Impact of Digital Payments on Spending and Saving Behaviour of Users in Salem District

Abstract

Digital payment adoption has expanded rapidly across India, driven by flagship policy initiatives such as Digital India and the Unified Payments Interface (UPI). Despite this growth, the behavioural determinants of adoption and financial transaction transparency remain insufficiently understood, particularly in semi-urban and district-level contexts. This study investigates how technological literacy, regulatory awareness, institutional trust, and perceived money laundering risk collectively influence digital payment adoption and financial transaction transparency among users in Salem District, Tamil Nadu. Drawing on the Technology Acceptance Model (TAM), Institutional Trust Theory, and Perceived Risk Theory, an integrated conceptual framework with eight hypotheses is developed and empirically tested. Primary data were collected from 187 valid respondents using a structured questionnaire and purposive sampling. Exploratory Factor Analysis (EFA) confirmed a six-factor structure, and Confirmatory Factor Analysis (CFA) validated the measurement model. Structural Equation Modelling (SEM) with path analysis was used to test the hypothesised relationships. Results reveal that technological literacy, regulatory awareness, and institutional trust positively and significantly influence both digital payment adoption and financial transaction transparency, while perceived money laundering risk exerts a significant negative effect on both outcomes. The study contributes an integrated theoretical framework to the digital finance literature and provides actionable policy implications for regulators, fintech service providers, and financial inclusion practitioners in India.