Role of Incentive Schemes in Adoption of Digital Payments - A Case Study

Digital payments in India have grown quickly, and cashback, bonuses and reward points have been used to speed up that growth. This study asks how much these incentives actually influence adoption among everyday users in a mid-sized Indian city, and which problems still stop people from relying on digital payments. A structured questionnaire was completed by 119 users chosen by convenience sampling. The analysis uses percentage analysis, Garrett ranking and the chi-square test of independence, with Cramér’s V to show the strength of association. Awareness of digital payments (93.3%) and of incentive schemes (81.5%) is high. About two thirds of respondents (65.5%) say incentives made them use digital payments more, and 60.5% report higher transaction volume. The chi-square tests show that response to incentives does not depend on gender, age, education, income or daily spend, but it is significantly stronger among respondents who know about the schemes (p = 0.037) and among those who have experienced or suspected fraud (p = 0.002). Agreeing that incentives help is significantly associated with an actual rise in transactions (p < 0.001). Garrett ranking places convenience, not cashback, first among the reasons for adopting UPI, and cash is still the most preferred method. Failed transactions are common (only 5.9% have never had one) and only half of the complaints were fully resolved. Incentives work well as a starting nudge across user groups, but lasting adoption depends on convenience, reliability, security and a fair grievance process. Providers and policymakers should pair rewards with investment in those areas.