A small UPI code peeks out of the green coconuts heaped on Yuvraj Yadav’s handcart outside a park in Delhi’s GK-1. “I get 90% of my money through it,” says the 18-year-old, pointing to the printed QR code.
This is nothing unusual for Indians now, for they have been witness to a payments’ revolution. From paying for tender coconuts to cutting chai, from giving alms to settling the bill at a fine-dining restaurant, people are simply whipping out their phones and using the indigenous United Payments Interface (UPI) platform.
The seamless transaction system, however, has fuelled a silent epidemic. The epidemic of overspending.
Around 74% of the 276 people surveyed by IIIT Delhi, in what it claims to be the first study on spending behaviour of people using the government’s UPI, said they were spending more after adopting the e-payments system.
This is interesting because human beings have been trading in currencies for centuries and their spending and saving behaviour has evolved around cash.
One might argue that plastic money in the form of credit cards has been there for decades now, but come to think of it, UPI is different from credit cards as no interest is charged. Also, the penetration of UPI is much more than that of credit cards. The mobile-to-bank transfers have done away with the need for a point-of-sale (PoS) machine, which is needed for credit or debit cards.
So, on the payment band, UPI is somewhere between cash and credit cards.
However, there are two sides to the UPI coin. If some people are spending more, anecdotal evidence suggests there is a segment of people who are now saving money because of UPI.
Yuvraj Yadav, who sells tender coconuts in Delhi’s GK-1, bears testimony to that. But before we look at his side of the coin, let us find out how and why people believe they are overspending because of UPI.
WE ARE SPENDING MORE BECAUSE OF UPI, FINDS SURVEY
“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?” asked Bengaluru-based Dharmesh Ba on X in 2022.
Dozens of people responded to his question and most agreed that they were now spending more because of UPI.
Dhruv Kumar, Assistant Professor at IIIT Delhi, and two of his students, Harshal Dev and Raj Gupta, conducted a survey to find out if UPI had indeed changed people’s spending habits.
They used Google Forms and surveyed 276 individuals aged 18 and above. The participants were from diverse backgrounds, age groups and occupations.