Factors behind use of plastic money: A

study of consumer behavior

Research Objectives:
1. To determine the level of awareness about plastic money among people.
2. To analyze the usage of plastic money with respect to the amount of transaction.
3. To study the relationship between purpose of transaction and usage of plastic money.
4. To assess the problems of using plastic money.
5. To identify the benefits of using plastic money.

Literature Review:
An article on the Hindu, dated 23rd April 2014 shed light on various issues such as the
utility of different forms of plastic money among other things. The article was based on a
report published by the RBI who had sourced the information from MasterCard and
VISA. According to the RBI report, credit cards have a higher share in the discretionary
category whereas debit cards dominate in routine expenses like utility payments. About
30 per cent of credit card spends are being done online. At least 10-15 per cent of
customers use their cards only online, mainly from smaller cities. The RBI report said
electronic payments dominate their expenses: rail/airfare (71 per cent), durable goods
(61 per cent), rent (49 per cent), tele/mobile (47 per cent), medical institutions (46 per
cent), clothing/footwear (44 per cent), beverages and refreshments (35 per cent). Debit
cards entered India in 1998 and they currently account for almost 95 per cent of the total
number of cards in circulation. Credit cards have shown relatively slower growth even
though they entered the market one decade before debit cards.
The paper published by Hayashi and Klee about the adoption of plastic money suggests
various benefits and problems faced by consumers. Using cash is convenient because it
is accepted almost everywhere (with the notable exception of online retailers), but
carrying large amounts of cash entails both a substantial opportunity cost and a physical
risk of being the target of crime. Credit cards, while costly from the perspective of
payees (as noted above), offer consumers many advantages. A limited liability in the
case of theft or loss, dispute resolution assistance, consolidation of bill payment,
itemized bills, and the ability to borrow are just some of the standard features of most
bank issued debit cards. These cards are accepted at the same locations where credit
cards are accepted. The major advantages of the debit card are that it normally doubles
as an ATM card, thus allowing the consumer to carry one less card, and it also allows
the user to receive cash back after purchases are made when used in combination with
a personal identification number. Like credit cards, debit cards also offer consolidated
billing/record keeping and ease of telephone and Internet based transactions.
Drawbacks to the debit card include lack of acceptance, high processing fee and
increased formalities.
Sources:
http://www.thehindu.com/business/Economy/only-1015-cards-used-for-online-transactions-rbireport/article5940415.ece
https://www.rbi.org.in/scripts/Publications.aspx
http://econpapers.repec.org/article/bpjrneart/v_3a2_3ay_3a2003_3ai_3a2_3an_3a8.htm

Hypothesis:
H0 : People are not aware of the concept of Plastic money.
H1 : People are aware of Plastic money and possess at least one such card.
H0 : Credit card is the most popular form of plastic money.
H1 : Debit card is the most popular form of plastic money.
H0 : People prefer to use cash more often for all their daily purchases.
H1 : People prefer plastic money over paper money for their daily transactions.

Data Collection Methods:

Primary data collection methods:

Exploratory Research including but not restricted to the reading up of resources

available both online and offline on the issue of plastic money, analysis of secondary
data and conversations with students on campus.

An initial non anonymous questionnaire will be designed and made available

publicly through social media so as to ensure that the scope of this study is maximized.

Based on the response to this questionnaire, a set of select respondents will be called
for a personal interview.

Secondary data collection methods:

Secondary data will be collected from online resources such as the websites of government
agencies and reputed e magazines and offline resources such as magazines and newspapers.

Schematic Diagram
Awarnes
s among
consume
rs
Expenditur
e

Securi
ty

Usage
of
Plastic
Money

Portabli
ty

Technolo
gy

Accessabl
ity

Questionnaire:
Q.1 Are you aware about plastic money?
A) Yes
B) No

Q.2 Which type of plastic money do you own (if any)?

A) Debit Card
B) Credit Card

Q. 3 Arrange these in the order of frequency of your usage (1 being most frequent and 4 being
least frequent)
A) Cash

___

B) Credit Card

___

C) Debit Card

___

D) Net Banking

___

Q.4 Would you prefer to use plastic money over other forms of payment for these transactions.
(Tick the preferred options)
A) Paying Bills (electricity, telephone etc.)
B) Online Shopping
C) Banking
D) Buying groceries

E) Buying Electronic items

F) Investments

G) Buying Jewelry, precious stones etc

H) Going out to eat in a restaurant

I) Mobile/TV Recharge

Q.5 Benefits of using plastic money? (Rate each Parameter on the scale of 1-5,1 being most
beneficial and 5 being least beneficial)
A) Convenience

___

B) Security

___

C) Promotional offers

___

D) Accessibility

___

E) Portability

___

Q.6 Problems perceived on possession of plastic money? (Rate each Parameter on the scale of
1-5, 1 being most problematic and 5 being least problematic).
A) Fear of losing card

___

B) High processing fee

___

C) Unnecessary formalities

___

D) Lack of acceptance of plastic money

___

Q.7 What amount(s) would you prefer to pay using plastic money over other forms?
A) Less than 100

B) Less than 100 greater than 1000

C) Less than 1000 greater than 10,000
D) Greater than 10,00

Q.8 Disadvantages of Paper money?

A) Fear of Theft

B) Increasing Duplicity
C) Wear And Tear of paper money
D) None

Q.9 How has plastic money affected your expenditure?

A) No effect
B) Increased
C) Decreased

Q.10 What is your opinion about the growth of Plastic Money in the future.
A) Rapid Growth
B) Steady Growth
C) Stagnant
D) Decline
E) Cant Predict

Submitted By
Aashish Agrawal

2015B3A8411G

Sarthak Mehrotra

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Aravind DS

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Palash Chaturvedi

2015B3A7395G

Dipesh Bansal

2015B3A4476G

Shubhransh Jagota

2015B3A7348G

Aravind Venugopal

2015B3A7474G