Marketing Research Project on Consumer Preferences
for Digital Payment Methods in Online Shopping
SUBJECT: MARKETING RESEARCH
SUBMITTED TO: PROF. SANJAY CHANDWANI
Prepared By:
Group No.7(Section-C)
Aprajit Khajuria PGP26067
Apoorva Chandola PGP26066
Bhumika Mittal PGP26097
Mudit Upadhyay PGP26203
Parvesh Salvi PGP26246
Rishant Shandil PGP26266
1
CERTIFICATE
This is to certify that RISHANT SHANDIL, BHUMIKA MITTAL,
APRAJIT KHAJURIA, APOORVA CHANDOLA, MUDIT UPADHYAY,
PARVESH SALVI’s research project "Consumer Preferences for Digital
Payment Methods in Online Shopping" is an authentic research work,
completed under Prof. Sanjay Chandwani and submitted to Fostiima
Business School, Dwarka, as a requirement for Marketing Research.
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ACKNOWLEDGMENT
We extend our sincere gratitude to everyone who contributed to this
research. Special thanks to Prof. Sanjay Chandwani for his guidance and
continuous feedback. We also thank Fostiima Business School for
providing resources and our survey respondents for their valuable insights.
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Contents
OBJECTIVE OF THE STUDY ........................................................................... 5
SCOPE OF THE STUDY .................................................................................... 6
BACKGROUND .................................................................................................. 7
RESEARCH AIM ................................................................................................ 8
CURRENT SITUATION ..................................................................................... 9
RATIONALE ..................................................................................................... 11
KEYWORDS DEFINITION.............................................................................. 12
LITERATURE REVIEW ................................................................................... 13
DATA ANALYSIS AND INTERPRETATION ............................................... 14
LIMITATION .................................................................................................... 20
REFLECTION AND LEARNING .................................................................... 21
RECOMMENDATIONS ................................................................................... 22
CONCLUSION .................................................................................................. 23
BIBLIOGRAPHY .............................................................................................. 24
APPENDIX ........................................................................................................ 25
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OBJECTIVE OF THE STUDY
• To identify the most preferred digital payment methods in online shopping.
• To analyse factors influencing consumer preferences (convenience, security,
cashback).
• To evaluate challenges faced by consumers (transaction failures, fraud risks).
• To compare adoption rates of UPI, digital wallets, BNPL, credit/debit cards, and cash
on delivery.
5
SCOPE OF THE STUDY
This study explores consumer behavior toward digital payment methods in India,
emphasizing factors such as age, income, and occupation. The research aims to provide
insights into consumer preferences, adoption patterns, and challenges faced while using
digital payment systems. This study is based on both Primary and Secondary Data, collected
through surveys, focus groups, industry reports, and relevant literature from books, the
internet, and articles.
This research focuses on the behavioral aspects of consumers influenced by technological
advancements, convenience and security concerns. It also examines the impact of digital
infrastructure, and promotional efforts by financial institutions on consumer adoption of
digital payments. The findings of this study will contribute to a better understanding of digital
payment trends and provide valuable insights for further research on consumer payment
behavior in India.
6
BACKGROUND
Digital payments have seen significant adoption in online shopping due to their
convenience, ease of transaction, and lucrative incentives offered by payment
providers. With the rise of fintech companies and government initiatives
promoting cashless transactions, digital payments have become a mainstream
payment method. However, challenges such as cybersecurity risks, failed
transactions, and consumer trust issues remain key concerns. Understanding
these factors is crucial for improving digital payment adoption rates.
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RESEARCH AIM
The research aim is to thoroughly investigate how consumers choose
digital payment methods for online shopping. It focuses on
understanding the reasons behind their preferences, such as
convenience, security, and cashback offers. Additionally, it aims to
identify the main challenges preventing widespread adoption,
including security risks and transaction failures. The findings will
help businesses and financial institutions improve digital payment
systems by offering better security, incentives, and reliability,
ultimately enhancing the overall user experience..
8
CURRENT SITUATION
Digital payments have revolutionized the e-commerce industry by making transactions faster,
safer, and more convenient. Some key transformations include:
1. Shift from Cash on Delivery (COD) to Digital Payments:
o Earlier, COD was the most preferred option in India due to trust issues in
online shopping.
o With UPI, digital wallets, and card-based payments, consumers now prefer
instant and secure payments.
2. Rise of UPI and Mobile Wallets:
o UPI has overtaken traditional card payments, enabling real-time, hassle-free
transactions.
o Wallets like Paytm, Google Pay, and PhonePe provide incentives such as
cashback, making them popular.
