“A Comparative Survey Study on “Physical Currency v/s Digital Currency” (With Special Reference to Alwar Region-Rajasthan)

“A Comparative Survey Study on “Physical Currency v/s Digital Currency” (With Special Reference to Alwar Region-Rajasthan)

¹ Bharat Prakash Goyal, ² Rajesh Kumar, ³ Dr Vikas Mahalawat ,

¹Student. MBA Modern Institute of Technology & Research Centre, Alwar

E-Mail ID: -goyalb089@gmail.com

²Assistant Professor DMS, MITRC Alwar & Research Scholar- Research Centre- BISM, Jaipur

(Rajasthan Technical University-Kota -Rajasthan)

²³Head, Department of Management Studies, Modern Institute of Technology & Research Centre, Alwar (Rajasthan)

 

 

Abstract: -

In India, physical currency (cash) is tangible, decentralized in possession, and anonymous, while digital currency—specifically the RBI's Central Bank Digital Currency (CBDC) or e₹—is an intangible, sovereign digital form of cash offering instant, secure, and traceable transactions. While UPI (Unified Payments Interface) uses existing bank accounts, the Digital Rupee behaves exactly like physical cash (no interest earned) but exists in a digital wallet.

Physical currency (cash) offers anonymity and offline usability but involves high logistical, printing, and security costs, whereas digital currency (including UPI and e-Rupee) provides 24/7 instant, secure, and traceable transactions, fostering financial inclusion. The Reserve Bank of India (RBI) is actively promoting the e-Rupee (CBDC), a secure, sovereign digital alternative meant to directly mimic the legal tender status and liability of physical cash, without interest. Digital payments, particularly through UPI, have surged to over 10 billion monthly transactions by 2026, significantly reducing reliance on cash and streamlining retail transactions.

 

Key-Words: -CBDC, UPI, RBI.

Introduction: -

The Physical currency, often referred to as cash, is the tangible Medium of exchange used to pay far goods & services, Settle debts, and stare Value. It primarily exists in two forms: banknotes (Paper or polymer notes) and coins. "Historical Evolution" Early human societies relied on direct trades of goods (e.g, grain for tools), which was limited by the "double coincidence of wants" Naturally occurring objects like cowrie shells, salt, and beats were used as early standardized Currency, standardized Metal coin appeared around the 7th century BCE in Lydia (modern Trader). Originating in china during the Tang Dynasty, Confer money initially served as promissory notes redeemable for gold or sliver Most modern Money is not backed by physical commodities but by the "Fiat" (decree) and trust of the issuing government, Modern security Features Governments use advanced technology to prevent counterfeiting.

The Digital currency is any foam of Money or payment that exists only is an electronic form, lacking a tangible representation such as paper bills, checks, as coins. It is managed, stored, and exchanged on digital computer systems, primarily over the internet. A digital version of a country's flat currency issued and regulated by its central bank for example, the Reserve Bank of India (RBI) launched the Digital Rupee in 2022 to provide a safe, sovereign-backed digital alternative to physical cash. ‘Historical Evolution" Crypto grapher David chaum introduced the idea of "digital cash in 1983 and founded Digicash in 1989. Early experiments like e-gold (1996) gained millions of users before being shut down by the government. over 114 countries are now exploring or piloting CBDCs.

Objectives of the study: -

1.To understand the concept of physical and digital currency

·       This objective focuses on explaining what both types of currency mean and how they work.

Physical currency: Cash like 10, 100, 500 notes and coins used for direct payment.

Digital currency: Money transferred electronically through UPI, debit cards, credit cards, and mobile wallets.

Example: Paying 200 in cash at a local shop vs paying through Google Pay or PhonePe.

2. To compare the usage patterns of both currencies

·       This helps to identify how frequently people use cash and digital payments in their daily life.

Example:

A vegetable vendor may prefer cash.

A college student may mostly use UPI for payments.

3. To examine the advantages and disadvantages

·       This objective highlights the pros and cons of both systems.

Physical Currency:

Advantage: Easy to use, no internet needed

Disadvantage: Risk of theft or loss

Digital Currency:

Advantage: Fast, convenient, no need to carry cash

Disadvantage: Risk of cyber fraud, requires internet

Example:

Using cash in rural areas vs using online payment apps in cities.

4. To study consumer preference and behavior

·       These objective studies which type of currency people prefer and the reasons behind their choice.

Example:

Elderly people may prefer cash due to lack of digital knowledge.

Young people prefer digital payments due to ease and speed.

5. To analyze the impact of digital currency on cash usage

·       These objective checks whether digital payments are replacing cash.

