Encouraging Financial Inclusion in Developing Nations: Factors influencing the usage of Mobile Wallets in India

Abstract

The rapid advancement of digital technologies has positioned mobile wallets as a pivotal tool for fostering financial inclusion in developing nations, particularly in India. With the proliferation of smartphones and internet connectivity, mobile wallets offer a convenient and cost-effective means of accessing financial services, enabling underbanked and unbanked populations to participate in the formal economy. Despite their potential, the adoption of mobile wallets remains uneven across demographic and geographic divides, hindered by challenges such as low digital literacy, trust issues, and infrastructural gaps. This study explores the factors influencing mobile wallet usage in India, focusing on technological, economic, and social determinants. Leveraging a comprehensive survey of 400 respondents, it examines the impact of ease of use, perceived security, affordability, peer influence, and incentives on user behavior. The findings reveal significant variations in adoption based on age, income, education, and location, highlighting the urban-rural digital divide. The study underscores the role of government initiatives like Digital India and UPI integration in promoting mobile payments, while also identifying barriers such as cybersecurity concerns and resistance to change. It emphasizes the need for targeted awareness programs, improved digital infrastructure, and trust-building measures to accelerate adoption. By linking mobile wallets to broader financial inclusion goals, such as reducing economic disparities and empowering marginalized communities, the research provides actionable insights for policymakers, mobile wallet providers, and stakeholders. Furthermore, it situates India’s experience within a global context, drawing parallels with successful implementations in other developing nations. This study contributes to the literature by offering a nuanced understanding of mobile wallet adoption and its role in bridging financial gaps, ultimately advocating for a collaborative effort to enhance digital financial ecosystems. The findings hold relevance for advancing Sustainable Development Goals, particularly those related to inclusive economic growth and innovation in financial services.