Modes of transaction- Analysis on the modes of

transaction chosen by the customers.

Authors
Ms. Prof ANUPAMA TADMARLA, Faculty member IBS Pune
Mr. M. CHARANKUMAR, student at IBS Pune
Mr. NARNE VINAY CHOWDARY student at IBS Pune

Institute and address for communication:

IBS Business School
Survey No. 174,175,
DSK Sunderbann Business Hub 1,
(Opp. DSK Toyota Showroom, Pawar Public School)
Hadapsar, Pune- 411 028, Maharashtra.

Mobile: 020 2672 2060.

ABSTRACT:
Modes of transaction are very important during the end payments made by the customers and
the organizations. Choosing the appropriate modes of transaction to offer their customers is
very important for organizational sustainability. This paper describes the analysis on the modes
of transaction chosen by customers during their end payments with reference to Mumbai city
MH, Pune city MH, Hyderabad city T.S, Ranchi city JH, Anantapur A.P, Tirupati A.P, Nellore
A.P, Pulivendula A.P, Bengaluru city KA, Chennai city T.N, Gorakhpur city U.P, Hisar city
HR. This paper illustrates the new emerging trends in modes of transaction chosen by
customers, reasons for choosing the digital mode of transaction, reasons for not choosing the
digital modes of transaction and willingness of the respondents for future choice the modes of
transaction. The analysis is based on the broad view of modes of transaction chosen by the
respondents during their end payment. This research helps the organizations in making
decisions for offering the best mode of transaction to gain competitive advantage.
Organizations can gain more market share and revenue by attracting the customer providing
offers on respondents desired mode of transaction. The literature review was studied from the
article printed in the business world article, the date of the article is 28/11/2016. The name of
the article is The Rise of Digital Payments. We have chosen the probabilistic sampling. The
sampling method is convenient sampling, the data was collected as per convenience of sample
of the respondents. The google form was prepared and floated to the sample of respondents to
collect the data. The obtained data was analyzed.
1. INTRODUCTION:
A payment is the trade of value from one party to another party for the purchase goods and
services, to fulfill the legal obligations. The most common modes of payment involve use
of Cash, Cheques, Debit card, Credit card, Mobile banking, Mobile wallets and other digital
modes of payment.

Customers has different preferences on modes of transaction while making end payments to
buy a product, avail the service and to fulfill legal obligations. The modes of transaction play
a dominant role in the degree of sales. Organizations should offer the appropriate modes of
transaction for the customers to sustain their presence in the current market.

A cash payment is a transaction where there is an immediate payment of cash for the purchase
the purchase goods and services, to fulfill the legal obligations.The modes of payment offered
by the organizations plays a significant role in growth of their sales. The traditional mode of
payment was by cash, cheque. The mode of payments chosen by end consumers has been
changed drastically during post demonetization. Now customers are choosing wide range of
options while making payments. During post demonetization customers are using Mobile
phone applications, Cards issued by the bank, Internet banking, Employee benefit cards like
Sodexo card. The mobile phone applications which are being used are Paytm, Google pay, UPI,
Paypal, Amazon pay, Mobikwik, Phoneme, Mpesa, Payzap, Airtel money, Jio money, Banks
have their own mobile apps and mobile banking apps, these are digital modes of payment which
are used by the customers during their transactions. The customer also has the credit options
like LazyPay to make payments. There is a payback period given by the LazyPay to return the
money.

This paper presents analysis on the modes of transaction chosen by the customers during their
end payments, reasons for choosing the particular mode of transaction and their willingness for
choosing new mode of transaction in the future. There are emerging trends while choosing
modes of transactions during the payments. This paper helps the organizations to offer
appropriate modes of transaction to their customers. The organizations can propound the
emerged trends on modes of transaction to gain competitive advantage. The organizations can
propound offers and discounts on the emerged modes of transaction which are chosen by the
customers during their end payment gate way to gain more market share.

The modernized digital payments are being chosen by the customers. The digital modes of
payment are being attracted to many of the customers while purchasing from online websites
and offline stores. The modernization of the modes of payment has overcome many issues
faced by the customers during their end payment. The modes of payments offered by an
organization plays a key role to increase the sales. This report helps the organizations to allow
the appropriate mode of transaction for the customers to create a competitive advantage from
their competitors. The organizations can also propound offers on the desired mode of
transaction chosen by the customers to gain market share.
2. LITERATURE REVIEW:
Modes of transaction has seen a huge growth in the past three years and it has been witnessed
the entry of new digital modes of transactions. E digital payments industry in India contributing
15 per cent to the country’s GDP

The modes of payment used during pre demonetization was Cash, Debit card, Credit card,
Cheques, Demand draft, Mobile banking, Internet banking, Paytm and Mobikwik mobile
wallets etc.

