea behind the shift to a cashless economy is to make transactions faster, more efficient,
and secure. Digital payments allow people to transfer money or make purchases instantly, without the
need for physical exchange of money. This makes everyday transactions more convenient for both
consumers and businesses. For example, people can pay for groceries, services, or even utilities
directly from their smartphones, without needing to carry cash or visit a bank.

One of the key benefits of a cashless economy is increased transparency. When transactions are
digital, they are automatically recorded, making it easier for individuals and businesses to track their
spending and income. This transparency also helps reduce corruption and tax evasion, as digital
transactions leave a clear trail that can be monitored by authorities. In contrast, cash transactions can
sometimes be unaccounted for, making it easier to hide income or avoid taxes.

Financial inclusion is another important aspect of the concept. A cashless economy can provide
greater access to financial services for people who were previously excluded from the traditional
banking system. Digital payment methods, like mobile wallets or UPI, allow individuals without bank
accounts to participate in the economy. This is particularly useful in rural or underdeveloped areas
where people may not have easy access to physical bank branches. By using a mobile phone, anyone
can make payments, transfer money, and even save or invest without needing a traditional bank
account.

However, for a cashless economy to work effectively, it requires a strong digital infrastructure. This
includes reliable internet connections, access to smartphones, and secure online payment systems.
Without these, it would be difficult for people to make digital payments, especially in rural areas or
among populations that may not have access to modern technology.

A cashless economy also aims to reduce the costs associated with handling physical money. Printing,
transporting, and storing cash require resources, both in terms of time and money. Moving away from
cash reduces the need for these processes, which can make the economy more efficient. Additionally,
digital payments can save time for consumers, as they no longer need to visit an ATM or wait in long
queues at the bank to withdraw or deposit cash.

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Despite the many benefits, the transition to a cashless economy comes with challenges. One of the
biggest concerns is security. As more people conduct transactions online, there is an increased risk of
cybercrime, such as identity theft, hacking, and fraud. It's important for digital payment systems to
be secure and for people to be educated on how to protect their personal information. Another
challenge is digital illiteracy, as many people, especially older individuals or those in rural areas, may
not know how to use digital payment systems. This digital divide can prevent full participation in the
cashless economy, leaving some people behind.

In conclusion, the concept of a cashless economy is about moving away from physical currency and
adopting digital payment methods for everyday transactions. While it offers numerous advantages,
such as convenience, transparency, and financial inclusion, it also presents challenges related to
security and accessibility. The successful transition to a cashless society depends on improving digital
literacy, expanding infrastructure, and ensuring the security of online payment system

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1.5 FEATURES OF CASHLESS ECONOMY

A cashless economy is characterized by several key features that distinguish it from traditional cash-
based economies. These features not only make transactions more efficient but also promote
transparency, convenience, and financial inclusion. Below are some of the most important features of
a cashless economy:

 Digital Payments: In a cashless economy, all transactions are made electronically through
digital payment systems. This includes mobile wallets (like Paytm, Google Pay, PhonePe),
credit and debit cards, UPI (Unified Payments Interface), online banking, and other electronic
means. Payments can be made through smartphones, computers, or point-of-sale machines,
without the need for physical cash.
 Increased Convenience: One of the main advantages of a cashless economy is the
convenience it offers. With digital payment systems, people no longer need to carry cash, visit
ATMs, or deal with the hassle of making change. Payments can be made instantly with a few
taps on a smartphone or by swiping a card. Whether it’s paying for groceries, bills, or services,
digital payments allow transactions to happen anytime and anywhere, even in remote
locations.
 Transparency and Accountability: Digital transactions create a record of every payment
made, which increases transparency and accountability. This record-keeping makes it easier
for individuals and businesses to track their spending, manage finances, and avoid mistakes.
Additionally, digital payments can help reduce corruption and illegal activities, as the details
of the transaction are logged and traceable, making it harder to hide financial transactions.
 Financial Inclusion: A major feature of a cashless economy is its ability to promote financial
inclusion. Many people in rural or underdeveloped areas do not have access to traditional
banking services due to the lack of bank branches or infrastructure. Digital payment systems,
however, allow individuals to participate in the economy without needing a physical bank
account. Mobile wallets and UPI services make it possible for even the unbanked population
to send money, pay bills, or receive payments using just their mobile phones.
 Security: While the shift to a cashless economy comes with concerns about digital security,
it also introduces advanced security features that protect users. Modern digital payment
systems use encryption, two-factor authentication, and biometric verification to safeguard
users’ financial information. These security measures aim to make digital transactions safer
and reduce the risk of fraud or identity theft.
 Cost Efficiency: A cashless economy can reduce the cost associated with handling physical
money. Printing, transporting, and securing cash involve significant costs for governments
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 and financial institutions. In a cashless system, these expenses are minimized because digital
transactions eliminate the need for physical currency. Additionally, businesses can save money
on the costs of counting and storing cash.
 Faster Transactions: Digital payments are processed almost instantly, making transactions
quicker than using cash. Whether paying at a store, transferring money to a friend, or making
an online purchase, digital payments reduce waiting times and improve efficiency. This is
especially beneficial in busy settings such as retail outlets, transportation, and even
government services, where speed is crucial.
 Reduced Risk of Theft or Loss: Carrying large amounts of cash can be risky, as it makes
individuals vulnerable to theft or loss. In a cashless economy, digital wallets or payment
methods are secure and protected by multiple layers of security. In the event of a lost or stolen
card, users can quickly block their account and prevent unauthorized transactions. Similarly,
mobile wallets offer options for users to lock or disable their accounts in case of theft.
 Environmental Benefits: A cashless economy also has environmental benefits. The need for
physical cash – including paper money and coins – decreases, reducing the resources required
for printing and minting currency. This not only helps save costs but also contributes to a more
sustainable environment by cutting down on the use of paper, ink, and metals.
 Support for E-Commerce: In a cashless economy, digital payments are closely linked with
the rise of e-commerce. Since online shopping relies on digital transactions, a cashless society
boosts the growth of online retail businesses, making it easier for consumers to shop and pay
for goods and services from the comfort of their homes. This has also enabled businesses to
reach a broader customer base across geographical boundaries.
 Integration with Government Services: Many government services can be efficiently
delivered in a cashless economy. For instance, citizens can pay taxes, utility bills, and fines
online through digital platforms. In addition, government schemes that provide financial
assistance can be directly transferred to beneficiaries through digital payments, reducing
delays and ensuring transparency.

In conclusion, the features of a cashless economy show how digital transactions can improve the
efficiency, security, and accessibility of financial systems. While challenges exist, the advantages of
convenience, transparency, cost savings, and financial inclusion make the transition to a cashless
society a compelling goal for many countries, including India. As digital payment systems continue
to evolve and expand, these features will help shape the future of economic transactions.

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1.6 SIGNIFICANCE OF CASHLESS ECONOMY

The significance of a cashless economy lies in its potential to bring about numerous positive changes
to both individuals and society as a whole. As digital payments become more widespread, they offer
several benefits that can lead to greater efficiency, security, and inclusivity. Below are some key points
that highlight the importance of moving towards a cashless society:

 Enhanced Financial Inclusion: One of the most significant advantages of a cashless

economy is the promotion of financial inclusion. In many developing countries, including
India, a large portion of the population has limited or no access to formal banking services
due to factors such as geographical barriers, lack of infrastructure, or financial illiteracy. By
moving towards a cashless economy, even individuals without a traditional bank account can
participate in financial transactions. Mobile wallets, UPI, and other digital platforms make it
possible for anyone with a mobile phone to make payments, transfer money, and access basic
financial services. This opens up new opportunities for people who were previously excluded
from the formal economy.
 Convenience and Efficiency: A cashless economy significantly improves the convenience of
everyday financial transactions. People no longer need to carry cash, visit ATMs, or deal with
the hassle of counting and handling money. Payments can be made instantly through
smartphones, cards, or online platforms, saving time for both consumers and businesses. This
increased efficiency leads to quicker transactions, reducing queues at stores, banks, and even
in government offices. In the long run, a cashless society can enhance the overall functioning
of the economy by streamlining financial processes.
 Reduction of Corruption and Black Money: One of the most important social impacts of a
cashless economy is the reduction of corruption and black money. Cash transactions,
especially in large amounts, are difficult to trace, which makes them a preferred method for
illegal activities such as tax evasion, bribery, and money laundering. Digital payments, on the
other hand, are recorded and traceable, making it harder to conceal financial activities. This
transparency helps authorities track the flow of money and ensures that taxes are paid, and
regulations are followed. By reducing the reliance on cash, a cashless economy can curb the
informal economy, promote tax compliance, and increase the accountability of both
businesses and individuals.
 Boost to E-Commerce and Digital Businesses: The rise of a cashless economy directly
benefits the e-commerce sector and digital businesses. As digital payment methods become
more accessible, consumers are more likely to engage in online shopping and use digital
services. Businesses can tap into a wider customer base, including those who may not have
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 easy access to physical stores. This has fuelled the growth of online retail, services, and digital
platforms, allowing businesses to reach global markets. In addition, digital payments provide
a seamless experience for customers, which can enhance satisfaction and encourage repeat
purchases.
 Improved Tax Collection and Governance: The shift to digital payments enhances the
ability of governments to collect taxes and manage public finances. With cashless
transactions, tax authorities can track incomes, purchases, and other financial activities more
easily, leading to better tax compliance. This results in a more accurate and efficient tax
collection system, allowing governments to allocate resources more effectively. Moreover,
digital platforms enable governments to provide various services, such as subsidies, social
benefits, and welfare programs, directly to citizens, ensuring that funds are distributed
transparently and efficiently.
 Security and Safety: Digital transactions offer a higher level of security compared to carrying
cash. Physical money can be lost, stolen, or damaged, whereas digital payments are protected
by encryption, two-factor authentication, and biometric verification. As digital payment
systems continue to evolve, these security measures become stronger, providing users with
confidence in the safety of their transactions. Additionally, in the case of theft or fraud, digital
payment systems offer the ability to track, block, or reverse unauthorized transactions, making
them safer than cash.
 Environmental Impact: A cashless economy can also contribute to environmental
sustainability. The production, transportation, and storage of physical currency require
significant resources, including paper, ink, and metals. Reducing the reliance on physical cash
means fewer resources are needed to print and transport money, leading to less waste and
lower carbon emissions. Furthermore, the decrease in the use of plastic for coins and paper
for banknotes can help reduce pollution, making the economy more environmentally friendly.
 Reduction in Operational Costs for Businesses: For businesses, moving to a cashless
system can reduce operational costs. Handling cash involves expenses such as maintaining
cash registers, paying employees to count and manage cash, and securing money in physical
safes. With digital payments, businesses can streamline these processes, reducing the need for
manual labor and security measures. The savings made by reducing cash handling costs can
be reinvested into other areas of the business, improving its overall efficiency.
 Improved Personal Financial Management: A cashless economy allows individuals to
manage their finances more effectively. Digital payments create an electronic trail of all
transactions, which can be easily tracked and analyzed. This helps individuals budget their
spending, monitor their income, and keep a clear record of financial activities. Furthermore,
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 many digital payment platforms provide users with features like automated bill payments,
savings programs, and investment options, which help individuals manage their finances more
efficiently.

the significance of a cashless economy extends beyond the convenience of digital transactions. It
has the potential to transform how people engage with money, promote financial inclusion,
improve governance, and contribute to a more sustainable environment. While challenges such as
digital illiteracy and security concerns remain, the long-term benefits of a cashless economy make
it an important step toward a more efficient, transparent, and inclusive financial system.