3. Emergence of BNPL (Buy Now, Pay Later):
o Many e-commerce platforms now offer BNPL options (e.g., Simpl, LazyPay,
Amazon Pay Later), allowing users to buy without immediate payment.
4. Enhanced Security Measures:
o Two-factor authentication (OTP-based approvals), tokenization of cards, and
biometric payments have made transactions more secure.
5. Integration with E-commerce Platforms:
o Digital payments are now deeply integrated into platforms like Amazon,
Flipkart, and Myntra, making checkouts seamless.
o AI-driven fraud detection systems help prevent unauthorized transactions.
Current Situation in India
• UPI Leads Digital Transactions:
o 83% of digital transactions in India are via UPI in 2024.
o More than 42 crore UPI transactions occur daily. (Business Standard)
• Consumers Prefer Instant and Reward-based Payments:
o Younger consumers (18–25 years) favor UPI, wallets, and BNPL, while
older users still rely on credit/debit cards.
o E-commerce platforms offer exclusive discounts on digital payments, boosting
adoption.
• Challenges Remain:
o Security Risks: Fraud cases, phishing, and data breaches are rising.
o Transaction Failures: Network issues and technical glitches impact
reliability.
o Market Dominance Concerns: Regulatory bodies are considering capping
UPI market shares to maintain competition.
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DATA : -
• UPI Dominance: 58% of respondents prefer UPI due to instant transactions.
• Digital Wallets: 27% use Paytm/Amazon Pay for cashback offers.
• BNPL Adoption: 12% of younger consumers (18–25) use BNPL for affordability.
• Cash on Delivery: 15% still prefer COD due to security concerns.
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RATIONALE
Understanding consumer behavior helps businesses and financial
institutions improve digital payment solutions, enhance security
measures, and tailor marketing strategies. The study will provide insights
into how different demographic groups perceive and use digital
payments, helping businesses refine their payment services and increase
user adoption. Additionally, the findings will assist policymakers in
formulating better digital payment regulations and security frameworks,
ensuring a safe and efficient transaction environment for consumers.
consumer behavior helps businesses and financial institutions improve
digital payment solutions, enhance security measures, and tailor
marketing strategies. The study will provide insights into how different
demographic groups perceive and use digital payments, helping
businesses refine their payment services and increase user adoption.
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KEYWORDS DEFINITION
• UPI (Unified Payments Interface): A real-time payment system for bank
transactions.
• Digital Wallets: Mobile applications for online transactions (e.g., Paytm, Google
Pay).
• BNPL (Buy Now, Pay Later): Short-term credit allowing deferred payments.
• Transaction Failure: Unsuccessful payment processing due to technical errors.
• Cybersecurity: Measures taken to protect digital payment transactions from fraud
and hacking.
• Fintech: Companies that use technology to improve financial services
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LITERATURE REVIEW
In this research we have tried to get a review on the most preferred digital payment methods
in online shopping and how the image of a UPI in online shopping changes in consumer’s
mind.
1) Studies have shown a significant increase in digital payment adoption in e-commerce
due to ease of access, security measures, and financial incentives.
2) Research highlights that mobile payment applications such as UPI and digital wallets
have surpassed credit/debit card usage in online shopping.
3) Findings indicate that transaction speed and security play a crucial role in consumer
payment preferences.
4) Studies suggest that promotional offers such as cashback, discounts, and reward
points increase digital payment adoption.
5) Several research papers discuss consumer trust in fintech services and how it impacts
digital payment choices.
6) Academic work has explored the role of government initiatives like Digital India and
their impact on online payment behavior.
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DATA ANALYSIS AND INTERPRETATION
• Gender-Based Preferences (in %)
Female (43%) → Prefer UPI & digital wallets for ease & security; more cautious
about fraud.
Male (38%) → Use a mix of UPI, BNPL & credit cards; prefer BNPL for flexibility.
Overall Trend → UPI dominates; Females focus on security, while Males adopt
BNPL & credit cards more.
Gender
Female
Male
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• Age-Based Preferences (in %) Total Respondents: 81
18–24 years (43 respondents) (53.1%) → Prefer UPI & digital wallets for quick
transactions and cashback.
25–34 years (20 respondents) (24.7%) → Use a mix of credit/debit cards & BNPL,
valuing credit flexibility.
35–44 years (18 respondents) (22.2%) → Lean towards credit/debit cards, prioritizing
security & reliability.
Overall Trend → Younger consumers favor UPI & BNPL, while older groups trust
traditional cards more.