India is going digital, a favorable regulatory environment, emergence of next-generation

payment service providers, and enhanced customer experience. The first trend India going
digital is reflected in the rising smartphone penetration and Internet access, which translates
into the growth of digital banking transactions. India currently ranks second in the world with
over 1 billion mobile subscriptions, out of which about 240 million consumers use
smartphones. Digital banking transactions have grown 50 % year-on-year, followed by ATM
transactions growing at 15%. Branch-based transactions at banks have reduced by almost 7%
in FY15 as compared to FY14. With regard to the regulatory environment, the government and
regulators have taken several initiatives to promote digital payments in India. For instance, as
per current RBI guidelines, customers need not undergo a KYC (Know Your Customer)
process for transactions up to Rs 10,000 per month on prepaid instruments. The guideline has
encouraged the download of mobile wallets, which are also exempt from the Two-Factor
Authentication (2FA) which is mandatory for transactions using credit/debit cards.

In addition, the Unified Payments Interface, launched by the National Payments Corporation
of India (NPCI) this year, proposes to stitch all services from Immediate Payment Service
(IMPS), Automated Clearing House (ACH) to RuPay into one common platform. In the past
3-4 years, India has seen the emergence of a string of next-generation payment service
providers spanning across sectors — telcos, banks, wallet companies, and e-commerce/tech
firms.

The recent move by the Narendra Modi-led government to demonetize high-value currency
notes to wipe out black money has only added fuel to the fire by pushing more number of
people to use digital modes of payments. The trend that has picked up as an immediate
aftermath of the announcement is expected to continue and create a lasting impact.

Within hours of the government’s ban on the existing Rs 500 and Rs 1,000 currency notes,
mobile payment and E commerce platform Paytm saw an overwhelming 435 per cent increase
in overall traffic. The company has registered a 200 per cent hike in the number of app
downloads and 250 per cent surge in the number of overall transactions and transaction value.
The number of ‘saved cards’ also grew 30 per cent, pointing at a strong set of repeat customers.
The company has recorded a 1000 per cent growth in money added to the wallet and a 400 per
cent growth in transaction value of offline payments.

“At Paytm, we are proud to announce that we have been able to help millions of Indians
adopting digital payments during the recent cash crunch. It’s heartwarming to see merchants,
small or large accepting mobile payments using Paytm…,” said Kiran Vasireddy, senior vice-
president, Paytm.

Same is the case with online payment gateway PayU India. As an immediate consequence of
the announcement, PayU India witnessed an increase of 85 per cent in daily transactions.
“Besides, new merchants are also opening to the idea of cashless economy, since the inquiries
by merchants have increased by 50 per cent. While our average daily transactions amount to
12lakh, we are anticipating the same to increase by 25lakh in the upcoming months. Following
the demonetization, consumers have become much more agile and are now actively adopting
cashless economy, since it is immune to demonetization” said B. Amrish Rau, CEO, PayU
India.

Flipkart, India’s largest e-commerce company, agrees that the government’s decision has given
a big push to the adoption of digital instruments like Mobile wallets, Unified Payments
Interface and a lot of movement towards electronic transactions. A part from e-commerce and
online payment players, app-based taxi services that accept electronic modes of payments seem
to be one of the major beneficiaries as cash-starved bus and auto commuters have started using
them.

In the past, banks have largely offered mobile banking apps with integrated bill payment
solutions. However, customer experiences with mobile wallets have proved to be far more
seamless and quick, leading to customers preferring wallets for mobile recharge and bill
payments. Thus, banks have now started offering their own mobile wallets in addition to the
mobile banking apps. Few examples include Pockets by ICICI Bank, Lime by Axis Bank,
PayZapp by HDFC Bank, SBI Buddy by SBI, and Ziggit by IDFC Bank.

Banks apart, large telcos such as Airtel and Vodafone have mobile payments solutions — Airtel
Money and Vodafone M-Pesa, respectively, targeted at their own customer base. Idea Money
from Idea Cellular, mRUPEE by TATA and JioMoney by Reliance are other telco-led payment
solutions launched to help consumers conduct a variety of financial transactions conveniently.