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1.7 DIGITAL INDIA PROGRAM AND INITIATIVES

The Digital India initiative, launched by the Government of India in 2015, aims to transform India
into a digitally empowered society and knowledge economy by promoting digital infrastructure, e-
governance, and digital financial services. Below are some of its key programs and initiatives:

1. Digital Payment Initiatives

 Unified Payments Interface (UPI) – Facilitates seamless digital transactions across banks and
has become the backbone of India's cashless economy.
 Bharat Interface for Money (BHIM UPI) – A government-backed UPI app for instant digital
payments.
 Aadhaar Enabled Payment System (AEPS) – Allows transactions using Aadhaar
authentication.
 Bharat Bill Payment System (BBPS) – A centralized system for online payment of utility bills.
 E-RUPI (2021) – A digital voucher system for direct benefit transfers (DBT) without requiring
a bank account.
2. E-Governance & Digital Infrastructure
 DigiLocker – A cloud-based platform to store and access important documents digitally (e.g.,
Aadhaar, PAN, driving license).
 eSign Framework – Enables Aadhaar-based electronic signatures for paperless transactions.
 MyGov Platform – A citizen engagement platform for participatory governance.
 JAM Trinity (Jan Dhan-Aadhaar-Mobile) – Links bank accounts, Aadhaar, and mobile
numbers to facilitate direct benefit transfers (DBT).
 e-Hospital & Ayushman Bharat Digital Mission – Digital healthcare initiatives providing
online medical services and health records.
3. Digital Literacy & Education
 Pradhan Mantri Gramin Digital Saksharta Abhiyan (PMGDISHA) – Aims to make rural
households digitally literate.
 SWAYAM – A free online learning platform for higher education.
 DIKSHA – A digital platform for school education with e-learning materials.
4. Digital Economy & Startups
 Startup India & Standup India – Encourages entrepreneurship and digital startups.
 IndiaStack – A set of digital APIs (Aadhaar, e-KYC, eSign, UPI) for digital transactions and
identity verification.

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  Open Network for Digital Commerce (ONDC) – A government initiative to create an open
and competitive digital commerce ecosystem.
5. Smart Cities & Urban Digitalization
 Smart Cities Mission – Uses digital technology for efficient urban planning, smart traffic
management, and online services.
 FASTag – An electronic toll collection system to reduce cash payments at toll booths.

 Common Service Centers (CSC) – Digital service points providing government services,
banking, and digital literacy in rural areas.

6. Cybersecurity & Digital Privacy

 Cyber Swachhta Kendra – A malware and botnet cleaning center for cybersecurity
awareness.
 Data Protection Bill – Focuses on data privacy and digital security.
 CERT-In (Computer Emergency Response Team – India) – Monitors and responds to
cybersecurity threats.

17
1.8 CONCLUSION

The transition to a cashless economy represents a significant step toward modernization and financial
efficiency. It offers benefits such as convenience, reduced corruption, and enhanced transparency.
However, the shift is not without its challenges. Cybersecurity threats, data privacy concerns,
financial exclusion, and the risks of monopolization in digital payments pose significant hurdles. The
reliance on technology makes financial systems vulnerable to technical failures, hacking, and fraud,
while certain sections of society, such as the elderly, low-income groups, and those in rural areas,
may struggle to adapt to digital transactions.

Moreover, the elimination of cash could lead to government overreach, financial censorship, and
difficulties in handling emergency situations. Small businesses and informal sectors may also face
economic disruptions due to the costs associated with digital transactions. To address these
challenges, it is crucial to implement strong security measures, ensure financial literacy, and create
an inclusive digital ecosystem that does not leave anyone behind.

A completely cashless economy may not be practical or desirable in every scenario. Instead, a
balanced approach that encourages digital payments while maintaining cash as an alternative can help
bridge the gap between innovation and accessibility. By addressing these challenges with appropriate
policies and infrastructure, a cashless economy can be made more secure, inclusive, and sustainable
in the long run.

18
 CHAPTER – 2
REVIEW OF LITERATURE

19
 CHAPTER – 2

REVIEW OF LITERATURE

The transition towards a cashless economy has been a significant global phenomenon, driven by
advancements in digital payment technologies, government policies, and changing consumer
preferences. In India, this shift gained momentum with the introduction of digital initiatives such as
the Unified Payments Interface (UPI), Aadhaar-enabled payment systems, and demonetization
policies aimed at reducing cash dependency. Given this rapid transformation, it is essential to examine
the existing body of knowledge to understand the factors influencing the adoption of cashless
transactions, their impact on economic growth, and the challenges faced in implementation.

This literature review explores previous studies on cashless economies, focusing on global and Indian
perspectives, with a special emphasis on Chennai City. It examines the role of digital payment
systems, consumer behaviour, financial inclusion, and security concerns in shaping the adoption of
cashless transactions. Additionally, the review highlights the gaps in research, particularly in the
context of Chennai, where demographic and infrastructural factors play a crucial role in digital
payment adoption. By analysing existing literature, this study aims to provide insights into the
effectiveness and challenges of the cashless economy and its implications for policymakers,
businesses, and consumers in Chennai.

Nurdin Hidayah, Ikaputera Waspada, and Maya Sari (2023) explored the role of a cashless
economy in supporting financial inclusion and economic growth in their research. The authors
focused on how digital financial services and cashless payment systems are transforming the financial
landscape, particularly in developing countries. Their study emphasized the increasing role of mobile
payments, e-wallets, and other fintech innovations in bridging the gap between the unbanked and the
formal financial system. The paper also examined how these systems help improve access to credit,
savings, and insurance, which can contribute to greater economic stability and development.

The authors discussed the benefits of a cashless economy, such as reduced transaction costs, enhanced
transparency, and increased tax revenues due to more traceable financial activities. However, they
also noted several challenges, including concerns over data privacy, the need for robust digital
infrastructure, and the risk of excluding vulnerable populations with limited access to technology.
They concluded that while the cashless economy has the potential to drive significant economic and
social progress, achieving this requires strong regulatory frameworks, digital literacy programs, and
efforts to ensure equitable access to technology.

20
Sandeep Kaur & S. M. Gupta (2022) in their study "Cashless Economy: A New Path for India's
Economic Growth" explore the potential of cashless transactions in driving India’s economic growth
and financial inclusion. They emphasize the role of digital payments in enhancing economic
activities, increasing efficiency, and fostering transparency within the financial system. The paper
discusses how the shift toward a cashless economy has been accelerated by initiatives such as the
Digital India program and the implementation of the Goods and Services Tax (GST).

The authors examine both the positive impacts, such as reduction in black money, improved tax
collections, and the ease of conducting business, as well as the challenges, including the digital divide,
security concerns, and the need for better infrastructure to support cashless transactions. They also
point out that while the shift to a cashless economy is essential for modernization, efforts must be
made to bridge the technological gaps in rural and less-developed areas. The paper concludes that a
comprehensive and well-supported strategy is crucial for realizing the full potential of a cashless
economy in India.

Jitender Kumar and Garima Bansal (2020) conducted a comprehensive literature review on the
topic of the cashless economy. Their study analyzes 97 articles published between 1995 and 2019,
aiming to provide a well-rounded perspective on the subject. The review covers various facets of a
cashless economy, including its impact on economic growth, the banking sector, and business
operations. It explores the technological advancements driving the shift towards cashless transactions,
such as digital payment systems, and their implications for enhancing financial inclusion. Moreover,
the authors examine the challenges faced by countries transitioning to a cashless economy, including
cybersecurity concerns, digital literacy, and the need for a supportive regulatory framework. Their
work sheds light on both the benefits and potential risks associated with adopting cashless systems,
offering insights into how this transformation can shape future economies.

Shiwani Soni (2020) conducted a detailed review on the cashless economy, focusing on its
implications for the financial sector and economic development. Her study highlights the growing
shift from traditional cash-based transactions to digital payments, which is facilitated by technological
advancements such as mobile payment platforms, internet banking, and government initiatives
promoting digital literacy. Soni’s research emphasizes the role of cashless transactions in promoting
financial inclusion, especially in developing countries, where access to traditional banking services
is limited. The study also identifies key challenges, including cybersecurity risks, the digital divide,
and resistance to change from certain segments of society. Overall, the research underscores the need
for a balanced approach, combining technological innovation with policy interventions, to foster the
widespread adoption of cashless systems while addressing the associated challenges.

21
This literature review provides valuable insights into how the cashless economy can drive economic
growth and inclusion while also addressing the complexities of its implementation.

Ramaswamy (2020) investigated the evolving landscape of digital payments in India, particularly in
the wake of the government's push toward a cashless economy. The study analysed the impact of
initiatives like the Digital India campaign and the increased use of mobile wallets, UPI (Unified
Payments Interface), and other digital payment platforms on the overall financial ecosystem.
Ramaswamy noted that while digital payments have shown significant growth, particularly post-
demonetization, there are still numerous challenges to achieving a fully cashless economy. These
include low levels of digital literacy, a lack of trust in electronic payment methods, limited access to
internet connectivity in rural areas, and vulnerabilities related to cybercrime. The study emphasized
that the government's role in strengthening the digital infrastructure, promoting awareness programs,
and ensuring robust security measures for online transactions would be critical in driving further
adoption of cashless systems. Ramaswamy concluded that while the journey toward a cashless
economy in India is promising, it requires coordinated efforts between the government, financial
institutions, and the public to address existing gaps and ensure inclusive financial access for all
segments of society.

Kumar (2019) explored the impact of the transition to a cashless economy in India, particularly in
the context of the government's push for digital financial inclusion through initiatives like the Digital
India program. The study examined how the increased use of digital payments, especially post-
demonetization, has affected various sectors of the economy, including banking, retail, and the
informal sector. Kumar highlighted the potential benefits of a cashless economy, such as improved
transparency, reduced corruption, and easier tracking of financial transactions, which could contribute
to broader economic growth. However, the study also pointed out significant challenges, including a
lack of digital literacy, inadequate infrastructure in rural areas, and concerns over cybersecurity. The
paper concluded that while a cashless economy could bring substantial long-term advantages, its
successful implementation would require addressing these barriers and fostering greater financial
literacy and infrastructure development across the country.

Arvidsson (2019) explored Sweden's transition toward a cashless economy, emphasizing the key
factors that contributed to its success. The study highlights how government policies played a crucial
role in promoting digital payments by implementing regulations that encouraged financial institutions
and businesses to adopt cashless transactions. Additionally, technological advancements, including
the widespread use of card payments, mobile banking, and the introduction of Swish, a widely used
mobile payment app, significantly reduced cash dependency. Consumer behavior also played a vital
part, as Swedish citizens demonstrated high trust in digital transactions, influenced by strong financial
22
literacy and a well-established banking infrastructure. The research further underscores how the retail
sector adapted to this shift, with many businesses gradually eliminating cash payments and
encouraging customers to use digital alternatives. However, despite the rapid adoption of cashless
payments, the study acknowledges potential challenges, particularly regarding the accessibility of
digital transactions for the elderly and the growing concerns over cybersecurity threats. Arvidsson’s
findings provide valuable insights into the dynamics of a cashless society and the factors that drive
its adoption.

Sinha (2019) conducted a study on the impact of India's transition to a cashless economy, with a
particular focus on the challenges and benefits of digital payment adoption. The research highlighted
that while the government’s push for digital payments, especially after demonetization, has had
positive effects on financial inclusion and transparency, several barriers persist. These include a lack
of digital literacy, inadequate internet infrastructure, and concerns over cybersecurity. The study
emphasized the importance of building trust among users in digital transactions, particularly in rural
areas where access to technology is limited. Kumar and Sinha (2019) also noted that the widespread
adoption of digital payments can help reduce the shadow economy, curb corruption, and improve tax
collection. However, they concluded that the success of the cashless economy in India hinges on
addressing infrastructural challenges, increasing awareness, and ensuring that digital payment
systems are secure and accessible to all, especially the rural and underprivileged population.

R.P. Rathod & M.A. Desai (2019) conducted a study titled "Moving Towards Cashless Society”
which focuses on the transition toward a cashless economy. The paper reviews various literature on
the factors influencing this shift, including government policies, technological advancements, and
economic changes. It emphasizes the role of digital payment systems in reducing reliance on physical
cash and enhancing transparency in financial transactions. The study identifies key drivers such as
increasing internet penetration, smartphone usage, and the rise of fintech services. Additionally, it
highlights barriers such as digital literacy, security concerns, and the challenges faced by rural areas
in adopting cashless methods. The paper concludes by suggesting that while the transition to a
cashless economy holds significant potential, addressing these barriers is essential for successful
implementation.