Age Group
50
45
40
35
30
25
Total
20
15
10
5
0
18 - 24 25 - 34 35 - 44
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• The analysis of average monthly online shopping expenditure shows diverse spending
patterns among consumers. A significant portion (27.16%) spends above ₹20,000,
indicating a preference for credit cards and BNPL options due to higher transaction
values. Around 19.75% fall within the ₹5000 - ₹10,000 range, suggesting they are
regular shoppers who likely use UPI and BNPL for their transactions. Similarly, 18.52%
of respondents spend between ₹10,000 - ₹20,000, showing an inclination toward
credit/debit cards and BNPL for flexibility and rewards. Meanwhile, 9.88% of
consumers shop within the ₹1000 - ₹5000 range, often opting for UPI and digital wallets
for convenience. Lastly, 24.69% of respondents spend below ₹1000, with a preference
for cash on delivery and UPI, possibly due to limited purchasing power or security
concerns. These insights indicate that spending behavior significantly influences digital
payment preferences, with higher spenders favoring credit-based options and lower
spenders relying more on digital wallets and UPI.
Online shopping expenditure
Below ₹1000
Below ₹1000
Above ₹20000
Above 10000 - Above ₹ 20000
Above ₹20000
₹5000 - ₹10000
Total
₹10000 - ₹20000
₹1000 - ₹5000
₹5000 - ₹10000
₹10000 - ₹20000
₹1000 - ₹5000
0 5 10 15 20 25
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• The analysis shows that credit/debit cards and UPI are the most preferred payment
methods, each used by 27.16% of respondents, followed by digital wallets at 23.46%.
Cash on delivery remains significant at 22.22%, indicating trust issues with online
payments. Businesses should focus on enhancing security and offering incentives to
boost digital payment adoption.
Payment Mode in Online Shopping
Cash on Delivery
Credit/Debit Card
Digital Wallet ( Paytm wallet/
Amazon wallet )
Digital Wallet (Paytm/Amazon)
UPI ( Google Pay/ PhonePe/
Paytm )
UPI (Google Pay/PhonePe/Paytm)
• The analysis of factors influencing payment method choices shows that convenience is
the top driver, preferred by 30.86% of respondents. Security and fraud protection follow
at 27.16%, highlighting consumer concerns about online transaction safety. Cashback
and rewards motivate 22.22% of users, indicating the impact of financial incentives.
Lastly, habit and comfort with a familiar method influence 18.52% of respondents,
showing the role of user experience in payment preferences.
Primary reason for your preferred payment method
30
25
20
15
Total
10
0
Cashback & Convenience Habit/Comfort with Option 2 Security & Fraud
Rewards the method Protection
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• The analysis of payment issues shows that 38.27% of respondents have never faced any
issues, indicating a smooth digital payment experience for many users. However,
37.04% have encountered failed transactions, highlighting a key concern in payment
reliability. Additionally, 24.69% reported that some merchants do not accept digital
payments, which can limit the usability of these methods.
primary reason for your preferred payment
method
25%
No, I have never faced any issue
38%
Yes, failed transaction
37% Yes, merchant not accepting digital
payments
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The analysis of UPI security perception reveals that 39.51% of respondents consider it
somewhat secure, while 33.33% hold a neutral opinion. Meanwhile, 27.16% perceive UPI as
very secure, indicating a generally positive but cautious attitude toward its safety in online
shopping.
How often do you use UPI for online
shopping
Very Secure Neutral
27% 33%
Neutral
Somewhat Secure
Very Secure
Somewhat Secure
40%
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LIMITATION
The Limitations section highlights the constraints of the study, such as its limited focus on
FOSTIIMA students, which may not represent broader consumer behavior. The sample size
of 70–90 respondents might not be large enough for generalization, and the self-reported data
may contain biases. Additionally, the study does not include perspectives from merchants and
digital payment providers, which could offer a more comprehensive understanding of the
digital payment landscape.
• Geographic Limitation: The study focuses only on FOSTIIMA students, which may not
reflect digital payment behavior across different regions or economic classes.
• Limited Demographic Representation: The target population is primarily aged 18–25,
missing insights from older age groups who may have different payment preferences.
• Exclusion of Merchant Perspective: The study does not consider the views of online
retailers and service providers, which could provide a more balanced understanding of digital
payment adoption.
• Rapid Technological Changes: Digital payment trends evolve quickly with new
technologies, making some findings less relevant over time.
• Potential Bias in Responses: Self-reported data may be influenced by respondent
perception, leading to potential inaccuracies.
• Limited Sample Size: A sample of 70–90 participants is relatively small, limiting the
generalizability of findings.
