International Journal of Management (IJM)

Volume 10, Issue 4, July-August 2019, pp.1–8, Article ID: IJM_10_04_001

Available online at http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=10&IType=4
Journal Impact Factor (2019): 9.6780 (Calculated by GISI) www.jifactor.com
ISSN Print: 0976-6502 and ISSN Online: 0976-6510
© IAEME Publication

CUSTOMER PERCEPTION TOWARDS

PAYMENT BANK: A CASE STUDY OF
CUTTACK CITY
Dr. Kishore Kumar Das
Associate Professor & Head – Department of Business Administration,
Ravenshaw University, Cuttack, India

Rupsa Mahapatra*
Rupsa Mahapatra, Research Scholar in Management,
Ravenshaw University, Cuttack, India
*Corresponding Author

ABSTRACT
A new model of banks conceptualised by the Reserve Bank of India (RBI) is
popularly known as Payment Bank. As these banks cannot issue loans and credit
cards, but both current and savings accounts can be operated by such banks. Money is
the life blood of every economy. Now-a-days cash transactions are much simpler due
to the popularization of internet, smart phones and other digital technologies.
Therefore most of the transactions were cashless and if these practices will continue
as it is then in future physical form of currencies will no longer be a king. Privacy,
security and convenience are the factors which influence the users while using the
facility of payment banks. The last decade has seen tremendous growth in use of
internet and mobile phone in India. Increasing use of internet, mobile penetration and
government initiative such as Digital India are acting as catalyst which leads to
exponential growth in use of digital payment. But still many people are there who
were not ready to accept this system of banking as they have a thinking of being
cheated. The current paper will help to identify the customer perception towards
payment bank.
Key word: banks, internet, digital, technologies, mobile, cashless, transactions.
Cite this Article: Dr. Kishore Kumar Das and Rupsa Mahapatra, Customer
Perception Towards Payment Bank: A Case Study of Cuttack City, International
Journal of Management, 10 (4), 2019, pp. 1–8.
http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=10&IType=4

1. INTRODUCTION
Payment banks are the latest initiative from the Reserve Bank of India with the primary
motive to promote digital, paperless and cashless banking in our nation. Traditional banks can
do everything payment banks can, but due to their structures and business priorities they may

http://www.iaeme.com/IJM/index.asp 1 editor@iaeme.com
 Dr. Kishore Kumar Das and Rupsa Mahapatra

be unable to cater to certain segments and geographies. For instance, while it is impossible for
a bank to open branches in every village across the country, payment banks can fill this gap
through the use of mobile phones. The adoption of internet banking by the banks customer is
important since the costs per transaction are even lower than those of an ATM. Besides, it
does not require physical infrastructure. Most banks today have facilities to enable internet
banking customers to pay utility bills online. Internet banking has not caught the fancy of
majority of customers. Small percentage that avail the facility, even makes a difference to the
overall costs for the banks. Indian banking is witnessing a dynamic phase due to the
continuous change in polices of RBI and the government of India. In 2015, RBI issued
licenses for the first time to 11 entities to start payment banks in order to improve banking
penetration. Of these 11, three entities have started their payment banks and are trying to
influence customers through technology driven services.
There are two main ways in which payment banks are different from traditional banks.
Firstly they can accept deposits of only up to Rs. 1lakh, and they cannot lend. Since payment
banks are not allowed to lend , they make their profits by selling third party products.
Secondly while payment banks themselves can not offer certain services to customers, they
can always partner with traditional banks for providing loans and selling investment products.

2. DEVELOPMENT OF PAYMENT BANKS

Today‟s world and its generations are very smart. They always try to do more work in less
time. India is one of the countries which consist of major user of smartphones and mobile
applications. These smartphones, internet facilities, mobile applications are the key drivers for
cashless society. Mobile devices have transformed the entire world by a click of a button
anything from purchase, payment or transfer can take place. With the increase in the
availability of 4G networks across the country, the digital payments becoming faster without
any inconvenience. On 23 September 2013 , committe on Comprehensive Financial Services
for Small businesses and Low Income Households headed by Nachiket Mor, was formed by
the RBI. On 7 January 2014, the Nachiket Mor Committee submitted its final report. Among
its various recommendations, it recommened the formation of a new category of bank called
Payments Bank. On 17 July 2014, the RBI released the draft guidelines for Payment Banks,
seeking comments for interested entities and the general public. On 27th November , RBI
released the final guidelines for payment banks.
In February 2015, RBI released the list of entities which had applied for a Payments Bank
licence.There were 41 applications. It was also announced that an external advisory
committee (EAC) headed by Nachiket Mor would evaluate the licence applications.On
February 2015 , during the presentation of Budget it was announced that India Post will use
large network to run Payment Bank. The external advisory committee headed by Nachiket
Mor submitted its findings on 6 july 2015. The applicant entities were examined for their
financial track records and governance issues. On 19 August 2015, the Reserve Bank of India
gave “in-principle” licences to eleven entities to lunch Payment Banks.The “in – principle”
licence was valid for 18 months within which the entities must fulfill the requirements and
they were not allowed to engage in banking activities within the period. The RBI will grant
full licences under section 22 of The Baanking Regulation Act,1949,after it is satisfied that
the conditions have been fulfilled. There are various methods for digital payments such as
mobile banking, internet banking, banking cards, mobile wallets, etc. In recent time mobile
wallets, UPI (Unified Payment Interface) applications are being popularized. Some of the
popularly used transaction apps are Paytm, Tez, Paypal, PhonePe, freecharge, rupay, BHIM,
Aadhaar pay, and even every bank has developed their own banking apps. There are social
media companies such as amazon, facebook and electronic currencies like Bitcoins seeking to