Midha (2018), The author discussed the issue of digitalization process and effectiveness of digital
India campaign. The programme is a good initiative but it has certain barriers which need to be
overcome. Digital India campaign aims to create a cashless society which has its own advantages.
Implementation phase is surely problematic as the concept is new but over the time period this has to
be seen from the perspective of customers. It is high time to discuss the relevant issues with the
customers so that the existing barriers may be removed. As if the barriers continue to be in this system
23
then it is very difficult to achieve the goal of the government the digitalization process has many
problems still in 2018 when the study had been done there are many cyber attacks still taking place
in the country so it is very important to curb those issues and the people related with those issues or
the government come up with some innovative ideas to take action against those cyber attacks on the
use of digital transactions or it is very difficult to achieve cashless transactions or to have cashless
economy as digitalization will play a vital cog in cashless economy.

Chauhan (2018) focused on the adoption and impact of digital payment systems in India, specifically
analysing the challenges and opportunities presented by the country’s shift towards a cashless
economy. The study highlighted how digital payments, including mobile wallets, debit/credit cards,
and online banking, have the potential to boost financial inclusion, reduce cash dependency, and
increase economic efficiency. Chauhan emphasized that while urban areas have embraced digital
transactions, rural areas face challenges such as limited internet access, low digital literacy, and lack
of trust in online payment systems. The paper also pointed out the government’s role in facilitating
this transition by introducing initiatives like the Digital India campaign and promoting awareness
through financial literacy programs. Despite these efforts, Chauhan noted that issues such as
cybersecurity risks, data privacy concerns, and the readiness of the existing infrastructure need to be
addressed for a successful cashless economy. The study concluded that with the right policies and
support, India can achieve its goal of a cashless society, though the process will require overcoming
significant hurdles, particularly in rural regions.

The International Monetary Fund (IMF) (2018) report focused on the role of digital payments and
the transition towards a cashless economy. It examined how the rise of electronic payments, such as
mobile money, digital wallets, and online banking, is reshaping global financial systems. The report
highlighted the positive impacts of cashless systems, including greater financial inclusion,
particularly in developing countries, by providing easier access to banking services for the unbanked.
Additionally, it discussed the efficiency gains in transactions and the reduction of transaction costs.
However, the IMF also cautioned about the potential risks, such as cybersecurity threats, privacy
concerns, and the widening digital divide between urban and rural populations. The IMF emphasized
the need for robust regulatory frameworks, strong cybersecurity measures, and public awareness to
address these challenges. It concluded that while the transition to a cashless society could boost
economic growth, it must be approached carefully to ensure that the benefits are broadly shared and
that risks are mitigated effectively.

M. S. Jabeen & M. J. Husain (2018) in their paper "The Impact of Cashless Economy on Economic
Growth in India" analyze the influence of a cashless economy on India's economic growth. They
highlight how digital payment systems, including mobile wallets, card payments, and online banking,
24
have played a pivotal role in shaping the economy post-demonetization. The authors discuss the
positive implications of a cashless economy such as improving financial transparency, reducing tax
evasion, and fostering economic inclusivity, particularly for small businesses and rural populations.
They also mention the challenges of transitioning to a cashless economy, such as digital illiteracy,
lack of proper infrastructure, and the security risks associated with online transactions. The study
concludes by advocating for stronger government policies, financial literacy programs, and improved
technological infrastructure to maximize the benefits of a cashless economy while addressing its
challenges.

Bharath (2018), in his review he mainly said about the future prospects of being cashless advantages,
limitations and the use of digital transactions in the country like how much it is ubeen used, what to
use and how many types of digital transaction can take place , Bharath also mentioned the challenges
like the digital inadequancy of people, inability to use the modern technologies in many parts of India
and much more, he also come up with the report that almost half of the people till the start of 21st
century didn’t know how to use the computer, so it is going to be difficult for the country to adapt
soon the upcoming technologies and standards of using digital transactions. So far, the government
has done a good job by making up a very good run of schemes like giving discounts on many items
like-railways tickets, petrol and diesel etc. But, now the job of government has just begun in his article
he had mentioned that how the illiterate people just use cash in order to get some resources fulfilled.
The BP (Below Poverty line) people also are living in the nation so for them it is very difficult to get
digital transactions as they will find difficult to use mobile and ATM cards, so for these type of people
Government has opened various schemes and various accounts for these people. To make country
like India a cashless one it is a big question mark and it is almost impossible to make such a huge
country cashless.

Raja (2017) examined the impact of a cashless economy on economic growth, financial inclusion,
and transaction efficiency, particularly in developing countries. The study emphasized that digital
payments enhance transparency, reduce corruption, and improve tax compliance by minimizing
unreported cash transactions. Raja highlighted that a cashless system promotes financial inclusion by
enabling access to banking services for underserved populations through mobile wallets and digital
banking. Furthermore, the research pointed out that cashless transactions increase efficiency by
reducing the costs associated with printing, handling, and securing physical currency. However, the
study also acknowledged challenges such as cybersecurity risks, the digital divide, and the need for
a strong regulatory framework to ensure a smooth transition. Raja concluded that while moving
towards a cashless economy has significant benefits, it requires a well-developed digital
infrastructure, consumer trust, and government support to be effectively implemented.
25
Bhaskar et al. (2017) explored the impact of digital payment systems on India's cashless economy,
analyzing both the opportunities and challenges posed by the transition from traditional cash
transactions to electronic modes of payment. The study emphasized the potential benefits of cashless
transactions, such as increased transparency, financial inclusion, and reduced corruption. It also
highlighted the significant role that digital payments could play in streamlining the economy and
enhancing overall efficiency. However, the research also pointed out several challenges, including the
lack of proper infrastructure in rural areas, limited digital literacy, and concerns over the security of
online transactions. Bhaskar et al. suggested that while urban areas have quickly adapted to digital
payments, there remains a substantial gap in rural areas, where people are often reluctant to adopt
new technologies. The paper called for increased government initiatives to improve digital literacy,
enhance security measures, and ensure that rural areas have the necessary infrastructure to support
digital transactions. Ultimately, the study concluded that with continuous efforts from both the
government and private sectors, India can gradually transition towards a cashless economy, but a
balanced approach is required to address existing disparities and challenges.

Bharadwaj (2017) focused on the challenges and opportunities that India faces in transitioning to a
cashless economy, particularly in the context of digital payments. The study highlighted the
government's efforts to promote cashless transactions through initiatives like the Digital India
campaign and the push for mobile and internet banking. However, Bharadwaj (2017) also identified
several obstacles that hinder this transition, such as limited digital literacy, insufficient internet
infrastructure, and a lack of trust in digital payment systems among the rural population. The paper
emphasized that for India to fully embrace a cashless economy, it is crucial to address these challenges
through targeted awareness programs and technological improvements. Bharadwaj also pointed out
that while urban areas have seen a significant shift toward digital payments, rural areas continue to
lag behind. The research concluded that with sustained efforts from the government, financial
institutions, and private sector players, India could successfully move towards a more cashless
society, but the process would require time and substantial investments in infrastructure and
education.

Ruksan (2017), in her study she had to say about the various card payment system in India different
card payment system in the country which includes MobiQuick a digital transaction net banking debit
or credit card system in her review she found that there is a more need of safety and banks or the
government also need to put more emphasis on security and needs or urges people 24 to stay alert as
there are lot of spams, fraud and various things going on while doing digital payments, so it is the
task of banks to tell people to never ever share there password or the other information on any
platform. As India is gearing up for the cashless transactions it is an important step to tell the citizens
26
of the country to be aware of the demerits of digital modes of payment in a positive way like how to
stay alert, how to report the technical team if there is any problem in digital payments. She observed
in her study that more than half of the country daily are witnessing the online frauds or cyber attacks
in their accounts while are facing lots of problem in their different types of payment system as well.
It is important to take baby steps to encourage digital payments but to hold special seminars in such
a way that all people in the country are aware of the flaws of digital payment system and also it is
responsibility of the government to clear the flaws in digital transaction to boost the cashless economy
of India.

Shendge & Shelar (2017), paying attention on impact and importance of cashless policy in India.
According to Government of India the cashless policy will increase employment, reduce cash related
robbery thereby reducing risk of carrying cash. Cashless policy will also reduce cash related
corruption and be a focus for more foreign investors to the country, leads to modernization of payment
system, fall in the cost of banking service, diminution in high security and safety risk and also hold
back banking related corruption. The financial shelter over the 22 digital payment channel is
important for pushing the cashless economy idea. The retail sector still has large number of cash
transaction and payment through cash is yet to pick up and card is the one of the most secure,
convenient mode of cashless payment in retail market. Digital transactions are traceable, therefore
easily taxable, leaving no room for the circulation of black money. The whole country is undergoing
the process of reconstruction in money communication, with e-payment services gaining first-time
momentum. With the speed on which the Government is getting with cashless economy, it is time for
India to fasten seat belts and be ready to live with cashless transactions and be used to get up with
digital transactions, government has ensured many services to people and is ensuring that people
don’t face difficulties while doing digital transactions that is going to be more important, they also
mentioned about the speed upon which the current government is working to make India cashless
country after demonetization there is more chance that government will put more initiative like these
to boost up digital economy and digital transactions of the nation.

Bhatnagar (2017), The author describes the awareness and adoption of new age banking facilities by
the rural poor. It has been witnessed that after reforms of financial sector, most of the banking sector.
Services are widened their operations by expanding the banking operations in unbanked areas. But
even after the initial momentum most of the banks are not able to retain the expansion of the services
due higher cost of serving the rural customers. Since, the earnings are less, providing a basic banking
service is a challenge. The traditional banking services may not be able to provide the services are
often become more complicated. As the technology started playing an important role, the costs of
delivering the services are also reduced drastically. But the system is not full proof. Lack of awareness
27
and trust on the system are the major hindrance for the proper implementation of the system till date.
As long as the consumers are not going to enjoy trust, it becomes difficult for the service providers
to adopt the technology based services which is the new mechanism for financial inclusion and other
value added services. Serving rural areas in a cost effective manner is surely an important and uphill
task for the service providers and this should be shorted out through proper implementation
mechanism.

Bartopia (2016), studied cash less payments in India. He developed a academic model of payment
decisions made by consumers and sellers. He found that the expediency of cash and was of importance
that it will be beneficial for both the sellers and buyers but in the long run, he came up with the
winding up in his review that after demonetization by the government since it was the way to stop
black money and prevent illegal cash flows in the country, but at the start it failed but promoted a way
of digital transactions in the country like people literally started using digital means of payment in
India which is like net banking, PayTm small vendors and daily 23 hawkers started using this means
of transaction, this will result in the long run and will have a positive impact on the country with the
positive use of digital payments in India.

Dhanrajetal (2016), The authors attempt to portray the role of Regional Rural banks (RRBs) in
shaping the rural economy and rural credit structure. The RRBs were established in the year 1975 to
shape the rural economy by providing credit to the needy segment. These segments were excluded by
the formal banking systems due to their inability to access to loan. The capital requirements were
exclusively predestined for small and marginal farmers, rural small scale producers, labourers. These
unbackable populations were able to improve the income generating activities with the help of the
capital that they received from RRBs. But very soon the bank becomes sick due to poor repayment
and mounting NPAs. The banks were not planned properly and failed to understand the real need of
the capital. Also, there was no follow up for the loans provided to the needy segment. The traditional
production approach also led to huge loss for most of the small time producers. This is a kind of
realization that only providing finance will not be adequate, the banks should guide to make them
understand the essential demand supply conditions as well as market need. But neither the banks nor
the implementing agencies are able to see the gap and as a result of the same the outcome are below
the expectation level. He also in his review had a very positive impact of the regional rural banks had
to play in the country to increase the use of digital transactions and to boost cashless economy in
India therefore, it is important for these types of banks to play the role of volunteers in the case of
digital transactions as to promote cashless transactions and also to stick with people to train in rural
areas like how to use digital means and how to do digital transactions.

28
Bappaditya Mukhopadhyay (2016), These selections are a unit prejudiced by the handiness of
cashless transactions weigh against the appeal to evade taxes. Significantly higher proportion of
people builds cashless payments currently (12.61% in 2014 as compare to three. 47% in 2011); Most
growth in cashless payments has been through itinerant payments. The variables in addition to also
the price of cashless transactions have a CAGR of nineteen, 91% and 24.14%, respectively. A
compartmentalization of amendment agent roles in a very industrial context, acknowledging the
distinctive relationship that club staff has with customers. It highlights, however his could be
leveraged to boost new development and client adoption. In specific, sturdy bonds exist between
agents and clients because of the frequency of customer visitation, and trust is expedited by their
membership standing. Employees during this study incontestable a capability to be familiar with and
answer consumer want in related ways that, and mirrored in some detail on the consequence of client
adoption of the cashless card on their role and responsibilities.