Prepaid wallets came into existence around 2009-10 in the form of app-based mobile wallets
where one can store a certain amount in their account funded through credit/debit cards or net
banking. Paytm, MobiKwik, Freecharge, and Citrus Pay are some well-known mobile wallets
in the market. Some of these have been acquired by tech firms (e-commerce, radio cabs,
entertainment bookings) to offer in-house wallet solutions. For example, Snapdeal acquired
Freecharge, Flipkart acquired FxMart to offer Flipkart money and Amazon acquired
Emvantage. While Ola offers Ola Money, Bookmyshow too has its own wallet app to service
customers.

Banks apart, large telcos such as Airtel and Vodafone have mobile payments solutions Airtel
Money and Vodafone M-Pesa, respectively, targeted at their own customer base. Idea Money
from Idea Cellular, mRUPEE by TATA and JioMoney by Reliance are other telco-led payment
solutions launched to help consumers conduct a variety of financial transactions conveniently.
Technology will be the key enabler for mass adoption of digital payments. The right product
has to cater to the heterogeneous needs of the customer solved in a customized manner. The
payment methods have to be simple, fast, efficient, and secure. With those in place, the
complexities of using digital will be gone and the habit of using cash will soon be a thing of
the past. The discounts and cash backs are one of the motivators to use digital modes of
transaction.

Finally, enhanced customer experience will be a key driver for consumers to adopt the digital
payment revolution. Indian customers are now used to a superior experience owing to the
popularity of e-commerce, and are demanding a similar experience from their financial services
providers as well. This includes seamless access to bank accounts and payments, coupled with
rewards, loyalties, and offers.

3. OBJECTIVE:
With respect to the literature there is a huge scope and growth for digital payments at present
and future.

To study the new emerged modes of transaction chosen by customers during their end
payments.

To study the reasons for choosing the particular modes of transaction by the customers.

To study the reasons for not adopting to use mobile wallets to make payments by the
customers.

To find the customer opinions for using the modes of transaction in future payments.

4. METHODOLOGY:
The study was conducted majorly among the Students, Government employees, Private
employees and graduates belonging to Mumbai city MH, Pune city MH, Hyderabad city T.S,
Ranchi city JH, Anantapur A.P, Tirupati A.P, Nellore A.P, Pulivendula A.P, Bengaluru city
KA, Chennai city T.N, Gorakhpur city U.P, Hisar city HR. Sample size was kept as 75. The
entire sample of respondents surveyed as per the convenience of the respondent. The sampling
method we have chosen is convenient sampling and simple random sampling. The procedures
and techniques to collect, evaluate, and analyze the information of the respondent reviews are
being represented. To collect the data from respondents we used survey. The questionnaire has
a total of 13 questions and floated through online by Google forms. The first section of the
questionnaire consists of questions which represent the demographic profile of the respondents.
The second section of the questionnaire consists of questions which represents the perceptions
towards the modes of transaction.
The primary data was collected from the respondents; Simple percentages were worked out to
study general characteristics like gender, education and designation. The questionnaire was
made with the questions which are intended to ask about the modes of transaction they use and
the usage of different modes of transaction, reasons for choosing the particular mode of
transaction, reasons for not choosing the digital modes and the respondents opinion on modes
of transactions for future payments by 5 point likert scale. The sample respondents were asked
to indicate the response. The likert scale was used only to find the opinions on modes of
transactions for future payments. The analysis helps the organization to offer the desirable
mode of transaction to gain competitive advantage.

5. QUESTIONNAIRE:

Name- Phone number-

Gender-

1.What is your age? 6. What is your payment option?

<20 years Debit Cards Mobile wallets

20 – 30 years Cash Internet banking

30 – 40 years Credit cards Mobile banking

>40 years Others ……………………………..

2. What is your educational

qualification? 7. How do you use when making purchases in retail stores?

Postgraduation Cash Sodexo card

Graduation Debit car Mobile wallet

10th - 12th class Credit card

Others ………………………. Others ……………………………………………………

3. What is your occupation? 8. Do you make payments using your mobile

Government servant phone?

Private employee Never

House wife Rarely (1 - 4 times in a month)

Own business Sometimes (1 – 3 times in a month)

Others ……………………………. Often (3 – 6 times in every week)

Always (>6 times in every week)

4.What is your monthly Income? 9. How do you make payments while purchasing

<Rs 50,000 through mobile phone?

