In Delhi’s GK-1, Yuvraj Yadav’s handcart of green coconuts features a small UPI code peeking out. . “I get 90% of my money through it,” says the 18-year-old, pointing to the printed QR code.
This scenario is becoming commonplace in India, as the country witnesses a payments revolution. From buying tender coconuts to enjoying a cup of chai, from giving donations to settling restaurant bills, people are increasingly using the indigenous United Payments Interface (UPI) platform by simply using their phones.
However, this seamless transaction system has led to an unintended consequence: overspending. According to a study conducted by IIIT Delhi, 74% of 276 individuals surveyed, claimed they were spending more since adopting the e-payment system.
This is noteworthy because traditional spending and saving habits have long been centered around cash transactions. While credit cards have been around for decades, UPI differs in that it does not accrue interest, and its usage is more widespread. Mobile-to-bank transfers have eliminated the need for point-of-sale (PoS) machines required for credit or debit cards.
So, UPI falls somewhere between cash and credit cards on the payment spectrum. However, there are two sides to this coin. While some people are overspending, anecdotal evidence suggests that others are actually saving money because of UPI.
Yuvraj Yadav, the coconut vendor, attests to this. But before delving into his perspective, let’s explore why and how some individuals believe they are overspending due to UPI.
WE ARE SPENDING MORE BECAUSE OF UPI, FINDS SURVEY
In 2022, Bengaluru-based Dharmesh Ba raised an intriguing question on X: ‘Does the convenience of UPI push us to spend more? I feel the tangibility of cash makes us conscious about how much we spend. Paying 5×500 notes in cash is more painful than paying 2500 on UPI. What has been your experience with UPI and spending?’
Numerous individuals responded to his query, with the majority admitting that they were indeed spending more due to UPI.
To delve deeper into this phenomenon, Dhruv Kumar, Assistant Professor at IIIT Delhi, along with his students, Harshal Dev and Raj Gupta, conducted a survey. Using Google Forms, they gathered responses from 276 individuals aged 18 and above, representing diverse backgrounds, age groups, and occupations.”