L Dawson (2016), in his report on the critic of the Government, ample arrangements should be made
in all parts of the country, especially the Government should send their volunteers in the rural areas
of the country to talk with low income people that how the cashless economy of the country will
work, also adequate safety measures to guard online transactions against fraud which is very common
in India.

The critics further argued that due to unavailability of cash many people died and lost their jobs, so
it’s the responsibility of the Government to ensure that everything goes according to a well-planned
system, as in country like India it is tough to deal with proper electricity in some areas of the nation,
24*7 internet etc.

Former RBI Governor Raghuram Rajan said that, “post –demonetization, e-transactions volumes
reverted back to earlier trends.” He also added that rise of digital transactions is a blip which is hard
to understand because in such a vast country like India you need to have proper vision to have cashless
transactions.

Manyul (2016), in his article mentions various of the benefits of cashless transactions to nations like
increased GDP by using cards and reduced social cost, increased in financial inclusion due to
acceptance of e-payments, reduce the shadow economy, reduced in cash payment enables ecommerce
growth and facilitated trusted transactions online. He says that at 1.7% of GDP, India incurs a much
higher cost of cash compared with most developed economies. Every changing digital world had a
huge impact on Human resource. It had created an impacts on their jobs and their workplaces. He
mentions five challenges that the human resource has to in the present as well as in the future. The
five challenges are- figure out when processes should be automated, versus when a human face or

29
voice is the best route, healthier communicators in order to efficiently leverage the digital space,
simplify the data and provide a clear picture of their up to date workforce as the data are spotted
among various systems and acquired in varied formats, 21 fear from the legal department of using
social media and HR has to estimate what function can be automatic and provide beloved level of
services.

He, basically had to say about the main challenges and impacts and advantages which the country is
going to face in growing upto cashless economy, he also clearly stated that how the country’s GDP is
going to increase or decrease that is not the matter, but the fact is to make India a cashless country
that is really big chance and challenge as well, also after demonetization the country has already seen
so much changes in the nation’s economy so now after 2-3 years that the country will settle down and
after that the government should see as making India as a cashless nation by introducing diverse
schemes.

Team (2016), paper clarifies the impact of Demonetization on the accessibility of credit, spending,
level of activity and government finances. The impact of the shock in the medium term is a function
of how much of the currency will be replaced at the end of the replacement process and the scope to
which currency in circulation is extinguished.

P Manivannan (2013), in his research paper "Plastic money means less payment and the use of more
card payment system. It was then, when in his review of cashless economy he choose that this
economy will be more beneficial in the long run for the country or every state, but it will take more
time to reach out to people in rural areas rather than urban areas, as in rural aeras people will find it
difficult to understand the basic needs of the country, or the necessary items which might be used for
the cashless economy and for digital transaction. However, today, with the development of banking
industry, fixed income group also begins the use of plastic and electronic money payment systems
and especially credit cards.

Rachna & Singh (2013), Study expected to spot the issues and challenges of electronic payment
systems and offer some solution to progress the e-payment system quality. With respect to the 25
payments method they have analysed, it is unworkable to say that any one of them is perfect, although
each one of them has reward as opposed to others. If the client wants to maintain space to yourself
then they choose those payment methods which guarantee a higher level of privacy such as e-cash or
Net Bill Checks. If the main concern is security, they should use, smart cards. The study concludes
on the note that, successful implementations of electronic payment systems depend on how the
security and privacy scope perceived by consumers as well as sellers are popularly managed in turn
would pick up the market assurance in the system.

30
Subhani (2011), conducted a study on the "plastic money / credit cards for kudos between now and
then." The study was based on information of the magnetism of plastic and its impact on the choice
for the use of money. The research found that the preference for the use of plastic money / credit card
has several pros and cons although it is easy to use and affordable. According to the consumer
behaviour it is stated that plastic money is a form of inspiration for a consumer to spend. The study
suggests that the preference to use plastic money to have a positive relationship with the easiness of
use because the principle of a credit card has been linked to usage with psychosomatic phenomena
that people lean to spend less with a credit card and spend more with the same amount of cash in
hand. She also had a say on the multiple usage of both the cards as well as cash which has been used
by many people in different ways but also had a good number of cards used in earlier days as India
was always ready for a cashless country, but for that like all others Shubhani also said in her review
that it will take a long time for a country of 1.2 billion people to become cashless country.

Roth (2010), realistic that developed countries of the world, to large extent are moving away from
paper payment instruments towards electronic ones, especially payment cards, some aspects of the
execution of cashless economy are improved by e-finance, e-money and E-exchanges.

According to another report in 2017 after demonetization, there was report that Indian economy is
cash based, so much that MNCs like Amazon had to incorporate cash on delivery just to tap into the
Indian market.

Devlin (2007), “An Analysis of main and subsidiary credit card asset and spending.” This study seeks
to scrutinize why most various credit cardholders have a “main” card (i.e. a card used more often than
others) and “subsidiary” cards (i.e. cards used less often or only in an emergency) and the spending
pattern connected with main and subsidiary cards. This study is a qualitative in nature, using a survey
which contained open-ended questions to acquire data. Response was subject to content analysis to
categories the reasons given for having a main and subsidiary card. Results show that 85 per cent of
the 141 respondents indicated that they had a main card and the most commonly quoted reason for
having such a card was the superior discount and promotions which were presented by the card issuer.
Not surprisingly, main cards were used for the broadest range of transactions while subsidiary cards
were used for a more restricted range of transactions, a majority saying that their subsidiary cards
were held for “stand by purpose”. The results suggests that managers who market credit cards should
aim to ensure that, in all times, the discount they offer, the promotions they put together and their
trustworthiness schemes are superior to those offered by competitors. By meeting these aims, higher
number of consumers, who are numerous cardholders, are likely to use their card as a main card,
thereby generating more income for their credit card holders which will have a great impact on both

31
the customers and the economy of the country as well, in his research he also said about the collision
and benefits the country he is going to get on the basis of cashless economy.

Srinivas, N. (2006), in his study ―An examination of the default in credit card payments , has tried
to analyse the socio-economic profile of the defaulters of credit cards, to identify the set of factors
which contributed to such defaults and suggest relevant measures to minimize the default cases.
Analysis of reasons indicated that economic adversity is the major reason acknowledged by majority
of the sample units follows by strict payment structure and loss of job/business. The main proposal is
that the banks concerned ought to redesign the payment structure of credit card defaulters in a flexible
and affordable instalment.

Humphrey et al. (2006) explored the global trends and implications of the shift towards cashless
payment systems, with a focus on the economic and social consequences of this transition. The study
analysed various payment methods, including credit and debit cards, mobile payments, and electronic
transfers, and discussed how these systems are reshaping economies. The authors emphasized that
cashless transactions offer numerous advantages, such as improved efficiency, reduced costs for
businesses, and enhanced transparency. However, they also pointed out several challenges, including
the digital divide, security concerns, and the potential exclusion of certain demographic groups,
particularly in developing nations. Humphrey et al. (2006) concluded that while the movement
towards a cashless society offers clear economic benefits, it requires careful consideration of the
associated risks, and governments and institutions must address these issues to ensure that the
transition is inclusive and equitable for all citizens.

Woodford (2002), Cashless economy is as one in which it is assumed to have no transaction frictions
that can be diminish through the use of money balances that accordingly provide a reason for holding
such balances even when they rate of return.

According to 2015 report, India’s unbanked population was 233 million. Even for people with access
to banks, the capability to use their debit or credit card is imperfect because wallet users had provided
the no. of mobile banking users and 3 times the no. of credit card users.

Santomero (1996), analysed the various choice forms of money such as prepaid cards, cash cards
electronic purse, smart cards etc and their demand for medium of exchange with the help of Baumol-
Tobin Model. It was found that range of use of asset decreases with the fall in household income,
usage patterns of medium of exchange differ with the same income but different allocation of income
among consumption of goods and households tend to use the higher interest medium of exchange to
buy the good that constitutes the largest amount of its income etc.

32
 CHAPTER – 3
RESEARCH METHODOLOGY

33
 CHAPTER – 3

3.1 INTRODUCTION

The research methodology serves as the foundation of this study, outlining the systematic procedures
and techniques adopted to explore the cashless economy in Chennai City. With the increasing
penetration of digital payment systems, government initiatives, and technological advancements,
understanding the shift from cash-based transactions to cashless modes is critical. This study aims to
assess the adoption, challenges, and future potential of cashless transactions among individuals and
businesses in Chennai.

To ensure the accuracy and reliability of the findings, the research employs a well-defined
methodology encompassing both primary and secondary data sources. The study follows a structured
approach, beginning with a comprehensive research design that aligns with the objectives of the study.
The data collection methods, sampling techniques, and analytical tools are carefully selected to ensure
that the study captures diverse perspectives, including consumers, business owners, and financial
institutions.

Furthermore, this section elaborates on the selection of respondents, the justification for choosing
specific data collection methods, and the analytical techniques used to interpret the findings. Ethical
considerations, reliability measures, and potential limitations of the study are also highlighted. By
employing a robust methodological framework, the research aims to provide valuable insights into
the effectiveness, awareness, and challenges of the cashless economy in Chennai, contributing to
academic literature and practical implications for policymakers and businesses.

1. Research approach

A quantitative research approach has been employed to gather structured and statistical insights. The
study relies on primary data collection through a survey questionnaire designed to capture consumer
adoption, usage patterns, challenges, and perceptions of the cashless economy in Chennai City.
Additionally, qualitative insights are incorporated through open-ended responses to understand the
broader implications and experiences associated with digital transactions. This approach ensures a
comprehensive analysis of the effectiveness, challenges, and future prospects of a cashless economy
in the region.

2. Research type

A descriptive research type has been adopted for this study to analyze the cashless economy in
Chennai City. This research aims to systematically describe the adoption, usage patterns, benefits,

34
and challenges associated with digital transactions. By using structured surveys and qualitative
insights, the study provides a clear understanding of consumer behavior, business adaptation, and the
overall impact of a cashless economy. The descriptive approach helps in identifying trends,
preferences, and key factors influencing the transition from cash-based to digital payment systems in
Chennai.

3. Sampling Design

The study follows a random sampling technique to ensure an unbiased representation of respondents
from Chennai City. The responses were collected from individuals using various cashless payment
methods. The participants were selected randomly, covering different demographics such as age,
occupation, and income levels to gain diverse perspectives on the adoption and challenges of the
cashless economy. This sampling approach ensures that the data reflects the general trends and
consumer behaviour related to digital transactions in Chennai. The collected responses provide
valuable insights into the effectiveness, awareness, and limitations of cashless payment systems in
the region.

4. Data Collection Method

The study employs a structured survey questionnaire to gather first-hand information on the adoption
and challenges of the cashless economy in Chennai City. The questionnaire consists of both closed-
ended and open-ended questions, covering aspects such as usage patterns, preferred digital payment
methods, benefits, and challenges faced by users. The survey was distributed online and offline to
ensure a diverse range of responses. A total of 100 responses were collected from randomly selected
individuals, providing quantitative insights into consumer behaviour and perceptions of cashless
transactions. This method ensures reliable and relevant data for analysing the impact and effectiveness
of the cashless economy in Chennai.

5. Statistical tool for Data Analysis

To derive meaningful insights from the collected data, the following statistical tools have been used:

 Percentage Analysis: This method has been utilized to determine the proportion of responses
for various factors influencing e-recruitment adoption, benefits, and challenges.

 Weighted Average Method: To assess the relative importance of different challenges and
benefits, a weighted average approach has been applied, ensuring that more influential factors
carry higher significance in the final interpretation.

