UPI and the "cashless illusion" — does frictionless digital payment erode the psychological pain of spending?

UPI AND THE “CASHLESS ILLUSION”: DOES FRICTIONLESS DIGITAL PAYMENT ERODE THE PSYCHOLOGICAL PAIN OF SPENDING? This behavioral economics research study investigates whether frictionless digital payment through the Unified Payments Interface (UPI) changes the psychological experience of spending compared with cash payment. At the center of the study is the concept of the “cashless illusion”—the possibility that digital payments can make spending feel less tangible and psychologically salient, even though the underlying financial cost remains unchanged. The research distinguishes between the objective monetary cost of a transaction and the subjective psychological experience of paying, examining whether the way money is transferred can influence how strongly consumers experience the cost of spending. The study adopts a quantitative experimental research design, comparing cash and UPI payment conditions while keeping the underlying purchasing context as comparable as possible. The primary outcome is the perceived psychological pain of spending, with purchasing response and willingness to spend considered as additional behavioral outcomes. The study is grounded in behavioral-economic research on the pain of paying, payment friction, payment tangibility, and the cashless effect. Rather than assuming that UPI necessarily causes overspending, the research treats the relationship as an empirical question and tests whether reduced payment friction is associated with a measurable difference in the psychological experience of spending. By examining UPI within the contemporary Indian digital-payment environment, this research contributes to the broader understanding of consumer decision-making and behavioral responses to increasingly frictionless financial technologies.