Example:

After demonetization and increased UPI use, many people shifted to digital payments instead of cash.

6. To assess the level of awareness about digital payment systems

·       This objective measures how much people know about digital payment methods.

Example:

Some people know how to scan QR codes.

Others may not know how to use mobile banking apps.

 

Review of Literature:-

Digital Currency Research studies conducted by Harshdeep Kaur, Kanika Mehta, and Monita Mago found that Indian households are increasingly adopting digital currency due to convenience, trust, and security features in CBDC systems.

The researchers observed that younger consumers prefer digital payments such as UPI and CBDC over physical cash because of faster transaction processing and ease of use.

Vaibhav Dixit and colleagues highlighted that awareness and technological infrastructure are major determinants influencing the adoption of India’s digital rupee system.

Their study further explained that physical currency continues to be preferred in rural and low-digital-literacy areas because of trust and accessibility concerns.

A comparative survey by E Shyamaladevi revealed that consumers increasingly use digital currency for online shopping, bill payments, and merchant transactions, while cash is mainly used for small offline purchases.

The study also noted that digital currency improves transaction transparency and reduces dependency on paper-based money systems.

Research on UPI adoption demonstrated that digital payment systems have transformed India into a rapidly growing cashless economy with strong consumer acceptance.

However, scholars found that concerns regarding cybersecurity, privacy, internet connectivity, and digital fraud still encourage many people to retain physical currency for daily security.

Comparative findings indicate that physical currency provides psychological satisfaction and universal acceptance, whereas digital currency offers speed, transparency, and lower transaction costs. Overall, recent literature concludes that both physical and digital currencies currently coexist in India, but digital currency usage is expected to increase significantly with technological advancement and government support for cashless transactions.

The review of literature on the comparative study of physical currency and digital currency highlights the changing trends in payment systems and consumer behavior across the world. Earlier studies emphasized the importance of physical currency due to its universal acceptance, ease of use, and trust among rural and elderly populations. Recent research indicates that digital currency and digital payment systems have grown rapidly because of technological advancement, smartphone penetration, internet banking, and government initiatives such as Digital India. Several scholars found that digital currency offers advantages like speed, transparency, convenience, and reduced transaction costs, while concerns related to cyber security, privacy, and digital literacy still remain significant challenges. Comparative studies reveal that urban consumers prefer digital transactions for efficiency, whereas many rural consumers continue to rely on cash because of limited digital infrastructure and trust issues. Literature also suggests that the COVID-19 pandemic accelerated the adoption of digital payments and reduced dependence on physical cash in many sectors. Overall, previous research concludes that both physical and digital currencies continue to coexist, with digital currency gradually gaining greater acceptance in modern economies.

Research Methodology: -

Population and area of the study: - Population of the present study consists of the Physical Currency v/s Digital Currency in the Alwar City. As the population is very large, descriptive research design was adopted and convenience sample method has been used in the present study.

 

Research Analysis: -

Q.1- To study a financial researcher wants to test whether users spend more per transaction when using digital currency of three rural areas A, B and C and different age groups

Age group	A	B	C
21-30	47	45	50
31-40	39	42	52
41 and above	44	36	48

Make the ANOVA For the given data.

Solution. Step-1 Calculation of grand total & Correction factor, if we assume any value in given data (45)

Age group	A	B	C	Total
21-30	+2	0	+5	+7
31-40	-6	-3	+7	-2
41 and above	-1	-9	+3	-7
total	-5	-12	+15	-2

 

 

 

 

 

 

                  Grand total (T) = -2, Correction Factor =  = =0.444

Step-2, calculation of SSC (sum of square between the columns)

SSC = A²/n_A+ B²/n_B+ C²/n_C –correction factor

     =(-5)²/3+(-12)²/3+(15)²/3-0.444

     =25/3+144/3+225/3-0.444

     =   130.88

  Step-3, SSR = (Cold water)²/n_c+ (Warm water)²/n_r+ (Hot water)²/n_h – correction factor

              = (7)²/3+(-2)²/3+(-7)²/3-0.444

              =  49/3+4/3+49/3-0.444

              = 33.556

Step 4: calculation of SST {Total Sum Of Square}

        SST= (+2)²+(0)²+(5)²+(-6)²+(-3)²+(7)²+(-1)²+(-9)²+(3)²-correction factor

              = 214-0.444

              = 213.556

Step 5: calculation of SSE {Total Sum Of Square Due To Error}

            SSE= SST-{SSC+SSR}

             = 213.556-{130.88+33.556}

             = 213.556-164.436

            = 49.126

Step 6: calculate the ratio of F

            F= MSC/MSE                                                                 

             = 65.44/12.28

             = 5.32

        Where, MSC= SSC/C-1= 130.88/3-1

                              = 130.88/2 = 65.44

        MSE= SSE/(C-1)(r-1) = 49.126/(3-1)(3-1)

