International Review of Business, Trade, and Economics
Payment Digitalization and Urban Household Consumption: Evidence from Micro-Level Data
Abstract
Yash Sharma
This study analyzes how digital payment adoption affects urban households’ consumption and saving behaviors, using micro-level survey data from 250 respondents in Indore, India, aged 20–50. Using an econometric approach with total consumption, discretionary spending, savings rate, and cash usage as outcomes, it evaluates impacts across age and income groups. The findings show that adopting digital payments raises overall and discretionary consumption, reduces cash use, and lowers savings, with particularly strong effects among younger households. Interaction and subgroup results indicate heterogeneous impacts, with younger and higher-income groups responding more strongly. Mediation analysis indicates that higher discretionary spending partly explains the drop in savings, consistent with present-biased consumption. The results offer guidance for policymakers and financial institutions on advancing financial inclusion and digital payment uptake while addressing risks to long-term household financial resilience.
