Customer Perception towards UPI and Digital Payments in Tier-2 Cities: An Empirical Study

Abstract

The rapid expansion of digital payment systems in India has transformed the financial behaviour of consumers, particularly in Tier-2 cities where digital adoption has accelerated post-demonetization and during the COVID-19 pandemic. This study examines customer perception towards Unified Payments Interface (UPI) and other digital payment methods in Tier-2 cities of Central India. The research is based on primary data collected from 220 respondents using a structured questionnaire. Statistical analysis using SPSS tools such as descriptive statistics, correlation, and regression analysis was employed to evaluate the influence of key variables such as ease of use, security, trust, convenience, and promotional incentives on customer perception. The results indicate that convenience and ease of use are the most influential factors affecting digital payment adoption, followed by trust and security concerns. The regression model shows that digital payment attributes explain 64% of the variance in customer perception (R² = 0.64). The findings suggest that while adoption levels are high, concerns regarding data privacy and fraud remain barriers for sustained usage. The study provides practical implications for financial institutions, fintech companies, and policymakers to improve digital payment ecosystems in semi-urban India by enhancing trust, awareness, and digital literacy.