http://www.iaeme.com/IJM/index.asp 2 editor@iaeme.com
 Customer Perception Towards Payment Bank: A Case Study of Cuttack City

enter the payment market. Consumers believe that the cashless society is more transparent and
convenient. But there are also some disadvantages associated with payment bank services like
barriers in digital payments such as technical issues, lack of clarity, consumers‟ acceptance
level, enough bank balance, etc. Therefore keeping the eyes on consumer satisfaction level
day by day these issues are minimising by the incraesing its efficiency and user-friendly
utilization.

3. STATEMENT OF THE PROBLEM

With the aim of expanding banking services in the country , RBI thrust responsibility on the
Nachiket Mor Committee to explore and make recommendations for the development of a
special category of banks to provide comprehensive financial services to small businesses and
low income families. One such recommendation has been the creation of payment banks
primarily to facilitate financial inclusion. Many traditional banks does not open branches in
extreme rural areas in India. Payment banks go where traditional banks do not. It is assumed
that the rural people will welcome the system due to its advantages. Here the concept and
players are relatively new, however only the positive aspects are focused upon. The negetive
aspect which may arise due to increasing competition or sour attitute of traditional banks due
to missing out on a new avenue or business opportunity has been looked over. Credit
restrictions imposed by the RBI on payment banks restricts the growth and this being a
relatively new sector not much research is conducted on how exactly the growth trend or the
strategy of payment banks would be due to lack of examples. Therefore a full scale research
can be conducted in this aspect to know the perception of customers towards payment banks.
The people still might not be ready to adopt this system as demonitization has just taken place
which in some cases may have in convenienced the masses. To expect the masses again to
adopt a new system of functioning in a relatively short span may be along shot and could
effectively backfire. In this context, the presend study is highly essential.

4. LITERATURE REVIEW
Dahlberg T, Mallat N, Oorni A (2003) concluded that Security and privacy were the major
concerns for the consumers which affect the adoption of digital payment solutions.
Soman D (2001) Soman D (2003) Srivastava J, Raghubir P (2008) analysed that Growth in
technology has opened many modes of payments through which consumers can do
transactions which are more convenient, accessible and acceptable.
Mallat N (2004) studied consumer adoption of mobile payments in Finland. Study found that
mobile payment is dynamic and its adoption depends on lack of other payments methods and
certain situational factors.
Dewan SG, Chen LD (2005) illustrated in their research paper that consumers have an
inclination towards mobile payment apps usage. There has been many studies conducted in
past on mobile payment application to find consumer interest and they found consumer has
positive inclination for the same.
Dahlberg T, Mallat N, Ondrus J, Zmijewska[2008] explained in their research, A Doing
payments via mobile phones has been in use for many years and is now set to explode. Also
mobiles are increasingly being used by consumers for making payments. A comprehensive
model „Payment Mode Influencing Consumer Purchase Model‟ was proposed by Braga and
Mazzon. This model considered factors such as temporal orientation and separation, self-
control and pain of payment constructs for digital wallet as a new payment mode. Consumer
perspective of mobile payments and mobile payment technologies are two most important
factors of mobile payments research.

http://www.iaeme.com/IJM/index.asp 3 editor@iaeme.com
 Dr. Kishore Kumar Das and Rupsa Mahapatra