35
6. Scope and Limitations of the Study

This study focuses on analysing the adoption, usage patterns, benefits, and challenges of the cashless
economy in Chennai City. It examines consumer behaviour, business adaptation, and the impact of
digital transactions on financial inclusion. The study also explores factors influencing the shift from
cash-based transactions to digital payments, including government policies, technological
advancements, and user awareness. The insights from this research can benefit policymakers,
financial institutions, and businesses in understanding the effectiveness of cashless transactions and
improving digital payment systems. Despite its significance, the study has certain limitations. Firstly,
the sample size is limited to 100 respondents, which may not fully represent the entire population of
Chennai. Secondly, the data is collected primarily through survey responses, which are subject to
individual perceptions and biases. Additionally, the study focuses only on Chennai City, limiting the
generalizability of the findings to other regions. External factors such as government policy changes,
cybersecurity risks, and digital infrastructure variations are not deeply analysed, which may impact
the overall assessment of the cashless economy.

36
3.2 SAMPLE DESIGN

3.2.1. Target population:

The target population for this study includes residents of Chennai City who engage in cashless
transactions. This includes individuals from different age groups, occupations, and income levels to
ensure diverse perspectives on digital payment adoption. The study primarily focuses on consumers
who use digital payment methods such as UPI, debit/credit cards, mobile wallets, and online banking
for daily transactions. By targeting a broad demographic, the research aims to capture varying levels
of awareness, usage patterns, and challenges faced in the transition to a cashless economy.

3.2.2. Sampling unit:

The sampling unit for this study consists of individual consumers in Chennai City who use or have
access to cashless payment methods. These individuals were selected randomly, irrespective of their
age, occupation, or income level, to understand the general adoption and challenges of digital
transactions. Each respondent represents a unit of analysis, contributing insights into the
effectiveness, awareness, and barriers associated with the cashless economy in Chenna

3.2.3. Sampling Frame:

The sampling frame for this study includes individuals residing in Chennai City who actively engage
in cashless transactions. Since there is no official database of all cashless transaction users, the study
relies on a non-probability sampling approach, where respondents were selected randomly through
online and offline surveys. The sampling frame includes people from different demographic
backgrounds, such as students, working professionals, business owners, and homemakers, ensuring a
diverse representation of digital payment users in Chennai.

3.2.4. Sampling Technique:

A convenience sampling technique has been adopted for this study. This non-probability sampling
method is used because:

 It allows easy access to respondents within Chennai city who are aware of cashless
economy.

 It ensures quick data collection from individual willing to participate in the study.

 It is suitable given the time and resource constraints of the research.

37
Although convenience sampling does not provide a strictly random representation of the population,
it is effective in capturing relevant insights from the population who actively use digital mode of
exchange.

3.2.5. Sample Size:

This study includes 100 randomly selected respondents from Chennai City to analyse the adoption
and challenges of the cashless economy. The sample size ensures a diverse representation while
keeping data collection manageable.

38
3.3 DATA COLLECTION TECHNIQUES

1. Data collection type:

 Primary data: The study relies on primary data collected through a structured survey
questionnaire from 100 randomly selected respondents in Chennai City. The survey
includes both closed-ended and open-ended questions to gather insights on consumer
adoption, usage patterns, benefits, and challenges of cashless transactions. This firsthand
data helps in understanding real-time experiences and perceptions of digital payment
users.
 Secondary data: This study also utilizes secondary data from various sources such as
research papers, government reports, banking sector publications, articles, and websites
related to the cashless economy. These sources provide background information, statistical
trends, policy developments, and insights into digital payment adoption at a broader level.
Secondary data helps in supporting the primary research findings and offers a
comprehensive understanding of the cashless economy in Chennai City.
2. Data Interpretation and Presentation Techniques
The collected data is analysed using tabular representation and pie charts to present findings in a
clear and structured manner. Tables are used to organize numerical data, making it easier to
compare different variables, while pie charts visually represent the distribution of responses,
highlighting trends in cashless payment adoption, usage patterns, and challenges. These
techniques help in interpreting the data effectively, allowing for better understanding and analysis
of consumer behaviour in the cashless economy of Chennai City.

Data Collection Procedure:

 In-Person Surveys: Researchers approached target population. The purpose of the study was
explained, and informed consent was obtained. Participants completed the questionnaire on
the spot, which took approximately 10 minutes.

 Online Surveys: An electronic version of the questionnaire was created using an online
survey tool. A link to the survey was shared via email and social media. Participants provided
digital consent before beginning the survey.

39
3.4 STATISTICAL TOOLS USED:

1. Percentage Analysis

Percentage analysis is a statistical method used to interpret and compare data by converting raw
numbers into percentages. This approach allows for easier comparison between different datasets,
regardless of their original size. It's widely used in various fields, including business, social sciences,
and health research, to understand proportions, distributions, and relationships within data.

NO OF RESPONDENTS
PERCENTAGE RESPONDENTS = 100
TOTAL RESPONDENTS

Further, Pie diagrams or pie charts are circular statistical graphics divided into slices to illustrate
numerical proportions. Each slice represents a category's contribution to the whole, making it easy to
see how different parts compare to each other.

2. Weighted Average Method - This Method is used as a statistical tool to analyse survey responses
effectively. This method helps in assessing consumer preferences, measuring the impact of
influencing factors, and comparing demographic variations in cashless transaction adoption. By
assigning different weights to responses based on their importance or frequency, a more accurate
interpretation of trends can be achieved.

Ethical consideration

 Informed Consent: Participants were informed about the study's purpose, procedures,
potential risks, and benefits. Consent was obtained prior to participation.

 Confidentiality: Data were anonymized using participant codes. Personal identifiers were not
collected or were removed during data processing.

 Voluntary Participation: Participants were assured that their involvement was voluntary and
that they could withdraw at any time without penalty.

40
Reliability and Validity

 Reliability Measures: A pilot test of the questionnaire was conducted with 15 students to
ensure clarity and consistency. Cronbach's alpha was calculated for scale items to assess
internal consistency.

 Validity Measures: Content validity was established through expert review. Questions were
aligned closely with the research objectives to ensure they accurately measured the intended
variables.

41
3.5 OBJECTIVES OF THE STUDY

The transition to a cashless economy is gaining momentum, driven by digital advancements and
government initiatives. In Chennai, understanding the adoption of digital payments and its impact is
essential for ensuring financial inclusion and efficiency. This study aims to analyse key factors
influencing digital transactions, assess benefits and challenges, and evaluate the role of government
policies. By setting clear objectives, the research seeks to provide insights that can help improve
digital payment adoption and enhance the cashless economy in Chennai.

1. To analyse the adoption of digital payment systems in Chennai City

2. To identify the factors influencing the shift towards a cashless economy

3. To evaluate the benefits of a cashless economy

4. To examine the challenges and limitations of cashless transactions.

5. To assess the impact of government policies and initiatives on digital payment adoption.

6. To explore the level of financial inclusion in a cashless economy.

7. To provide recommendations for enhancing the cashless economy

42
3.6 SCOPE OF THE STUDY

The scope of this study focuses on understanding the extent of digital payment adoption, the factors
influencing its growth, and the challenges faced in transitioning to a cashless society. The research
examines various digital payment modes such as UPI, mobile wallets, credit and debit cards, internet
banking, and other fintech innovations, assessing their impact on individuals, businesses, and
financial institutions. It also explores the role of government policies, technological advancements,
and consumer behaviour in shaping the digital economy.

 Geographical Scope: The study focuses on Chennai City, a major metropolitan area with a
diverse population, making it an ideal setting to analyse the adoption and challenges of a
cashless economy across different demographics.
 Digital Payment Modes: The research examines various digital payment methods, including
UPI, mobile wallets (such as Google Pay and Paytm), credit and debit cards, internet banking,
and other fintech innovations that facilitate cashless transactions.
 Target Groups: The study considers multiple stakeholders, including individual consumers,
small and large businesses, financial service providers, and policymakers, to understand their
roles and perspectives in the transition toward a cashless economy.
 Factors Influencing Adoption: The research explores key drivers such as the availability of
digital infrastructure, government initiatives (like Digital India and UPI expansion),
consumer awareness, and trust in digital transactions, all of which impact the acceptance and
use of cashless payment systems.
 Benefits of a Cashless Economy: The study highlights advantages like reduced transaction
costs, increased financial transparency, faster and more efficient transactions, and the
potential for a more accountable and formalized economy.
 Challenges and Limitations: It also identifies obstacles to widespread adoption, including
cybersecurity threats, digital illiteracy, concerns about fraud, the reluctance of small vendors
to accept digital payments, and the exclusion of lower-income groups due to lack of access
to technology.
 Policy and Practical Implications: The research aims to provide actionable
recommendations for improving digital payment adoption, strengthening security measures,
and enhancing financial inclusion, ensuring that the shift toward a cashless economy benefits
all sections of society.

43
3.7 LIMITATION OF THE STUDY

1. The study is being conducted within a fixed timeframe of 45 days, which may limit the ability
to conduct a comprehensive longitudinal analysis. This means that the study might not capture
long-term trends or the evolving nature of cashless payments in Chennai.
2. The sample size for surveys and interviews is limited that is of 100 respondent, the study’s
findings might not be representative of the entire population of Chennai, leading to potential
sampling biases.
3. The study focuses only on Chennai, which may not fully represent trends in other parts of
India. The findings may not be generalizable to rural areas or smaller cities where cashless
payments might face different challenges or adoption rates.
4. The research assumes a certain level of access to digital payment systems. However, not all
individuals in Chennai may have access to the necessary technology, such as smartphones,
internet connectivity, or digital literacy, which could skew the study's findings
5. As the study focuses on Chennai, which is an urban city, it may not reflect the situation in
rural areas or other smaller cities where cashless transactions might face different challenges
due to infrastructure limitations, literacy, and economic factors.
6. Not all survey participants may fully understand the technical aspects of cashless payments.
Misunderstandings or incomplete knowledge could lead to inaccurate responses, particularly
when discussing more complex payment systems or security features.

44
3.8 CONCEPTUAL FRAMEWORK

The conceptual framework for this study on the cashless economy with reference to Chennai City is
based on the relationship between various influencing factors and the adoption of digital transactions.
The shift towards a cashless economy is driven by multiple elements, including digital infrastructure,
government policies, consumer awareness, security concerns, and financial inclusion. Digital
infrastructure, such as the availability of mobile networks, internet access, and payment gateways,
plays a crucial role in enabling seamless transactions. Government initiatives like Digital India, UPI,
and demonetization policies have further encouraged the move toward a digital economy. Consumer
awareness and perception significantly influence the acceptance of digital payments, as individuals'
trust and willingness to shift from cash transactions depend on their understanding of digital
platforms. Security and privacy concerns, including cyber threats and fraud risks, also impact
adoption, as users may hesitate to switch due to fears of data breaches. Financial inclusion is another
critical factor, as the cashless economy can only be successful if all sections of society, including the
unbanked and underprivileged, have access to digital financial services.

The study explores how these factors interact and contribute to the widespread adoption of digital
payments, leading to reduced dependency on cash, increased economic efficiency, and enhanced
transparency in financial transactions. The theoretical foundation is based on models such as the
Technology Acceptance Model (TAM), which explains how perceived usefulness and ease of use
influence digital adoption; the Diffusion of Innovation Theory, which highlights the process by which
new technologies spread among consumers and businesses; and the Financial Inclusion Theory, which
emphasizes the role of digital payments in bridging the financial accessibility gap. The conceptual
framework establishes a cause-effect relationship where digital infrastructure, policies, and awareness
act as independent variables, trust and security concerns serve as mediating factors, and the ultimate
outcomes include higher digital transaction adoption, improved economic efficiency, and financial
inclusion. By analysing these elements, the study aims to provide insights into the progress of
Chennai’s cashless economy, identify challenges, and recommend measures to enhance digital
payment adoption for a more inclusive and efficient financial system.

45
3.9 CHAPTERIZATION

Introduction, Origin, Meaning, Concepts, Features, Significance,

CHAPTER – 1 Digital India Program and Initiatives, Conclusion.

Review of Literature, Theoretical Background, Existing studies, Key

CHAPTER – 2 concepts & Definitions and Framework for analysis.

Research Methodology, Research Design, Data Collection Methods

CHAPTER – 3 (Primary & Secondary Data), Sampling techniques, Tools and
Techniques for analysis Justification for Methodology.
Data Analysis and Interpretation, Presentation of Collected Data
CHAPTER – 4 (Tables and Charts), Statistica Analysis.

