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An interesting observation is that the number of people using the digital payment systems (credit and debit
cards) has increased in spite of the fact that there were problems with both the merchants and consumers
regarding digital payments. The problems can be divided into two major categories: problems related to
consumers' inability to understand how to use or trust credit card usage, and problems related to
dissatisfaction with customer service.
The strategies adopted by India's Central Bank, Reserve Bank of India (RBI), to promote adoption on credit
and debit cards included educating consumers about their usage, disseminating information through
campaigns, promoting use through discounts etc., but it was not enough. There are many reasons for the lack
of success with these strategies. Firstly, most of the education and awareness campaigns were targeted at
merchants only, not customers. Secondly, education regarding electronic payments was aimed at educating
merchants on the usage of credit cards (Business Standard, 17th March 2013). The focus was on teaching
them about the merits of digital payment systems and less so on how to actually use them efficiently. Thirdly,
overall education and information were not direct or consistent enough to be effective (Business Standard,
19th January 2015).

As a result of these factors it can be said that when it comes to digital payments in India there is a gap in
understanding between what consumers want and how merchants can meet these needs. As a result,
consumers are not adopting digital payments as quickly as merchants are accepting them. The paper further
provides an extensive analysis of the problems that were faced by governments and service providers when
it came to promoting digital payment systems in India.

2. Literature Review
In this section, a systematic review of literature is provided to help understand the sources of information on
what works and what doesn't when it comes to penetration of digital payment systems in India. The
following questions were the focus of the study:

1. How is digital payment systems used in India?
2. How is digital payment systems promotion done in India?

3. What are the problems faced by merchants and consumers regarding digital payments?
4. What can we do to promote digital payments effectively in India?

5. What are the key challenges that relate to adoption of digital payment systems in
India?

The first question refers to what is actually happening around credit card usage in India. The use of credit
card payment can be measured in terms of the number of transactions, transactions per individual customer
and the average amount spent using a credit card. Some sources provide information on the average sales
volume generated by credit cards (Business Standard, 19th January 2015), while other sources are more
focused on customer satisfaction level with credit cards. For example, an article from Business Standard
(19th November 2014) describes a study that shows that consumers think more about how to use cashless
methods than about how to use cash itself. The same article describes additional findings from the same
study as follows:
"The survey found fewer people used credit card for payments on everyday items like groceries and grocery
items where some customers may keep aside exact change. This lack of awareness of the use of cards in such
cases is causing them financial loss (Business Standard, 19th November 2014).

The second question refers to where and how merchants are being educated about digital payments. Most
sources are concerned with educating merchants on the usage of credit cards. Merchant education is also a
significant issue when it comes to matters related to online payments (CIO, 15th July 2015). In order to fully

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