Shin and Ziderman [2009] tested a comprehensive model of consumer acceptance in the
context of mobile payment. It used the unified theory of acceptance and use of technology
(UTAUT) model with constructs of security, trust, social influence, and self-efficacy. The
model confirmed the classical role of technology acceptance factors (i.e., perceived to users‟
attitude), the results also showed that users‟ attitudes and intentions are influenced by
perceived security and trust. In the extended model, the moderating effects of demographics
on the relations among the variables were found to be significant. Digital wallets offer the
consumers the convenience of payments without swiping their debit or credit cards. Instant
Cash availability and renders seamless mobility is also a unique feature of these digital apps,
for instance the balance in your Paytm wallet can be very easily transferred to your bank
account as and when you want.
Bamasak [2011] carried out study in Saudi Arabia found that there is a bright future for m-
payment. Security of mobile payment transactions and the unauthorized use of mobile phones
to make a payment were found to be of great concerns to the mobile phone users.
Liu S, Zhuo Y, Soman D, Zhao M (2012) Offering various benefits such as flexi payment
digital wallet brands are providing extra convenience to consumers. Digital wallet payments
bring extra convenience to shoppers by offering flexible payment additions and accelerating
exchanges.
Padashetty S, Kishore KS (2013) pointed in their study the factors such as perceived ease of
use, expressiveness and trust affect adoption of digital wallet as payment method. These
factors are termed as facilitators and plays crucial role in adoption of digital payment solution.
Doan [2014] illustrated the adoption of mobile wallet among consumers in Finland as only at
the beginning stages of the Innovation-Decision Process. “Digital Wallet “has become a part
of consumers which are nothing but smart phones which can function as leather wallets.
Wamuyu PK (2014) found that Digital wallet offered many benefits while transferring
money such as convenience, security and affordability.
Rathore HS (2016) found Major factor in adoption of digital wallet is convenience in buying
products online without physically going from one location to another location.
Taheam K, Sharma R, Goswami S (2016) analysed Usage of digital wallet among youth in
the state of Punjab was found to be associated with societal influence and usefulness,
controllability and security, and need for performance enhancement. Premium pricing,
complexity, a lack of critical mass, and perceived risks are the barriers to adoption of digital
payment systems.

5. RESEARCH GAP
The review of literature shows number of works undertaken over the period to study the
perceptions of the prospective payment bank users still there is lot of scope for research for
the present sample and period.

6. OBJECTIVE OF THE STUDY

 To know the perception of customers towards payment bank.
 To make a comparative study on the users of payment bank irrespective of their age, gender,
educational background and monthly income.

7. RESEARCH METHODOLOGY
The concept of payment banks is quite new in India. The purpose of our research is to analyse
the perception of customers towards payment bank. The primary data for the study was
collected through distributing structured questionnaires among the users. The sample size is

http://www.iaeme.com/IJM/index.asp 4 editor@iaeme.com
 Customer Perception Towards Payment Bank: A Case Study of Cuttack City

limited to 110 respondents. The study was conducted based on the convenient sampling
technique. The data collected was analyzed to estimate its trend across the variables.

8. ANALYSIS AND DISCUSSION

8.1. Study of Gender profile
The present study is based on the samples of 110 respondents of Cuttack city. The table-1 and
the corresponding figure -1 reflects that the total samples comprising 71percent male where as
29 percent are female. This is found in the primary data which are collected by random
sampling. The composition shows more male members are using cash less system or payment
bank method to settle their commercial transactions.
Table 1 Study of Gender profile of samples
Profile Frequency Percentage
Male 78 70.91
Female 32 29.09
Total 110 100.00
Sources: Compiled from Collected data

frequency

Male
Female

Figure 1 Study of Gender profile of sample

Sources: Compiled from Collected data

8.2. Study of Age profile

The present study about the age profile of the sample as per Table-2 and Figure-2 shows that
there are 35.45 percent user of payment banks are belongs to the age group below 30 years
where as 39.10 percent users are belongs to the age group of 31-40 years. This reflects that the
majority of users are in the age group of 31-40 years. If we consider the age group up to 40
years then about 74.55 percent which is 3/4th of the total users are belongs to this group. The
lowest users of payment bank belong to the age group of above 50 years which is about 10
percent. This indicates the insecurity as regards use of payment bank increases with
increasing age.
Table 2 Study of Age profile of samples
Age Frequency percentage
Below 30 years 39 35.45
31-40 years 43 39.10
41-50 years 17 15.45
Above 50 years 11 10.00
Total 110 100
Sources: Compiled from Collected data

http://www.iaeme.com/IJM/index.asp 5 editor@iaeme.com
 Dr. Kishore Kumar Das and Rupsa Mahapatra

Frequency

Below 30
years
31-40 years

Figure 2 Study of Age profile of sample

Sources: Compiled from Collected data

8.3. Study of Educational Qualification profile

Table – 3 and Figure-3of the present study shows the Educational Qualification profile of
samples. The payment bank users having post graduate qualification and above comprising
about 44.55 percent of the total sample and lowest users are belongs to HSC qualification
which is about 17.27 percent. This reflects with higher level of education the users of
payment bank are more comfortable and have a positive perception towards cashless
transactions.