                = 49.126/2*2  = 49.126/4 = 12.28

·       F = MSR/MSE

           = 16.775/12.28

           = 1.36

Where, MSR= SSR/r-1= 33.556/3-1

                       = 33.556/2 = 16.775

Step 7: Tabulated value of F :

         Level of significance = assume 5%

               V_1c = C-1=3-1= 2

                V_1r = r-1=3-1= 2

                 V₂ = (c-1) (r-1) = (3-1) (3-1)=2*2= 4

                 V = (n-1) = 9-1 = 8

F tabulation (2,4) = 6.94

F tabulation (2,4) = 6.94

8 Step-; comparison & Decision

F tabulation (2, 4) = 6.94  F Calculate 5.32

It is not significant so this is no significance difference in digital currency & no significance in age group

Decision Rule for F-test:

Critical Value (F-table) → 6.94
│
│
│
│
│ F-calculated = 5.32 (falls here)
│
│
│
│
│ Reject H₀ zone → F > 6.94
│
────────────────────────────→ F values

Conclusion: F-calculated < F-table → Fail to reject H₀

Q.2 - We have the number of people per house hold using physical cash (sample of 50 households):

3,4, 2, 5, 3, 4, 4, 3, 5, 2, 3, 4, 3, 3, 4, 5, 2, 4,3, 3, 4, 3, 5, 4, 3, 2, 4, 3, 3, 4, 5, 3, 4, 3, 2, 4,3, 4, 3, 3 , 4, 3, 5, 3, 4, 2, 3, 4, 3, 3

We want to test if the average number of people using cash per household is 4.

Sol.    Step 1: State Hypotheses

·      Null hypothesis (H₀):  =4 (mean =4)

·      Alternative hypothesis (H₁): µ  4 (mean  4)

        This is a two tailed T-Test

        Step 2: calculate sample mean ( )

We sum the number and divide by 50. Lets calculate it step by step.

Count of numbers:

·       Sum of all numbers:

Lets tally carefully. I will group them in 10s to avoid mistakes:

 

1st 10 numbers: 3+4+2+5+3+4+4+3+5+2=35

2nd 10 numbers: 3+4+3+3+4+5+2+4+3+3=34

3rd 10 numbers: 4+3+5+4+3+2+4+3+3+4=35

4th 10 numbers: 5+3+4+3+2+4+3+4+3+3=34

5th 10 numbers: 4+3+5+3+4+2+3+4+3+3=34

 

·       Total Sum= 35+34+35+34+34=172

 

                  Mean = 172/50 =3.44

Step 3: Calculate Sample Standard Deviation (s)

Formula:     S=  

I will outline the calculation instead of doing all 50 differences here:

·      Differences x_i -  (first few)

3-3.44 = -0.44  0.1936

4-3.44 = -0.44  0.3136

2-3.44 = -1.44  2.0736

5-3.44 = 1.56  2.4336

 

·       After calculating all 50 squared differences and summing assume sum of squares  29.68

 

           S=      0.778

 

Step 4: Calculate t-statistic

                    t= - 0/ s/

                    t = 3.44-4 / 0.778/

·        7.071

·      /  = 0.778/7.071  0.11

                           t = -0.56/0.11  -5.09

Step 5: Degree of freedom

                          df = n-1 = 50-1 = 49

Step 6: Determine critical t-value

·      Two-tailed test, α = 0.05, df= 49 teritical    2.01

·      Our t = -5.09    >2.01

Step 7: conclusion

·      Since >t_eritical, We reject H_0.

·       There is significant evidence that the average number of people using cash per household is different from 4.

 

Probability Density
           ^
           |
   0.4  |        ____
   0.3  |      /      \
   0.2  |     /        \
   0.1  |    /          \
   0    |__/            \___
       -5  -2.01        2.01   5
           *              *
           |              |
      t-calculated      t-critical

•  Marks the critical and calculated t-values.
• The area under the curve beyond the critical t-values is the rejection region.

 

 

Conclusion:-

The study on physical currency and digital currency reveals that both forms of money play a significant role in the modern economy. Physical currency, in the form of cash, continues to be widely used due to its simplicity, universal acceptance, and independence from technology. It is especially important in rural areas and for small daily transactions where digital infrastructure may be limited.