Findings, Observation and Suggestions.

CHAPTER – 5

Conclusions, Bibliography and Annexure.

CHAPTER – 6

46
3.10 CONCLUSION

The research methodology adopted in this study plays a crucial role in ensuring the accuracy,
reliability, and credibility of the findings. By employing a structured research design, this study
systematically examines the factors influencing the adoption of a cashless economy in Chennai. The
use of both primary and secondary data sources allows for a comprehensive understanding of digital
payment trends, challenges, and opportunities in the city. Primary data collected through surveys and
interviews provide firsthand insights into consumer behaviour, business adoption, technological
infrastructure, and government policies related to digital transactions. Meanwhile, secondary data
sourced from government reports, research articles, and financial records supplement the primary
findings and help in validating the results.

The sampling design of the study has been carefully planned to ensure that the data represents a
diverse group of respondents, including individuals from different age groups, income levels, and
educational backgrounds, as well as small businesses and financial institutions. By using a suitable
sampling technique, this research ensures that the collected data is unbiased and reflective of the
broader population of Chennai. The chosen data collection methods, whether through online surveys,
in-person interviews, or structured questionnaires, help in gathering meaningful and relevant
information that contributes to a deeper understanding of cashless transactions in the city.

Furthermore, data analysis techniques play a significant role in interpreting the collected data
accurately. Statistical tools such as frequency distribution, correlation analysis, and regression models
are used to identify patterns and trends in consumer behaviour toward digital payments. By applying
these methods, the study can derive key insights into how factors such as digital literacy, security
concerns, and government incentives influence the adoption of cashless transactions. The use of
software tools like SPSS, Excel, or other analytical programs ensures that the findings are data-driven
and objective, reducing the likelihood of errors or biases in interpretation.

Another important aspect of the research methodology is ensuring the reliability and validity of the
data. Reliability is maintained by using a consistent data collection approach, while validity is ensured
by designing survey questions and interview guidelines that align with the study’s objectives. If a
pilot study or pre-testing was conducted, it would further enhance the accuracy of the research
instruments, minimizing ambiguities and improving the overall effectiveness of data collection. These
steps contribute to the credibility of the study and ensure that the conclusions drawn are well-founded
and applicable to real-world scenarios.

Ethical considerations have also been given significant attention in this study. Ensuring the
confidentiality and anonymity of participants helps build trust and encourages honest responses from
47
survey respondents. Informed consent is obtained from participants before data collection, ensuring
that they voluntarily take part in the study. Additionally, the research follows standard ethical
guidelines to prevent any misuse or misinterpretation of data. By maintaining these ethical principles,
the study upholds academic integrity and ensures that the research process remains fair, transparent,
and responsible.

In conclusion, the research methodology adopted in this study provides a structured and systematic
approach to analysing the adoption and impact of the cashless economy in Chennai. By integrating a
well-planned research design, diverse data sources, appropriate sampling techniques, and advanced
data analysis methods, the study aims to produce reliable and insightful findings. The ethical
considerations incorporated in the study further reinforce its credibility and ensure that the research
process is conducted responsibly. This well-defined methodology forms the foundation for the study’s
conclusions and recommendations, which can contribute to better policy formulation, enhanced
business strategies, and greater consumer adoption of digital payments in Chennai.

48
 CHAPTER – 4
DATA ANALYSIS AND &
INTERPRETATION

49
 CHAPTER – 4

DATA ANALYSIS & INTREPRETATION

4.1 Introduction to Data Analysis and Interpretation

This section presents the analysis and interpretation of the 100 responses collected through a Google
Forms survey for the study on “A Study on Cashless Economy with Reference to Chennai City.” The
responses have been systematically analysed using statistical tools such as percentage analysis,
weighted average method, and graphical representations provided by Google Forms and represented
in the form of pie chart and tabulation. The goal is to identify key trends, preferences, and challenges
related to the adoption of cashless transactions.

4.2 Objectives of Data Analysis:

 To examine consumer preferences for different digital payment methods such as UPI, mobile
wallets, and debit/credit cards.

 To analyse key factors influencing cashless transaction adoption, such as convenience,

security, and government policies.

 To identify challenges faced by users in transitioning to a cashless economy, including

technical issues, cybersecurity concerns, and awareness gaps.

 To provide insights that can assist policymakers, financial institutions, and businesses in
improving digital payment systems.

By interpreting the collected data, this study aims to provide valuable findings that contribute to a
better understanding of the cashless economy in Chennai and its future potential.

4.3 Demographic Variables

The following figures and tables are representing the demographic variables of the respondents

50
 Table 4.3.1 Gender of respondents

Gender Frequency Percentage (%)

Male 66 66%
Female 34 34%
Total 100 100%

Chart 4.3.1 Gender of the respondent

GENDER OF THE RESPONDENT

MALE FEMALE

INTERPRETATION

The above table 4.3.1 shows that 66% are male respondent and 34% are female respondents. Compare
to the female respondents the male respondents are higher (32%). his could reflect greater
involvement in cashless transactions or simply the sampling method. However, the 34% female
representation ensures both perspectives are considered.

51
 Table 4.3.2 Age of the respondents

Age Frequency Percentage (%)

10 To 20 16 16%
20 To 30 54 54%
30 To 40 27 27%
Above 40 3 3%
Total 100 100%

Chart 4.3.2 Age of the respondents

AGE

10 To 20 20 To 30 30 To 40 Above 40

INTERPRETATION

The table 4.3.2 shows that the majority of respondents (54%) are aged 20 to 30, followed by 27% in
the 30 to 40 age group. Younger individuals (10 to 20 years, 16%) also have a notable presence, while
only 3% are above 40. This suggests that the study is largely influenced by younger age groups, who
are likely more engaged with cashless transactions.

52
 Table 4.3.3 Educational qualification of respondents

Particulars Frequency Percentage (%)

School 14 14%
Under graduate 58 58%
Post graduate 17 17%
Professional course 4 4%
Others 7 7%
Total 100 100%

Chart 4.3.3 Educational qualification of respondents

Educational qualification

School UG PG Professional course others

INTERPRETATION

The table shows 4.3.3 that the majority of respondents (58%) are undergraduates, followed by 17%
who are postgraduates. School students make up 14%, while 4% are pursuing professional courses,
and 7% fall into the others category. This indicates that most participants are in higher education,
which could suggest a greater awareness and usage of cashless transactions among students and
graduates.

53
 Table 4.3.3 Age of the respondent

Occupation Frequency Percentage (%)

Student 46 46%
Government employee 5 5%
Private 26 26%
Business 10 10%
Home make 6 6%
Unemployed 7 7%
Total 100 100%

Chart 4.3.3 Occupation of respondent

OCCUPATION

Student Government employee Private Business Home maker Unemployed

INTERPRETATION

The above table 4.3.3 shows that 46% of respondents are students, making them the largest group,
followed by 26% working in the private sector. Business owners (10%), homemakers (6%), and
unemployed individuals (7%) also contribute to the study. Government employees (5%) form the
smallest group. This indicates that students and private sector employees are the primary respondents,
which may reflect their higher engagement with cashless transactions.

54
 Table 4.3.4 Respondents support cashless economy

Particulars Frequency Percentage (%)

Yes 74 74%
No 4 4%
May be 22 22%
Total 100 100%

Chart 4.3.4 Respondents support for cashless economy

DO YOU SUPPORT CASHLESS ECONOMY

Yes No May be

INTERPRETATION

The above table 4.3.4 shows that 74% of respondents support the cashless economy, indicating a
strong preference for digital transactions. 22% are uncertain, suggesting they may have concerns or
need more awareness. Only 4% oppose it, showing minimal resistance. This highlights a positive
attitude toward cashless transactions, with some hesitation among a smaller group.

55
 4.3.5 Table of Reason for adaptation of cashless economy

Particulars Frequency Percentage (%)

Convenient and easy 46 46%
Discount 8 8%
Reward and cashbacks 27 27%
Easy to track your spending 17 17%
Shortage of cash 2 2%
Total 100 100%

Chart 4.3.5 Reason for adaptation of cashless economy

IF YOU ARE SUPPORTING CASHESS ECONOMY, WHY WOULD

YOU LIKE TO ADOPT CASHLESS TRANSACTION?

Convenient and easy Discount Reward and cashbacks

Easy to track your spending Shortage of cash

INTERPRETATION

The table 4.3.5 shows that 46% of respondents prefer a cashless economy for its convenience and
ease of use, making it the most significant reason for adoption. 27% are motivated by rewards and
cashbacks, while 17% value the ability to track spending. Only 8% consider discounts, and 2% cite a
shortage of cash as a reason. This indicates that user-friendliness and financial benefits play key roles
in the shift toward cashless transactions.

56
 Table 4.3.6 Respondents Preferred mode of online payment

Particulars Frequency Percentage (%)

Gpay & Patym 60 60%
Net banking 17 17%
Debit and credit card 9 9%
Mobile bankig 8 8%
Others 6 6%
Total 100 100%

Chart 4.3.6 Respondents preferred mode of online payment

RESPONDENT'S PREFERRED MODE OF ONLINE PAYMENT

Gpay & Paytm Netbankig Debit & Credit card Mobile banking

INTERPRETATION

The data shows that 60% of respondents prefer GPay & Paytm, making them the most popular online
payment modes. 17% use net banking, while 9% rely on debit and credit cards. 8% prefer mobile
banking, and 6% use other methods. This indicates a strong preference for mobile-based UPI
transactions, highlighting their convenience and widespread adoption.

57
 Table 4.3.7 How often will respondent make online payment

Particulars Frequency Percentage (%)

Daily 49 49%
Weekly 28 28%
Rarely 15 15%
Never 8 8%
Total 100 100%

Chart 4.3.7 How often will respondent make online payment

HOW OFTEN WILL RESPONDENT MAKE ONLINE PAYMENT

Daily Weekly Rarely Never

INTERPRETATION

The data shows that 49% of respondents make online payments daily, indicating frequent reliance on
digital transactions. 28% use them weekly, while 15% do so rarely. Only 8% never use online
payments. This suggests that cashless transactions are a routine part of life for most respondents,
though some still prefer traditional payment methods.

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 Table 4.3.8 Respondents most of payment for large sum

Particulars Frequency Percentage (%)

Cash 22 22%
Credit & debit card 5 5%
Net baking 56 56%
Cheque and demand draft 17 17%
Total 100 100%

Chart 4.3.8 Respondents most preferred mode of payment for large sum

Respondent's most preferred mode of payment for large

sum

Cash Debit or credit card Netbankig Cheques and demand drafts

INTERPRETATION

The data shows that 56% of respondents prefer net banking for large-sum payments, making it the
most popular choice. 22% still rely on cash, while 17% use cheques and demand drafts. Only 5%
prefer credit and debit cards. This suggests that while digital methods dominate, a notable percentage
still prefer traditional modes for high-value transactions.

59
 Table 4.3.9 Respondents opinion whether India is ready for cashless economy

Particulars Frequency Percentage %

Yes 95 95%
No 5 5%
Total 100 100%

Chart 4.3.9 Respondents opinion whether India is ready for cashless economy

Respondent’s opinion whether India is ready for cashless

economy

Yes No

INTERPRETATION

The data shows that 95% of respondents believe India is ready for a cashless economy, reflecting
strong confidence in digital transactions. Only 5% think the country is not ready, suggesting minimal
skepticism. This highlights a positive outlook on India’s digital payment infrastructure and its
growing acceptance.

60
 Table 4.3.10 Respondents opinion on obstacles will India face to its road to cashless economy

Particulars Frequency Percentage (%)

Digital literacy 46 46%
Infrastructure 30 30%
Poverty 13 13%
Government implementation 11 11%
Total 100 100%

Chart 4.3.10 Respondents opinion on obstacles will India face to its road to cashless economy

Respondet's opinion on the obstracles will India face to itts

road to cashless economy

DIGITAL LITERACAY INFRASTRUCTURE POVERTY GOVERNMENT IMPEMENTATION

INTERPRETATION

The data shows that 46% of respondents see digital literacy as the biggest obstacle to a cashless
economy, indicating a need for better awareness and education. 30% believe infrastructure is a major
challenge, while 13% cite poverty as a barrier. 11% think government implementation could be an
issue. This suggests that while digital adoption is growing, improving accessibility and awareness
remains crucial for a fully cashless India.

