Digital Payment Adoption and Financial Inclusion Among Rural Youth in India

Abstract

This Systematic Literature Review (SLR) synthesizes evidence from 27 studies including peer-reviewed articles, government surveys, industry reports, and empirical research to investigate the adoption of digital payment systems and their role in the financial inclusion of India’s rural youth. The body of reviewed literature ranges from broad macroeconomic analyses of the digital landscape and household-level surveys to targeted impact assessments  and studies on the behavioral intentions of young Indians. It further incorporates urban-rural comparisons and policy evaluations of various government initiatives.

Collectively, these sources highlight four primary barriers preventing rural youth from fully utilizing digital financial services. These include infrastructure deficits, such as unreliable connectivity and limited access to hardware or electricity; a significant gap in digital literacy among first-generation users; concerns regarding security and cyber fraud; and regulatory hurdles like complex KYC norms and low disposable income. While UPI transactions saw exponential growth between 2017 and 2020, findings indicate this progress is unevenly distributed, leaving rural youth underrepresented despite their importance to the national digital agenda. Research consistently identifies youth, higher education, and male gender as predictors of adoption, while socio-cultural factors and geographic isolation continue to disadvantage rural women and marginalized groups. Ultimately, the review suggests that policy interventions must be localized and youth-centric, addressing these barriers as an interconnected web rather than isolated issues.