Rs 50,000 -1,00,000 Debit Cards Mobile banking

Rs 1,00,000 to 2,00,000 Mobile wallets Credit cards

 >Rs 2,00,000 Internet banking Cash on delivery

Others …………………………….

5. Please tick mark your usage from the given particulars.

Particulars Daily Weekly Once in 15 Every Never

Days Quarterly

Credit card

Debit card

Mobile wallet

Internet banking

Mobile banking

10. What are your reasons for not using the mobile wallets to make payments?

I don’t see any particular reason

c
I don’t know how to use
c
I don’t think they are secure
c
I face difficulties while using them
c
Others ………………………………
c

11. What are your reasons for using mobile wallets and bank debit/credit cards?

I feel safe by paying through this mode

c
I feel easy by paying through this mode
c
I can avail more discounts.
c
I can reduce my hand bag/wallet weight and size
c
Others………………………………
c

12. What are your reasons for using only cash while making payments?

I feel paying in cash is safe

Seller forces me to pay in cash

I get more discount while paying in cash

Other ……………………………………..
13. Please tick mark your opinion for your future payments from the given statement.

Statements Strongly Disagree Neutral Agree Strongly

Disagree Agree

I would consider making payments

using mobile wallet, Debit and Credit
cards in future.

I would consider making payments by

cash in future.

I will use the new changes in technology

for making payments.

6. RESULT AND DISCUSSION:

Demographic Profile of the respondents (Table - 1):

Frequency Weighted average

Gender Male 60 0.80

Female 15 0.20

Age <20 years 3 0.04

Age (continued) 20 – 30 years 67 0.893

30 – 40 years 2 0.02

>40 years 3 0.04

Educational Postgraduation 34 0.453

qualification
Graduation 40 0.533

10th - 12th class 1 0.013

Others 0 0

Occupation Government sector 5 0.066

Private sector 25 0.333

House wife 0 0
 Own business 2 0.026

Student 38 0.506

Unemployed 2 0.026

The data was collected from respondents. 20% of the respondents were female and 80% were
male. The respondents represented 4% are of the age group <20years, 89.3% are of the age
group 20 - 30 years, 2% are of the respondents are of the age group 30 - 40 years, 3% are of
the group >40 years. 45% of the respondents are post graduated, 53% of the respondents are
graduated, 1.3% of the respondents have studied between10-12th standard. The majority of
respondents 50.6% are students, 33% are working in private sector, 6% of respondents are
working in government sector, 2.6% of the respondents are having own business and the rest
2.6% are unemployed.

6.1 Representation of usage of the modes of transaction by the bar graph-

Cash payment – The analysis represents that 44 respondents are using the cash payments
during the transactions daily,14 respondents are using the cash payments during the
transactions weekly, 3 respondents are using the cash payments during the transactions once in
fort night, 3 respondents are using the cash payments during the transactions monthly, 1
respondent is using the cash payments during the transactions quarterly, 10 respondents are not
using the cash payments during the transactions.
Mobile wallets – The analysis represents 42 respondents are using the mobile wallets to
make transactions daily, 5 respondents are using the mobile wallets to make the transactions
weekly,7 respondents are using the mobile wallets to make the transactions for every fortnight,
2 respondents are using the mobile wallets to make the transactions monthly, 1 respondent is
using the mobile wallets to make the transactions quarterly, 14 respondents are not using the
mobile wallets to make the transactions.

UPI mode- The analysis represents that 36 respondents are using the UPI mode to make
transactions daily, 11 respondents are using the UPI mode to make transactions weekly, 6
respondents are using the UPI mode to make transactions for every fortnight, 5 respondents are
using the UPI mode to make transactions monthly, 2 respondents are using the UPI mode to
make transactions quarterly, 10 respondents are not using the UPI mode to make transactions.

Debit card- The analysis represents that 24 respondents are using the debit card to make
transactions daily, 31 respondents are using the debit card to make transactions weekly, 11
respondents are using the debit card to make transactions for every fortnight, 6 respondents are
using the debit card to make transactions monthly, 1 respondent use the debit card to make
transactions quarterly, 1 respondent not use the debit card to make transactions.