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 Table 4.3.11 Respondents opinion on best way to achieve cashless economy

Particulars Frequency Percentage (%)

Proper internet connection 15 15%
Improved infrastructure 26 26%
Promotion and awareness of 24 24%
digital currency
Encouraging people to use 35 35%
digital payment system
Total 100 100%

Chart 4.3.11 Respondents opinion on best way to achieve cashless economy

Respondent's opinion on best ways to achieve cashless

economy

Proper internet connection

Improved infrastructure
Promotion and awareness of digital currency
Encouraging people to use digital payment system

INTERPRETATION

The data shows that 35% of respondents believe encouraging people to use digital payments is the
best way to achieve a cashless economy. 26% emphasize the need for improved infrastructure, while
24% suggest promotion and awareness of digital currency. 15% think a proper internet connection is
key. This highlights the importance of both technological advancements and public engagement in
driving a cashless economy.

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 Table 4.3.12 Respondents opinion on elimination of currency note

Particulars Frequency Percentage (%)

Yes 78 78%
No 22 22%
Total 100 100%

Chart 4.3.12 Respondents opinion on elimination of currency notes

Respondent's opinion on elimination of currency note

Yes No

INTERPRETATION

The data shows that 78% of respondents support the elimination of currency notes, indicating strong
Favor for a fully digital economy. However, 22% oppose it, suggesting concerns about accessibility,
security, or adaptability. This highlights a growing acceptance of cashless transactions while
acknowledging the need to address challenges for a complete transition.

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 Table 4.3.14 Respondents opinion on safety of using digital means of payment

Particulars Frequency Percentage (%)

Yes 74 74%
No 26 26%
Total 100 100 %

Chart 4.3.14 Respondents opinion on safety of using digital means of payment

Respondent's opinion on safety on using digital means of

payment

Yes No

INTERPRETATION

The data shows that 74% of respondents consider digital payments safe, indicating strong trust in
online transactions. However, 26% believe they are not safe, suggesting concerns about fraud,
security breaches, or data privacy. This highlights the need for continuous improvements in
cybersecurity and awareness to enhance confidence in digital payment systems.

64
 Table 4.3.15 Respondents frequency on changing passwords and pins of Internet banking,
debit and credit card

Particulars Frequency Percentage (%)

Often 14 14%
Rarely 41 41%
Once in a year 19 19%
Never 26 26%
Total 100 100%

Chart 4.3.15 Respondents frequency on changing passwords and pins of Internet banking,
debit and credit card

Respondent’s frequency on changing passwords and pins of

Internet banking, debit and credit card

Often Rarely Once in a year Never

INTERPRETATION

The data shows that 41% of respondents rarely change their passwords and PINs, while 26% never
do so, indicating potential security risks. 19% update them once a year, and only 14% do so often.
This suggests a need for greater awareness about cybersecurity practices to enhance the safety of
digital transactions.

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 Table 4.3.16 Respondents opinion on storing passwords and pins of credentials in phones,
laptops, computer and books.

Particulars Frequency Percentage (%)

Yes 86 86%
No 14 14%
Total 100 100%

Chart 4.3.16 Respondents opinion on storing passwords and pins of credentials in phones,
laptops, computer and books.

Respondent’s opinion on storing passwords and pins of

credentials in phones, laptops, computer and books.

Yes NO

INTERPRETATION

The data shows that 86% of respondents store their passwords and PINs on phones, laptops,
computers, or books, which poses a significant security risk. Only 14% avoid this practice, indicating
better cybersecurity awareness. This highlights the need for educating users on secure password
management to prevent potential fraud or data breaches.

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 Tabe 4.3.17 Respondents opinion on Government should promote cashless payment

Particulars Frequency Percentage (%)

Yes 90 90%
No 10 10%
Total 100 100%

Chart 4.3.17 Respondents opinion on Government should promote cashless payment

Respondent’s opinion on Government should promote

cashless payment

Yes No

INTERPRETATION

The data shows that 90% of respondents believe the government should promote cashless payments,
indicating strong public support for digital transactions. However, 10% oppose it, possibly due to
concerns about accessibility or security. This suggests that government initiatives can play a key role
in accelerating the shift toward a cashless economy.

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 Table 4.3.18 Respondents opinion on reduce in currency note will decrease crime rate and
have a positive impact on society

Particulars Frequency Percentage (%)

Yes 61 61%
No 9 9%
Positive impact on society but 21 21%
will not reduce crime rate
Reduce crime rate but will not 9 9%
have any positive impact
Total 100 100%

Chart 4.3.18 Respondents opinion on reduce in currency note will decrease crime rate and
have a positive impact on society

Respondent’s opinion on reduce in currency note will

decrease crime rate and have a positive impact on society

Yes
No
Positive impact on society but will not reduce crime rates
Reduce crime rate but will not have any positive impact on society

INTERPRETATION

The data shows that 61% of respondents believe that reducing currency notes will decrease crime
rates and have a positive impact on society. 21% agree that it will bring a positive impact but doubt
its effect on crime. Meanwhile, 9% think it will reduce crime without broader benefits, and another
9% believe it will have no impact on either. This suggests that while most respondents see benefits in
reducing cash circulation, opinions vary on its direct effect on crime.
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 Table 4.3.19 Respondents opinion on some countries with less population and higher literacy
rates are not also completely cashless, will India can become cashless in few years

Particulars Frequency Percentage (%)

Yes 85 85%
No 15 15%
Total 100 100%

Chart 4.3.19 Respondents opinion on some countries with less population and higher literacy
rates are not also completely cashless, will India can become cashless in few years

Respondent’s opinion on some countries with less

population and higher literacy rates are not also completely
cashless, will India can become cashless in few years

Yes No

INTERPRETATION

The data shows that 85% of respondents believe India can become a cashless economy in a few years,
despite challenges faced by other countries with smaller populations and higher literacy rates.
However, 15% disagree, possibly due to concerns about infrastructure, digital literacy, or financial
inclusion. This reflects strong optimism about India's digital transformation while acknowledging
existing hurdles.

69
 4.3.20 Table of respondents opinion on how long will India take to become cashless economy

Particulars Frequency Percentage (%)

5 Years 17 17%
10 Years 35 35%
20 Years 33 33%
50 + Years 15 15%
Total 100 100%

4.3.20 Respondents opinion on how long will India take to become cashless economy

Respondent’s opinion on how long will India take to

become cashless economy

5 Years 10 Years 20 Years 50+ Years

INTERPRETATION

The data shows that 35% of respondents believe India will become a cashless economy in 10 years,
while 33% think it will take 20 years. 17% expect it to happen within 5 years, whereas 15% believe
it will take 50+ years. This suggests that while there is optimism about a cashless future, many
recognize the challenges that may delay full adoption.

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 CHAPTER – 5
FINDINGS & SUGGESTIONS

71
 CHAPTER – 5

FINDINGS

The study on the cashless economy in Chennai provides insightful observations regarding public
perception, adoption, challenges, and the future of digital transactions. The findings are based on data
collected from respondents of various demographics, reflecting the widespread transition toward
cashless payments and the factors influencing this shift.

1. Demographic Composition and Cashless Economy Participation The study reveals that 66% of
respondents are male, while 34% are female. The higher participation of male respondents (32% more
than females) may indicate greater involvement in cashless transactions or be a reflection of the
sampling method. However, both perspectives are adequately represented in the study.

In terms of age distribution, 54% of respondents are between 20 to 30 years old, followed by 27% in
the 30 to 40 age group. A notable 16% belong to the 10 to 20 age group, while only 3% are above 40.
These findings suggest that younger individuals, who are generally more tech-savvy, are the primary
users of digital payments.

The respondents' educational background also plays a crucial role in digital payment adoption. 58%
are undergraduates, 17% postgraduates, 14% school students, 4% pursuing professional courses, and
7% classified under ‘others’. The dominance of higher education participants indicates a greater
awareness and usage of cashless transactions among students and graduates.

2. Employment and Preferences in Cashless Transactions Occupation-wise, 46% of respondents are

students, 26% are private sector employees, 10% are business owners, 6% are homemakers, 7% are
unemployed, and 5% are government employees. This suggests that students and private sector
employees are the primary participants in cashless transactions, possibly due to their exposure to
digital payment methods.

The study further indicates a strong 74% preference for a cashless economy, with 22% uncertain and
4% opposed. This reflects a positive attitude towards digital payments, though a small percentage
remains hesitant. The primary reasons for preferring a cashless economy include convenience (46%),
rewards and cashbacks (27%), spending tracking (17%), discounts (8%), and cash shortages (2%).
This underscores that user-friendliness and financial incentives are major motivators for digital
adoption.

3. Payment Modes and Frequency of Usage Regarding preferred payment modes, 60% of respondents
favor UPI-based applications like GPay and Paytm, followed by 17% using net banking, 9% using

72
debit and credit cards, 8% preferring mobile banking, and 6% relying on other methods. This
demonstrates the growing reliance on mobile-based UPI transactions due to their convenience and
accessibility.

The frequency of online transactions also highlights the integration of cashless payments into daily
life. 49% of respondents make digital payments daily, 28% weekly, 15% rarely, and 8% never use
online payments. This suggests that cashless transactions are a routine practice for most individuals,
though a small segment still prefers traditional payment methods.

For large-sum transactions, 56% prefer net banking, 22% rely on cash, 17% use cheques and demand
drafts, and only 5% opt for credit and debit cards. While digital methods dominate, a notable
percentage still prefers traditional options for high-value transactions.

4. Perceptions of India's Readiness for a Cashless Economy A significant 95% of respondents believe
India is ready for a cashless economy, indicating strong confidence in the country’s digital
infrastructure. However, challenges remain, with 46% citing digital literacy as the biggest hurdle,
30% pointing to infrastructure limitations, 13% highlighting poverty, and 11% concerned about
government implementation. This suggests that while digital adoption is increasing, addressing
accessibility and awareness issues is crucial for a successful transition.

To achieve a fully cashless economy, 35% believe encouraging people to use digital payments is key,
26% emphasize infrastructure improvement, 24% suggest promotion and awareness, and 15% see
proper internet connectivity as essential. This underscores the importance of both technological
advancements and public engagement in driving digital transformation.

5. Security Concerns and Cyber Awareness Security remains a critical concern in digital payments.
While 74% of respondents consider digital payments safe, 26% worry about fraud, security breaches,
and data privacy. Additionally, 41% rarely update their passwords, 26% never do, 19% update them
once a year, and only 14% change them regularly. This highlights a lack of cybersecurity awareness,
necessitating greater education on digital safety.

Moreover, 86% of respondents store passwords and PINs on devices or in written records, posing a
major security risk. Only 14% follow safe practices, reflecting the need for stronger awareness
regarding password management and digital safety.

6. Government Role and Societal Impact Public perception strongly favors government involvement
in promoting cashless payments, with 90% of respondents supporting such initiatives and only 10%
opposing them. This indicates that government policies, incentives, and awareness campaigns can
significantly accelerate the transition to a digital economy.

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Regarding the societal impact of reducing currency circulation, 61% believe it will reduce crime and
bring societal benefits, 21% agree on its positive impact but doubt its effect on crime, 9% think it will
only curb crime without broader benefits, and another 9% see no impact on either. While most
respondents see benefits in limiting cash transactions, opinions vary on its direct influence on crime
reduction.

7. Timeline Expectations for a Cashless Economy When asked about the expected timeline for India
to fully transition to a cashless economy, 35% of respondents believe it will happen in 10 years, while
33% think it will take 20 years. Meanwhile, 17% are more optimistic, expecting it within 5 years,
whereas 15% believe it could take 50+ years. This suggests that while optimism exists, many
recognize the challenges that may delay complete adoption, such as infrastructure, digital literacy,
and financial inclusion.

Lastly, 85% of respondents believe India can become a cashless economy in a few years, despite
challenges faced by other countries with smaller populations and higher literacy rates. However, 15%
disagree, citing concerns about infrastructure, digital literacy, and financial inclusion. This reflects
strong optimism about India's digital transformation while acknowledging existing hurdles.

