The Unified Payments Interface (UPI) has revolutionized digital payments in India. Today, UPI enables digital transactions everywhere, from large shopping malls to paan and vegetable shops. People use UPI not only for everyday purchases but also to pay for expensive home appliances, gadgets, and designer clothes.
UPI plays a crucial role in digitizing India’s payment system and reducing cash usage. However, there is a downside. News agency IANS has reported that experts believe UPI is leading to increased extravagance. People are buying items they don’t necessarily need at the moment.
Why Is Extravagance Increasing Due to UPI?
The primary driver of increased spending through UPI and QR codes is smartphones. Today, a large portion of the population has access to smartphones and data, making payments easy and quick. This convenience can lead to unnecessary spending.
A recent survey by IIT Delhi indicates that about 74% of people are spending more than necessary due to UPI and other digital payment options. Digital payments are easier than using cash. With cash, issues like needing exact change or not having enough money at the moment can prevent purchases. Digital payments, however, don’t face these issues. Your bank balance is effectively available on your smartphone, and credit cards allow you to spend more than what you have. Borrowing money from friends or relatives also becomes easier.
What Are Industry Experts Saying?
Prabhu Ram, Head of Industry Intelligence Group at market intelligence firm CMR, told IANS, “There is a great possibility of wasteful expenditure increasing due to such convenience, because it is a digital mode. It does not feel like paying cash in hand, how much money you are spending.”
The latest data from the National Payments Corporation of India (NPCI) shows that the number of UPI transactions reached 1,330 crores in April, marking a 50% annual increase. Last year, UPI transactions grew by about 60% to a record 11,768 crores. According to experts, consumer spending is on the rise in India. People are now spending significantly on cars, smartphones, TVs, and other items, which boosts the country’s economic growth. However, it is also observed that UPI is leading to unnecessary spending on high-priced items, and this trend is continually growing.