Table 3 Study of Educational Qualification profile of samples

Educational qualification Frequency Percentage
HSC 19 17.27
Under Graduate 42 38.18
Post Graduate and above 49 44.55
Total 110 100
Sources: Compiled from Collected data

Frequency

HSC
Under Graduate
Post Graduate and above

Figure 3 Study of Educational Qualification profile of sample

Sources: Compiled from Collected data

http://www.iaeme.com/IJM/index.asp 6 editor@iaeme.com
 Customer Perception Towards Payment Bank: A Case Study of Cuttack City

8.4. Study of Monthly Income profile

Table-4 and figure-4 reflects the level of income of the sample profile. The trend shows an
upward inclination with rising income up to a point and then declines with higher income.
The lowest users of payment bank belongs to the income group above Rs 50000 per month
which is about 4.54 percent and the highest users are belongs to the group of Rs15000-30000
per month which is about 42.72 percent. The maximum users of payment bank are lies in the
capping Rs 5000-30000 per month which is about 77.26 percent.

Table 4 Study of Monthly Income profile of samples

Monthly income Frequency Percentage
Below 5000 11 10.00
5000-15000 38 34.54
15000-30000 47 42.72
30000-50000 09 08.20
Above 50000 05 04.54
Total 110 100
Sources: Compiled from Collected data

Frequency

Below 5000
5000-15000
15000-30000
30000-50000
Above 50000

Figure 4 Study of Monthly income profile of sample

Sources: Compiled from Collected data

9. FINDING AND CONCLUSION

The present study as regards to customer perception towards payment bank: a case study of
Cuttack city shows more male members are using cash less system or payment bank method
to settle their commercial transactions over the female users. As regards to age, more users are
belonging to the age group of 31-40 years. Older people are not comfortable with this cash
less system. Level of education also plays an important role in the development of payment
bank system. This reflects with higher level of education, the users of payment bank are more
comfortable and have a positive perception towards cashless transactions. Level of income
also reflects a similar character. More users of payment bank are found at median income
where as at the both tail use of payment bank is less.

http://www.iaeme.com/IJM/index.asp 7 editor@iaeme.com
 Dr. Kishore Kumar Das and Rupsa Mahapatra

REFERENCES
[1] Dahlberg T, Mallat N, Oorni A (2003) Consumer Acceptance of Mobile Payment
Solutions-Ease of Use, Usefulness and Trust. The Second International Conference on
Mobile Business, Vienna, Austria, pp: 17-25.
[2] Soman D (2001) Effects of payment mechanism on spending behavior: the role of
rehearsal and immediacy of payments. Journal of Consumer Research 27: 460-47
[3] Soman D (2003) The effect of payment transparency on consumption: quasi-experiments
from the field. Marketing Letters 14: 173-183.
[4] Srivastava J, Raghubir P (2008) Monopoly Money: the effect of payment coupling and
form on spending behavior. Journal of Experiental Psycology Applied 14: 213-225
[5] Mallat N (2004) Theoretical Constructs of Mobile Payment Adoption. 27th Information
Systems Research Seminar, Scandinavia (IRIS), Falkenberg, Sweden, pp: 34-46.
[6] Dewan SG, Chen LD (2005) Mobile payment adoption in the USA: a cross- industry,
cross-platform solution. Journal of Information Privacy and Security 1: 4-28.
[7] Dahlberg T, Mallat N, Ondrus J, Zmijewska A (2008) Past, present and future of mobile
payments research: A literature review. Electronic Commerce Research and Applications
7: 165-181.
[8] Shin H, Ziderman A (2009) Student Loans Repayment and Recovery: International
Comparisons. Higher Education 57: 315-333
[9] Bamasak O (2011) Exploring consumers acceptance of mobile payments-an empirical
Study. International Journal of Information Technology, Communications and
Convergence 1: 173-185.
[10] Liu S, Zhuo Y, Soman D, Zhao M (2012) The consumer implications of the use of
electronic and mobile payment systems. Rotman School of Management, University of
Toronto.
[11] Padashetty S, Kishore KS (2013) An Empirical Study on Consumer Adoption of Mobile
Payments in Bangalore City-A Case Study. Researchers World 4: 83
[12] Doan N (2014) Consumer adoption in mobile wallet: a study of consumers in
Finland. http://theseus.fi/bitstream/handle/10024/86343/Ngoc_Doan.pdf?sequence=1.
[13] Wamuyu PK (2014) The role of contextual factors in the uptake and continuance of
Mobile money usage in Kenya. The Electronic Journal of Information Systems in
Developing Countries.
[14] Rathore HS (2016) Adoption of Digital Wallet by Consumers. BVIMSR‟s Journal of
Management Research 8: 69.
[15] Taheam K, Sharma R, Goswami S (2016) Drivers of Digital Wallet Usage: Implications
for Leveraging Digital Marketing. International Journal of Economic Research 13: 175-
186.

http://www.iaeme.com/IJM/index.asp 8 editor@iaeme.com