Conclusion The findings of this study highlight that cashless transactions are widely accepted and
integrated into daily life, particularly among younger and educated individuals. UPI payments and
net banking dominate, with convenience, rewards, and security influencing adoption. However,
challenges such as digital literacy, infrastructure, and cybersecurity concerns need to be addressed to
ensure a seamless transition to a fully cashless economy. Public optimism, coupled with government
initiatives and security improvements, will play a pivotal role in shaping India’s digital financial
future.

74
SUGGESTIONS

Based on the findings of this study, it is evident that while there is a strong inclination toward a
cashless economy, certain challenges must be addressed to facilitate a smoother transition. Factors
such as digital literacy, cybersecurity awareness, infrastructure development, and financial inclusion
play a crucial role in ensuring the widespread adoption of cashless transactions. Additionally,
fostering trust in digital payments, encouraging businesses to embrace digital solutions, and
strengthening government initiatives can further accelerate this transformation. The following
suggestions focus on key areas of improvement to enhance digital payment adoption and support
India's journey toward a fully cashless economy.

1. Enhancing Digital Literacy: Since digital literacy is the most significant obstacle, the
government and financial institutions should implement targeted awareness programs,
especially in rural areas and among older generations. Digital literacy workshops, educational
campaigns, and interactive training can help bridge the knowledge gap.

2. Improving Infrastructure: A stable internet connection is essential for a cashless economy.

Authorities should focus on expanding internet access in remote and underdeveloped areas,
ensuring that digital transactions are seamless and accessible to all.

3. Strengthening Cybersecurity Measures: Since many respondents store their passwords and
PINs insecurely, campaigns on cybersecurity best practices should be introduced. Financial
institutions should promote secure authentication methods, such as biometric verification and
two-factor authentication, to enhance digital safety.

4. Encouraging Frequent Password Updates: Many respondents rarely change their passwords,
making them vulnerable to cyber threats. Awareness programs should emphasize the
importance of regularly updating passwords and using secure storage methods instead of
writing them down or saving them on devices.

5. Promoting Government Initiatives: Since most respondents support government involvement,

policymakers should continue launching incentives such as cashback rewards, transaction
discounts, and tax benefits to encourage cashless transactions.

6. Fostering Trust in Digital Payments: Although a majority trust cashless transactions, concerns
about fraud and data privacy still exist. Strengthening consumer protection laws, enforcing
strict regulations on financial data security, and educating the public on secure online
transactions will help build confidence.

75
 7. Encouraging Businesses to Go Digital: Small businesses and local vendors should be provided
with training and incentives to adopt digital payment systems. Government-backed programs
offering easy access to digital payment infrastructure and financial literacy support can
accelerate this transition.

8. Reducing Dependence on Cash for Large Transactions: Despite the popularity of digital
payments, many still prefer cash for high-value transactions. Policies encouraging digital
alternatives, such as lower transaction fees, increased transaction limits, and tax benefits,
could drive greater adoption.

9. Addressing Public Concerns on the Transition Timeline: Since opinions vary on how long it
will take for India to become a fully cashless economy, phased implementation strategies
should be designed. A realistic roadmap with short-term and long-term goals will help ensure
a smooth transition.

10. Strengthening Public-Private Collaboration: Collaboration between banks, fintech companies,

and the government can drive innovation and expand digital payment solutions. Investments
in technology-driven financial solutions can make digital payments more user-friendly,
accessible, and secure.

By addressing these key areas, India can accelerate its transition to a cashless economy while ensuring
financial inclusion, security, and trust in digital transactions.

76
CHAPTER – 6
CONCLUSION

77
 CHAPTER – 6

CONCLUSION

The study on the cashless economy with reference to Chennai City has provided valuable insights
into the growing acceptance and adoption of digital transactions. The analysis of collected data
indicates that a significant majority of respondents prefer cashless payments due to their convenience,
security, and efficiency. While challenges such as cybersecurity concerns and digital literacy persist,
the overall response suggests that people are adapting to the transition with optimism.

Furthermore, the study highlights that government initiatives, technological advancements, and
increasing smartphone penetration have played a crucial role in fostering a cashless ecosystem.
Businesses and consumers alike recognize the benefits of digital transactions, including reduced
dependency on physical cash, enhanced financial transparency, and ease of transaction tracking.
Given the positive outlook observed in the study, it can be concluded that the cashless economy is
not just a theoretical concept but a practical and well-supported movement in Chennai. The project's
findings affirm that the majority of the population is in favor of a digital financial system, marking a
significant step toward a technologically advanced and financially inclusive economy. The research
has thus been successful in demonstrating the feasibility and growing acceptance of a cashless society.

The cashless economy is expected to evolve significantly with the advent of emerging technologies
such as blockchain, artificial intelligence, and advanced cybersecurity measures. Future
advancements may focus on making digital transactions even more secure and efficient. The
expansion of digital infrastructure, such as improved internet connectivity and fintech innovations,
will further drive the adoption of cashless payments. Additionally, collaborations between financial
institutions and technology providers can create seamless and integrated digital payment solutions,
making the transition smoother for consumers and businesses alike.

Although the cashless economy presents numerous advantages, certain challenges must be addressed
to ensure its successful implementation. Cybersecurity concerns remain a major issue, as digital
transactions are vulnerable to cyber threats. Strengthening data protection laws and investing in
advanced cybersecurity technologies can mitigate risks. Digital literacy is another challenge,
especially in rural areas where many individuals lack adequate knowledge of digital payment
methods. Government-led awareness campaigns and financial literacy programs can bridge this gap.
Additionally, inconsistent internet connectivity can hinder smooth transactions, and expanding digital
infrastructure will enhance accessibility. Some consumers and businesses also prefer traditional cash

78
transactions due to trust issues, but encouraging small vendors to adopt digital payment methods
through incentives and training programs can help overcome this reluctance.

The Government of India has introduced several initiatives to promote a cashless economy, including
the Digital India Campaign, which aims to improve online infrastructure and increase internet
connectivity. The Unified Payments Interface (UPI) enables instant money transfers between bank
accounts, while the Aadhaar-Enabled Payment System (AEPS) allows banking transactions using
Aadhaar authentication, reducing dependency on physical bank visits. The BHIM app, developed by
the National Payments Corporation of India (NPCI), facilitates easy transactions, and the
implementation of GST encourages digital invoicing and reduces reliance on cash transactions in
businesses. These policies have significantly contributed to the growth of digital payments in Chennai
and across India, fostering an environment that supports the transition to a cashless economy.

Chennai has witnessed successful implementations of digital payment systems in various sectors. The
Chennai Metro Rail Limited (CMRL) has adopted cashless ticketing solutions, including QR code-
based ticketing and smart card payments, reducing cash transactions and streamlining commuter
convenience. Many small-scale vendors in areas like T. Nagar and Sowcarpet have also embraced
digital wallets and UPI-based payments, improving transaction efficiency. Restaurants and retail
outlets have widely adopted POS (Point of Sale) machines and UPI payments, making transactions
faster and reducing dependency on cash.

Comparing Chennai’s cashless economy progress with other metropolitan cities in India provides key
insights into its development. While Mumbai has a higher rate of digital transactions due to its
financial hub status, Chennai is catching up rapidly with increasing adoption of UPI and digital
wallets. Bangalore, being a tech hub, leads in fintech adoption, but Chennai’s strong banking network
and government initiatives have accelerated cashless payment adoption. Delhi has seen significant
government-driven digital payment growth, but Chennai's structured financial literacy programs have
contributed to a more systematic adoption of digital transactions.

From the study and analysis, it is evident that Chennai is progressing towards becoming a cashless
economy. The city's residents and businesses have demonstrated a strong inclination toward digital
transactions, supported by technological advancements and government initiatives. While challenges
exist, the solutions proposed can significantly aid in overcoming them. The success of various digital
payment implementations in Chennai indicates that a cashless economy is not only feasible but also
highly beneficial for economic growth. Therefore, the project successfully highlights the increasing
support for a digital financial ecosystem and reinforces the importance of continued efforts to enhance
cashless transactions in the city.

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BIBLIOGRAPHY

Government Reports & Policies:

1. Ministry of Electronics and Information Technology (MeitY). (2015). Digital India

Programme. Retrieved from https://www.meity.gov.in
2. Reserve Bank of India (RBI). (2023). Payment and Settlement Systems in India: Vision 2025.
Retrieved from https://www.rbi.org.in
3. National Payments Corporation of India (NPCI). (2016). Unified Payments Interface (UPI) –
A Game Changer for Digital Transactions. Retrieved from https://www.npci.org.in
4. Government of India. (2016). Impact of Demonetization on Digital Payments. Retrieved from
https://www.finmin.nic.in
5. Tamil Nadu e-Governance Agency (TNeGA). (2024). Digital Payment Initiatives in Tamil
Nadu. Retrieved from https://www.tn.gov.in

Academic & Research Papers:

1. Sharma, R., & Gupta, S. (2022). The Role of UPI in Promoting a Cashless Economy: A Study
in Indian Urban Centers. International Journal of Financial Studies, 10(3), 45-60.
2. Kumar, V., & Singh, P. (2021). Demonetization and Its Long-term Impact on Digital
Transactions in India. Economic & Political Weekly, 56(29), 112-124.
3. Bose, A. (2020). Financial Inclusion through Digital Payments: A Case Study of Chennai City.
Journal of Banking & Finance, 35(4), 198-215.

Newspaper & Online Articles:

1. The Hindu. (2023, June 15). Chennai Leads in Digital Transactions in South India. Retrieved
from https://www.thehindu.com
2. Business Standard. (2024, January 10). RBI’s New Digital Payment Guidelines and Their
Impact on the Cashless Economy. Retrieved from https://www.business-standard.com

Web References:

1. NPCI Official Website. (2024). Statistics on Digital Payment Adoption in India. Retrieved
from https://www.npci.org.in/statistics
2. Reserve Bank of India. (2024). UPI Transaction Data & Trends. Retrieved from
https://www.rbi.org.in/UPI-data

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ANNEXURE

A Study on Cashless Economy with Reference to Chennai City

Annexure – I: Research Questionnaire

Personal Details:

1. Name: ________________________

2. Age: ________________________

3. Gender: ________________________

4. Occupation: ________________________

5. Monthly Income: ________________________

6. Educational qualification: __________________________

7. Do you support cashless economy?

(Yes, No)

8. If you supporting cashless economy, why would you like to adopt cashless transaction?

(Convenient and easy, Discount, Rewards and cashbacks, Easy to track your spending, Shortage of
cash)

9. Which mode of online payment you’d prefer?

(Gpay & Paytm, Net banking, Debit and Credit card, Mobile banking, others)

10. How often do you make online payment?

(Daily, Weekly, Rarely, Never)

11. What has been the most preferred mode of payment by you if in case of high transaction or
exchange according to you?

(Cash, Credit & Debit card, Net banking, Cheque & Demand drafts, Paytm & Gpay)

12. Do you think India is ready for cashless economy?

(Yes, No)

13. According to you, what are the obstacles will India face to its road to cashless economy?

(Digital literacy, Infrastructure, Poverty, Government implementation)

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14. What is the best way to achieve cashless economy?

(Proper internet connection, Improved infrastructure, Promotion and awareness of digital currency,
Encouraging people to use digital payment system)

15. A cashless economy could eliminate the currency notes would you be ok with that?

(Yes, No)

16. Do you feel safe with using digital means of payment?

(Yes, No)

17. How often you’d change your internet banking password and pin of debit and credit card?

(Often, Rarely, Once in a year, Never)

18. Do you store your card details on you phones, laptop, computer or book?

(Yes, No)

19. Do you think that government should promote cashless payment?

(Yes, No)

20. Do you think that if we reduce currency note the crime rate will decrease and have a positive
impact?

(Yes, No, Positive impact on society but will not reduce crime rate, Reduce crime rate but will not
have any positive impact on society)

21. Some countries with less population and higher literacy rate are also not completely cashless, do
you think India can become cashless in few years?

(Yes, No)

22. How much time will India take to completely transform into cashless economy?

(5 years, 10 years, 20 years, 50+ years)

Respondent’s Signature: ________________________

Date: ________________________

82