THE ECONOMICS OF FRICTIONLESS TRANSACTIONS: UPI AND CONSUMPTION BEHAVIOUR AMONG STUDENTS IN VIJAYAWADA CITY OF ANDHRA PRADESH

The findings reveal that UPI usage is extremely intensive among student respondents in Vijayawada, with the majority conducting multiple transactions every day and a substantial share exceeding ten transactions daily. Female respondents exhibit marginally higher daily transactional engagement than male respondents, particularly in the higher-frequency brackets. This indicates that students operate within an environment of near-continuous low-friction transactional activity, which has important implications for the structure and awareness of their consumption. Regarding the change in transaction size after UPI adoption, responses indicate a clear and meaningful shift toward smaller-value transactions, with about two-thirds of respondents reporting either significantly or slightly smaller transactions. This pattern is more pronounced among female respondents. The finding suggests that UPI has unlocked a category of micro-transactions that were behaviourally inaccessible under cash conditions, where minimum-value thresholds and the friction of small-change handling discouraged low-value digital exchange. In terms of perceived convenience, an overwhelming majority of student respondents — exceeding 90 per cent — perceive UPI as more convenient than cash. This near-universal agreement, observed across both gender groups, confirms that UPI is experienced not as one of several available payment options but as a structurally superior interface for daily transactions. This perceived dominance constitutes the behavioural foundation on which the subsequent consumption effects rest. The study further shows that UPI-driven increases in consumption are concentrated in discretionary and high-frequency micro-spending categories, with food and online shopping emerging as the most affected segments. Male respondents exhibit a comparatively broader distribution across food, peer transfers and mobility, while female respondents are more strongly clustered in food and online shopping. This indicates that UPI functions less as a uniform driver of all consumption and more as a category-specific amplifier of discretionary expenditure. With respect to impulse purchases, approximately seven in ten student respondents report an increase in impulsive spending after adopting UPI, with female respondents exhibiting a stronger propensity for such change. This finding aligns with the behavioural economics literature on payment friction, which holds that reductions in transactional friction systematically increase the likelihood of unplanned and discretionary spending. The pattern indicates a measurable economic consequence of UPI's frictionlessness on student consumption decisions. Finally, a notable share of student respondents report reduced awareness of their total monthly spending under UPI compared to the cash era, with female respondents demonstrating a marginally stronger expression of this decoupling effect. Overall, the study concludes that UPI has functioned for student respondents not merely as a faster payment infrastructure, but as a behavioural environment that systematically alters consumption through the elimination of transactional friction. Gender exerts a consistent moderating influence across usage intensity, transaction size, category concentration, impulsiveness and spending awareness, suggesting that the economics of frictionless transactions cannot be adequately understood without accounting for demographic heterogeneity in behavioural response. It is suggested that financial literacy programmes designed for students should be strengthened to incorporate explicit awareness of payment-friction effects, including the documented tendency for digital payments to weaken the perceptual link between consumption and the outflow of money. Awareness initiatives may particularly target female student users, who exhibit stronger expressions of impulsive and decoupled consumption patterns. UPI applications and digital payment platforms may be encouraged to incorporate behavioural safeguards such as periodic spending summaries, category-level budgeting tools and configurable transaction-confirmation prompts that reintroduce minimal friction at user discretion. Higher education institutions can integrate personal finance and behavioural economics content into core or elective coursework to equip students with frameworks for understanding their own consumption behaviour. Regulatory consideration may also be given to platform-level nudges, such as monthly spending notifications and friction-restoration options for high-value or repeat transactions. Finally, future research may extend the present analysis through income-based segmentation, comparison with non-student populations and longitudinal designs that examine the persistence of decoupling effects over time.

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