A Comparative Study of Cash and Cashless Transactions in Bihar

Abstract

This study examines the evolving landscape of financial transactions in Bihar, focusing on a comparative analysis between traditional cash-based methods and emerging cashless alternatives. The research employs a mixed-methods approach, combining primary data collected from 318 respondents across diverse demographics—including age, gender, education, occupation, income levels, and geographic locations—with secondary data sourced from government reports, industry publications, and academic studies. The primary data provides insights into awareness, usage patterns, preferences, and satisfaction levels associated with various transaction modes. Findings reveal a significant inclination towards cashless transactions, with platforms like Google Pay, PhonePe, and Paytm being predominant. Key drivers for this shift include convenience, speed, and security. However, challenges such as technological barriers, limited digital literacy, and infrastructural constraints persist, especially in rural areas. Secondary data analysis contextualizes these findings within broader national trends, highlighting the role of government initiatives like the Digital India campaign in promoting digital transactions. It also underscores the disparities in adoption rates between urban and rural regions, emphasizing the need for targeted interventions to bridge these gaps. The study concludes by recommending strategies to enhance digital literacy, improve infrastructure, and build trust in digital payment systems to facilitate a smoother transition towards a cashless economy in Bihar.

Introduction

Overview:
The proliferation of digital technology has significantly altered financial transactions in India, especially post-2016 demonetization. Government initiatives like Digital India have boosted the adoption of digital payments aimed at increasing transparency and financial efficiency. In Bihar—a state with mixed socio-economic and technological development—the shift from cash to cashless payments presents both opportunities and challenges, especially between urban and rural populations.

Objectives of the Study:

1. Assess rural awareness of digital payment tools like UPI, wallets, and digital banking.

2. Identify popular digital payment platforms and user preferences in rural Bihar.

3. Analyze socio-demographic influences (age, gender, education, income) on cashless adoption.

4. Investigate barriers like poor infrastructure, digital illiteracy, and connectivity issues.

5. Evaluate the impact of initiatives like Digital India and Bihar Wallet.

6. Compare usage frequency and purpose of cash vs. cashless transactions.

7. Recommend strategies for enhancing digital inclusion in rural/semi-urban Bihar.

Literature Review Highlights:

• Trust and Convenience are key drivers of digital payment adoption (See et al., 2014).

• Rural areas lag behind due to tech infrastructure gaps and low digital literacy.

• COVID-19 emphasized the need for offline digital solutions.

• Bihar-specific studies show high UPI usage in urban youth, but rural adoption remains slow.

Methodology:

• Sample Size: 318 respondents across Bihar.

• Data Collection: Structured questionnaires (online/offline).

• Data Type: Primary (surveys) & secondary (studies, reports).

• Analysis: Visual tools like pie charts, bar graphs.

• Ethical Considerations: Informed consent, anonymity, academic use only.

Scope:

Focuses on Bihar's urban and rural population, analyzing usage of cash and digital payments (especially UPI, mobile wallets, and internet banking) across age, income, education, gender, and occupation.

Research Hypotheses:

1. Age significantly correlates with digital payment preference.

2. Higher education boosts digital adoption.

3. Urban residents prefer cashless methods more than rural ones.

4. Perceived security and convenience influence digital preference.

5. Digital illiteracy and infrastructure issues hinder adoption.

Data Analysis Insights:

• Youth-Oriented: 88.4% aged 18–24.

• Male-Dominated Sample: 70.1% male.

• Urban Majority: 72% urban, only 9.4% rural.

• Students: 83% are students.

• Economic Spread: 20.8% earn ?1L+/month; diverse income representation.

• High Awareness: 81.4% aware of UPI, 69.5% of mobile wallets.

• Popular Platforms: Google Pay (69.5%), PhonePe (67%), Paytm (38.4%).

• Usage Purposes: Bill payments, online shopping, in-store purchases.

• Transaction Frequency: 72.6% families conduct 50%+ of transactions cashless.

• User Satisfaction: 83% are satisfied or very satisfied with UPI.

Key Findings:

1. Digital payment usage is youth-driven.

2. Significant gender gap in survey participation and possibly access.

3. Urban respondents dominate the sample, influencing findings.

4. Cashless tools are widely known, but rural areas lag in adoption.

5. Infrastructural issues and digital illiteracy are main adoption barriers.

6. Cash incentives (rewards, subsidies) drive digital use.

7. Major barriers: Internet issues, ease of cash use, and trust concerns.

Conclusion

This study highlights a clear and growing preference for cashless transactions in Bihar, driven primarily by the convenience, speed, and security offered by digital payment platforms like Google Pay, PhonePe, and Paytm. These platforms have become central to everyday financial activities, especially in urban areas where digital infrastructure and awareness are higher. The shift towards cashless payments reflects broader national trends and the impact of government initiatives such as the Digital India campaign, which have promoted the adoption of digital financial services across the state. However, the study also reveals significant challenges that continue to limit the reach of cashless transactions, particularly in rural regions. Limited digital literacy, lack of trust, and infrastructural shortcomings such as poor internet connectivity and limited access to smartphones remain major barriers. These issues contribute to persistent disparities in adoption between urban and rural populations, underscoring the digital divide that inhibits inclusive financial growth. Without targeted efforts, these challenges may slow down Bihar’s progress toward a fully cashless economy. To overcome these obstacles, the study recommends focused interventions including enhancing digital literacy through education and awareness campaigns, improving digital infrastructure to ensure wider connectivity and device accessibility, and building greater trust in digital payment systems by strengthening security and customer support. By addressing these critical factors, Bihar can accelerate its transition to a cashless economy, fostering financial inclusion and unlocking economic opportunities for all sections of society.

References

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Copyright

Copyright © 2025 Harsh Srivastava, Prof. Shyam Shankar Dwivedi. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.