Mobile banking- The analysis represents that 19 respondents are using the mobile banking to
make the transactions daily, 9 respondents are using the mobile banking to make the
transactions weekly, 5 respondents are using the mobile banking to make the transactions for
every fortnight, 17 respondents are using the mobile banking to make the transactions monthly,
3 respondents are using the mobile banking to make the transactions quarterly. 19 respondents
are not using the mobile banking to make the transactions.

Internet banking- The analysis represents that 17 respondents are using the internet banking
to make transactions daily, 13 respondents are using the internet banking to make transactions
weekly, 9 respondents are using the internet banking to make transactions for every fortnight,
15 respondents are using the internet banking to make transactions monthly, 5 respondents are
using the internet banking to make transactions quarterly, 13 respondents are not using the
internet banking to make transactions.

Credit card- The analysis represents that 2 respondents are using the credit cards to make
transactions daily, 4 respondents are using the credit cards to make transactions weekly, 9
respondents are using the credit cards to make transactions for every fortnight, 12 respondents
are using the credit cards to make transactions monthly, 5 respondents are using the credit cards
to make transactions quarterly, 39 respondents are not using the credit cards to make
transactions.

6.2 Representation of the respondent choice of modes of payment by pie chart-

The analysis represents that 37.3% respondents has desire to choose the mobile wallets to make
transactions, 28% respondents has desire to choose the debit cards to make transactions, 17.3%
respondents has desire to choose the cash payments to make transactions, 8% respondents has
desire to choose the internet banking to make transactions, 6.7% respondents has desire to
choose the mobile banking to make transactions, 1.3% respondents has desire to choose the
paytm to make transactions, 1.3% respondents has desire to choose the credit cards to make
transactions.

6.3 Representation of modes of transaction chosen by the respondents when

making purchases at retail stores-

The analysis represents that 48% of the respondents make payments by debit cards, 24% of the
respondents make payments by cash, 22.7% of the respondents make payments by mobile
wallets, 4% of the respondents make payments by credit cards, 1.3% of the respondents make
payments by paytm.

6.4 Representation of willingness of the respondents to make payments by mobile

phones-
The analysis represents that 40% of the respondents make payments by mobile phone more
than 6 times in a week, 21.3% of the respondents make payments by mobile phone 3- 6 times
in a week, 17.3% of the respondents make payments by mobile phone 1-3 times in a week,
12% of the respondents make payments by mobile phone 1-4 times in a week, 9% of the
respondents never make payments by mobile phone.

6.5 Representation of modes of payment chosen when purchasing through mobile

phone-

The analysis represents that 30.7% of the respondents chooses debit cards option to make while
purchasing from mobile phone, 28% of the respondents chooses cash mode option to make
while purchasing from mobile phone, 14.7% of the respondents chooses internet banking
option to make while purchasing from mobile phone, 14.7% of the respondents chooses cash
on delivery option to make while purchasing from mobile phone, 6.7% of the respondents
chooses mobile banking option to make while purchasing from mobile phone, 5.3% of the
respondents chooses credit card option to make while purchasing from mobile phone.

Reasons for not choosing the mobile wallets to make the payments are-11 respondents
mentioned that they don’t feel the mobile wallets are secure.

6.6 Representation of reasons for choosing the mobile wallets and debit/credit cards
during transactions-

The analysis represents that 57.3% of the respondents feel easy by paying through this mode,
17.3% of the respondents feel safe by paying through this mode,13.3% of the respondents can
avail more dicounts through this mode, 12% of the respondents can reduce their hand bag/
wallet weight and size by paying through this mode.

6.7 Representation of reasons for using only cash while making payments-
The analysis represents that 57.3% respondents are forced by the sellers to make payment only
by cash, 30.7% respondents feel by paying in cash is safe, 9.3% respondents can avail dicounts
by paying through the cash, 1.3% respondents don’t have a particular direction to make
payments.

6.8 Representation of opinion of the respondents for their future payments

Statements Strongly Disagree Neutral Agree Strongly

disagree agree
 Digital 9 1 19 27 19

Cash 10 7 39 16 3

New mode 7 3 35 24 6

7. CONCLUSION:
Modes of transactions are diversifying to online. There are more emergence of the digital mode
market players attracting the customers by offering discount and cash backs. The customers
are more being attracted to the digital modes of payments. The organizations should implement
the digital modes of transaction rather than being paid through cash payments. The government
and organizations should also educate and motivate the customers to choose the digital modes
of transactions.