Changing Trends in Consumer Behaviour due to E-Wallets and UPI

The rapid expansion of mobile internet access, smartphone ownership and fintech innovation hastransformed retail payments in India. Two payment families — proprietary e-wallets and the interoperableUnified Payments Interface (UPI) — moved from novelty to mainstream in only a few years, altering not onlytransaction mechanics but also consumers’ spending psychology and merchant practices. This paper synthesisesempirical studies, working papers and doctoral research (2018–2025) to document how e-wallets and UPI havechanged consumer behaviour across five domains: mode choice and transaction frequency, the “pain of paying”and impulsivity, price sensitivity and loyalty, trust and risk perceptions, and merchant-consumer interactions.Drawing on national transaction aggregates and representative studies, we show that UPI now dominates retaildigital volumes, driven primarily by small-ticket everyday transactions and frictionless UX; this structural shiftcorrelates with higher transaction frequency and increases in self-reported impulsive purchases among youngerurban cohorts. Platform incentive architectures (instant cashbacks, gamified rewards, referral bonuses)accelerate trial and habit formation and attenuate price sensitivity for routine, low-value purchases. Merchantresponses — rapid QR adoption, offer-alignment with platforms and integration of loyalty mechanics — createreinforcing feedback loops. However, benefits are heterogeneous: rural and older consumers remain moresensitive to security concerns and fraud risk, and certain merchants face margin pressures when participating inpromotional schemes. Policy implications include strengthening consumer redress, transparent disclosure ofpromotional terms, targeted financial literacy, and support for low-cost merchant onboarding. The paperconcludes by proposing a conceptual framework linking infrastructure, app design, incentives and behaviouralmediators, and calls for longitudinal and experimental research to quantify long-run welfare effects and designinterventions that preserve convenience while limiting harmful overspending