Are Cashless Payments Impacting Spending Habits?
Grasping and applying these strategies can aid in controlling overspending despite the appeal of cashless payments
New Delhi: Recently, there has been a noticeable upward trend in spendings related to cashless transactions. It is also noticed that this is affecting savings negatively. For instance, looking at his increased expenses, Kamal took a day to meticulously review his expenditures. It soon became clear that the surge in his spending was due to the convenience of cashless payments. Wherever he went, he would use UPI and other digital methods for payments, unknowingly increasing his expenditure.
Kamal is not alone in this trend. According to a joint research by the University of Melbourne and the University of Adelaide, across 17 countries, reveals that this phenomenon is seen globally, beyond just India. According to their findings, consumers tend to spend more when using digital payment methods compared to cash.
Overspending rise due to high UPI, digital payments
The preference for digital transactions over cash is a global trend, underscored by India’s significant role in cashless transactions. The National Payments Corporation of India reported nearly 13.9 billion transactions in June, valued at over ₹20 lakh crore. Similarly, credit card transactions amounted to 36 crore in May 2024 alone, totaling ₹1.65 lakh crore.
A survey conducted at the Indraprastha Institute of Information Technology Delhi (IIIT Delhi), corroborates the rise in overspending due to UPI and other digital payment methods, with 74% of respondents admitting to overspending. Moreover, 81% of respondents acknowledged using UPI daily.
Cash vs. UPI, digital payments
To address this issue, exercising self-control over expenditures is crucial. One effective strategy is to use cash more frequently. When paying with physical currency, individuals are more conscious of their spending habits. Additionally, employing expense tracking apps can provide insights into where excessive spending occurs, allowing for better financial management.
By adopting these strategies, individuals can mitigate the risk of overspending induced by cashless transactions. It is imperative to reconsider spending behaviors and utilize credit cards wisely, focusing on transactions that offer rewards or cashback rather than impulsively using them for everyday expenses.
In conclusion, understanding and implementing these strategies can help curb overspending amidst the allure of cashless payments.
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