• Lack of Longitudinal Analysis: The study is based on a one-time survey rather than
tracking changes in consumer preferences over time.
• Security Concerns Not Fully Explored: While the study addresses security risks, it does
not include technical assessments or expert opinions on fraud prevention.
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REFLECTION AND LEARNING
• Gained insights into consumer payment preferences and challenges.
• Understood the role of security and incentives in digital payment adoption.
• Recognized the need for future research on a wider demographic.
• Observed changing payment preferences over time with advancements in financial
technology.
• Learned the impact of transaction failures and security concerns on user trust.
• Noted the influence of promotional offers and discounts on consumer choices.
• Acknowledged the importance of fintech innovations in shaping digital payment
trends. Gained insights into consumer payment preferences and challenges.
• Understood the role of security and incentives in digital payment adoption.
• Recognized the need for future research on a wider demographic.
• Observed changing payment preferences over time with advancements in financial
technology.
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RECOMMENDATIONS
• Strengthen security measures with multi-factor authentication and real-time fraud
detection.
• Improve transaction reliability through banking partnerships and robust infrastructure.
• Provide tailored incentives to attract younger consumers and increase engagement.
• Conduct awareness campaigns to address security concerns and promote trust.
• Encourage financial literacy programs to educate users about digital payment risks
and benefits.
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CONCLUSION
Digital payment methods are widely preferred for online shopping, but security and reliability
remain key concerns. Incentives like cashback drive adoption, especially among younger
consumers. Businesses and financial institutions must continuously innovate to enhance user
trust and ensure seamless digital transactions.
• Security Concerns: Consumers are often worried about fraud, data breaches, and
unauthorized transactions. Issues like phishing, card cloning, and identity theft create
hesitation in adopting digital payments.
• Reliability Issues: Transaction failures, delays in payment processing, and system
downtimes cause frustration among users. This can be due to bank server issues, network
failures, or app glitches.
• Impact on Adoption: Users who experience frequent transaction failures or security
breaches may revert to traditional payment methods like cash on delivery.
• Measures to Improve: Financial institutions and fintech companies are implementing
fraud detection, AI-based monitoring, and improved encryption to enhance security and
reliability.
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BIBLIOGRAPHY
www.researchgate.net
www.ama.org
www.tandfonline.com
www.sciencedirect.com
www.mdpi.com
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APPENDIX
Section 1: Demographic Information
1. What is your age group?
Below 18
18-24
25-34
35-44
45-54
55 and above
2. What is your gender?
Male
Female
Other
Prefer not to say
3. What is your occupation?
Student
Employed (Full-time/Part-time)
Self-employed
Unemployed
Retired
4. What is your average monthly online shopping expenditure?
Below ₹1,000
₹1,000 - ₹5,000
₹5,000 - ₹10,000
₹10,000 - ₹20,000
Above ₹20,000
Section 2: Digital Payment Preferences
5. Which payment method do you use most frequently for online shopping?
Credit/Debit Card
UPI (Google Pay, PhonePe, Paytm, etc.)
Digital Wallets (Paytm Wallet, Amazon Pay, etc.)
Buy Now, Pay Later (BNPL) services
Cash on Delivery
6. What is the primary reason for your preferred payment method?
Convenience
Security & Fraud Protection
Cashback & Rewards
Faster Transactions
Habit/Comfort with the method
7. How often do you use UPI for online shopping?
Always
Frequently
Occasionally
Rarely
Never
8. Have you used Buy Now, Pay Later (BNPL) services for online purchases?
Yes, frequently
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Yes, but rarely
No
9. What factors would encourage you to use digital wallets or UPI more? (Select
all that apply)
Higher cashback & discounts
Faster processing speed
Enhanced security features
More merchant acceptance
Other (please specify)
Section 3: Security & Challenges
10. Have you ever faced any issues while using digital payments for online
shopping?
Yes, failed transactions
Yes, security concerns (fraud, hacking, etc.)
Yes, merchant not accepting digital payments
No, I have never faced any issues
11. How secure do you feel when using digital payment methods for online
shopping?
Very Secure
Somewhat Secure
Neutral
Somewhat Insecure
Very Insecure
12. Have security concerns ever stopped you from using a digital payment
method?
Yes
No
Section 4: Consumer Behavior & Future Trends
13. Do you think digital payments will completely replace cash on delivery in the
future?
Yes
No
Not Sure
14. Would you prefer to use a single digital payment method for all transactions or
multiple methods?
Single method (e.g., only UPI)
Multiple methods depending on the situation
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