Impact of Demonetization (2016) on Digital Payment Growth in India
Dr. Ravishankar S Ulle1, Diyaa D2, Dixita Sinha2, Deepthi Shree N2, Gadamsetty Varun Kumar2,
Deno Eswar L2
Assistant Professor1, MBA, Faculty of Management Studies
CMS Business School2, Jain (Deemed-to-be University), Bengaluru
Abstract
The demonetization of ₹500 and ₹1,000 currency notes in November 2016 marked a transformative shift in India's payment ecosystem, accelerating the adoption of digital payment methods. This study examines the impact of demonetization on the growth of Unified Payments Interface (UPI) transactions and e-wallet usage in India. By analyzing transaction volumes, growth trends, and consumer behaviour, this research highlights how demonetization acted as a catalyst for digital financial inclusion.
Using data from the Reserve Bank of India (RBI), the National Payments Corporation of India (NPCI), and fintech reports, this study identifies a sharp increase in digital transactions post-demonetization. UPI, launched in 2016, witnessed exponential growth due to government initiatives, increased smartphone penetration, and changing consumer trust dynamics. E-wallets such as Paytm, PhonePe, and Google Pay also saw rapid adoption, though regulatory shifts later reshaped their role in the digital payments landscape.
Additionally, this study explores consumer behaviour patterns, emphasizing the role of trust, convenience, and security concerns in digital payment adoption. A shift in payment preferences from cash to digital methods was influenced by factors such as ease of use, merchant acceptance, and cashback incentives. However, challenges like cybersecurity threats and digital literacy gaps continue to affect adoption rates.
This research contributes to the understanding of digital payment evolution in India and provides insights for policymakers, fintech firms, and banking institutions to further enhance financial inclusivity. Future studies may explore the long-term impact of digital payments on India’s informal economy and financial habits.
Keywords
Demonetization, Digital Payments, UPI, E-wallets, Financial Inclusion, Consumer Behaviour, Trust, Fintech, RBI, NPCI, Cashless Economy
