Adoption of digital payment systems in the era of demonetization in India

TLDR

The study investigates actual usage of digital payment systems by Indian consumers during the demonetization period, examining how behavioral intention and innovation resistance influence adoption. Using the unified theory of acceptance and use of technology (UTAUT 2) and innovation resistance theory, 766 respondents completed a pre‑tested questionnaire and the data were analyzed with partial least squares structural equation modeling. Results show that behavioral intention and innovation resistance drive digital payment usage, and that the relationship between intention and usage is moderated by consumers’ stickiness to cash payments. The cross‑sectional study is geographically limited and focuses exclusively on UTAUT 2 and innovation resistance theory during demonetization.

Abstract

Purpose This study aims to investigate the actual usage (AU) of digital payment systems by the consumers during the period of demonetization (from November 9, 2016 to December 30, 2016) in India. Design/methodology/approach The conceptual frame work for this study is based on the unified theory of acceptance and use of technology (UTAUT 2) and innovation resistance theory. A total of 766 sample respondents were surveyed using a pre-tested questionnaire. The empirical validation of the framework and analysis was done using partial least squares (PLS)-structural equation modeling (SEM) technique. Findings The results suggest that the behavioral intention (BI) to use and innovation resistance (IR) affect the usage of digital payment systems. The relation between BI to use digital payment systems and the AU of digital payment systems is moderated by the stickiness to cash payments. Research limitations/implications This cross-sectional study is limited by geographic constraints and highlights the AU of digital payment systems by using the UTAUT 2 and IR theory only during the demonetization period. Practical implications This study offers valuable insights to the economists, policymakers and digital payment service providers regarding the usage of digital payment systems by consumers during demonetization. Originality/value This study assumes importance as it empirically examines the influence of BI and IR on the AU of digital payment systems during the demonetization period in India. This study empirically validates the moderating influence of stickiness to cash payments on the AU of digital payment systems.