Consumer spending in the digital age: The effect of payment method choices on online purchases

Introduction

E-commerce is rapidly gaining ground in India, with an increasing number of consumers opting for online shopping due to its convenience, availability, and affordability. This change has brought about a shift in the traditional marketing strategies from brick-and-mortar stores to online platforms. The total interaction between marketers and consumers is being significantly influenced by the online buying environment. The introduction of various payment systems has boosted online transactions. On the contrary, challenges such as lack of knowledge about online shopping, low internet penetration rates in rural areas, lack of awareness and lack of trust in online transactions continue to impede the widespread adoption of e-commerce in India. Online payment options have evolved significantly over the years, making it easier and safer for consumers to make the transaction online. In addition to traditional options like credit and debit cards, buyers can now use digital wallets, gift cards, net banking, and UPI payments (through Google Pay, PhonePe, Paytm, YONO, BharatPe, etc.). These payment options have become crucial in the context of India's push towards a cashless economy which is ecofriendly. Indian consumers are known to be cautious about sharing their personal and financial information online because of the increasing number of cybercrimes reported in the country. To tackle this issue, e-commerce companies in India have been implementing various security measures such as two-factor authentication and encryption techniques. Additionally, having a safe and secure payment gateway that accepts popular payment options such as net banking, credit cards, and digital wallets is crucial in building trust and encouraging consumers to shop online. As technology continues to advance, more convenient and secure payment options can be expected in the future. Discounts, sales, cash backs and promotions are effective marketing tools that can impact online purchasing behavior. According to Fauzi et al. 2018 [2] , the discounts, free gifts, and high quality of online stores have convinced consumers to engage in online buying. Indian consumers are known to be price-sensitive, and discounts and sales are perceived as an opportunity to save money. Online buying platforms like Flipkart, amazon, Myntra, Meesho, etc use special festive offers, flash sales, buy-one-get-one (BOGO) deals, and cash back schemes to attract and retain customers. These promotions create a sense of urgency among consumers to make a purchase decision, resulting in increased sales for the retailer. According to Nagra and Gopal (2013) [6] , demographic factors (consumer's age, gender, qualification, marital status, family size, and income) have a significant impact on online shopping parameters like customer satisfaction, future purchase intention, frequency of online shopping, the number of items purchased, and overall expenditure in online shopping.

Methodology

To achieve the objectives of the present study, the study area was purposively selected namely three districts of U.P i.e., Ayodhya, Lucknow and Kanpur. Respondents were selected randomly for the study. Total 120 respondents (under graduate, post graduate and PhD students from www.extensionjournal.com different streams) were selected for the present study. The self-structured questionnaire was prepared in order to collect information to obtain the objectives of the study. For the collection of online data from the respondents, the selfstructured questionnaire was disseminated via various platforms like WhatsApp, Gmail, etc. For the collection of offline data, structured interview schedule was prepared to get responses from the respondents. Of the 120 responses from the respondents, 90 were received from the online survey and the remaining 30 responses were collected from offline/ structured interview schedule. Statistical analysis was done using mean, standard deviation, Chi-square and percentage. More than 50% of respondents were pursuing under graduation and only 28.3% of respondents were post graduate students. post graduate students and 4.2% PhD students). There were only 6.7% of under graduate students who had not bought anything during past six months. While Gupta and Khincha (2015) [3] found that 20% of respondents rarely purchase online, compared to 30% who do so frequently and 50% shops occasionally and Rao and Hymavathi (2018) [8] revealed that 28% respondents purchased once in a month, followed by 14% once in three months and 15% once in a year. www.extensionjournal.com 4 explains the resolving factor for the situation when consumers were not satisfied with the product and reveals that 70.0% of the respondents chose to return or refund the product when they were not satisfied with the product followed by 53.3% respondents preferred replacing the product when they were not happy with the product. The respondents who preferred complaint about the product when they were not satisfied with the product were 51.7%. [8] revealed the average monthly cost for online purchases was Rs. (2019) [9] in their research revealed that 58% of respondents spent RM0-500 monthly, 20% spent RM501-100, 20% spent 1501 and above whereas, 2% spent 1001-1500. Table 6 shows that 85.0% of the respondents preferred cash on delivery for the payment in online buying services even though they pay using online mode while receiving, followed by 65.8% of the respondents preferred online payment option(prepaid) for paying the amount in online shopping. The study found that 18.3% of the respondents used debit card and only 9.2% of the respondents used credit card for the payment of commodities that they had bought from online shopping portals. While Gupta and Khincha (2015) [3] found that 58% of respondents prefer payment by cash on delivery, 26% prefer payment by debit card, 16% prefer payment by credit card, and the other 2% prefer other payment options. On the contrary, Pise et al., (2021) [7] found that cash on delivery followed by credit cards are the most preferred method while shopping online and Jain and Bhardwaj (2022) [5] revealed that majority of respondents which is 55% prefer to pay by cash on delivery, net banking is used by 10%, debit cards are used by 50%, and credit cards are used by 20%. www.extensionjournal.com While Bashir et al (2015) [1] in their study also showed that the most popular items for online shopping were apparel and footwear. On the other hand, Rungsrisawat et al. (2019) [9] revealed that most chosen category for online shopping was buying clothes, accessories, apparels which was 34%, then 22% people chose others in which respondents wrote travel/hotel booking etc., 20% respondents bought gadgets and electronics online, 14% respondents tended to purchase daily use items online, 2% bought cinema tickets online and the remaining 2% bought books and magazines online and Jain and Bhardwaj (2022) [5] found that 70% of respondents prefer electronic, 68% prefer apparel, 56% prefer homeutilities, and 47% prefer to purchase groceries when purchasing items.

Major Findings

Conclusion

After all the findings and results, the study concluded that mode of payment is very influential factor in online buying behavior. The frequency of shopping is more in under graduate degree in comparison to post graduate and PhD students. Most of the respondents prefer not to spend much in online shopping except for Rs. 500 to Rs. 1000 monthly because of dependency on family. Mostly respondents chose cash on delivery mode of payment even though they use digital mode for paying during delivery, the reason behind is that they fear that their order get delivered to someone else in the hostel if it is prepaid online transaction (because not every order comes with OTP, like in food).

References

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