On the other hand, digital currency has gained rapid popularity in recent years due to its speed, convenience, and efficiency. With the growth of smartphones and internet access, people are increasingly using digital payment methods such as UPI, mobile wallets, and online banking. Applications like Google Pay and Phone-Pe have made transactions easier, faster and more accessible. Government initiatives like digital India by the government of India have also played  a key role in promoting cashless transactions.

The survey findings indicate that while a large number of people prefer digital payments for their convenience and record-keeping benefits, many still rely on physical currency for small transactions and in situations where internet connectivity is poor. Security concerns, lack of digital literacy, and technical issues remain challenges for digital currency adoption.

In conclusion, neither physical currency nor digital currency can completely replace the other at present. Instead, both complement each other and are used based on the needs and situations of users. A balanced approach, along with increased awareness, better infrastructure, and strong security measures, can help in achieving a more efficient and inclusive financial system.

 

Recommendation and Suggestions:-

Current studies comparing physical and digital currency focus on the transitional shift from tangible cash to Central Bank Digital Currencies (CBDCs) like India's Digital Rupee and decentralized assets like Bitcoin.

Core Comparison Factors

* Tangibility and Form:

Physical currency consists of tangible coins and banknotes designated as legal tender.

Digital currency exists solely as electronic records in digital wallets or computer networks.

* Transaction Efficiency:

 Physical cash requires manual handling, physical presence, and entails high management costs for printing and storage.

 Digital currencies offer instantaneous, 24/7 transfers without intermediaries significantly reducing transaction costs.

* Privacy and Traceability:

◦ Physical cash is inherently anonymous and does not leave a digital trail.

Diaital currencies create an immutable digital footprint, which enhances security against fraud but raises significant privacy and data monitoring concerns.

Key Research Findings (2026)

* Reduced Operational Costs:

Adopting digital currency can save governments billions in currency management; India spent approximately Rs. 4,984 crore on printing between 2021 and 2022.

Critical Recommendations for Study

* Analyze Regulatory Frameworks:

Study the impact of landmark legislation like the GENIUS Act and the Clarity Act, which are expected to stabilize digital asset markets by 2026.

Focus on Hybrid Models:

 Investigate how physical and digital currencies can coexist especially in developing economies where cash reliance remains high for specific demographics.

Evaluate Security Risks:

Address the "hacking potential" and the need for robust cryptographic protocols to maintain public trust.

Examine Demographic Adoption:

 Research how digital literacy gaps, particularly among elderly or rural populations, act as barriers to a full digital transition.

 

References: -

The following sources were referred to for preparing this report:

Books

Kothari, C.R. – Research Methodology: Methods and Techniques

Gupta, S.P. – Statistical Methods

Khan, M.Y. – Indian Financial System

Websites

Reserve Bank of India – www.rbi.org.in

National Payments Corporation of India – www.npci.org.in

Ministry of Finance India – www.finmin.nic.in

Digital India – www.digitalindia.gov.in

Reports & Articles

·       RBI Annual Reports on Digital Payments

·       Government publications on Cashless Economy

Research papers on Digital Payment Systems

Mobile Applications (for practical understanding)

Google Pay                                     Phone-Pe

Paytm

Other Sources

·       Online journals and articles

·       Survey data collected through questionnaire

 

 

 

 

 

 

APPENDIX:-

                                            QUESTIONAIRES

GENDER:  MALE                                  FEMALE  

AGE GROUP:   10-20                        21-30         31—40              41 and above 

EDUCATION:  SECONDARY                                            GRADUCATION

                         SENIOR SEC.                                          POST GRADUCATION

                          OTHER

DEMOGRAPHIC PROFILE:    RURAL                 URBAN

QUES.1   Which payment method do you use most frequently for daily expenses?

a)     Physical cash                                                                   c)  Mobile wallets

b)     Debit/credit cards                                                          d)  Crypto currencies

      QUES.2   How often do you carry physical cash in your wallet?

a)     Always                                                                              c)  Rarely

b)     Most of the time                                                            d)  Never

      QUES.3 For a transaction under RS.500 which is your go to method?

a)     Always cash                                                                  c)  Mostly digital

b)     Mostly cash                                                                  d)  Always digital

      QUES.4 Where do you find digital payments most difficult to use?

a)     Local street vendors                                                   c)  Large retail store

b)     Public transport                                                           d)  Rural areas/ villages

      QUES.5 How long have you been consistently using digital payment method?                   

a)     Less than 1 year                                                     c)  More than 3 years

b)     1 to 3 years                                                             d)  I do not use digital

       QUES.6 How often do you face server down or payment failed issues?          

a)     Frequently                                                               c)  Rarely

b)     Occasionally                                                            d) Never

      QUES.7 If you forget your phone at home, how do you feel?

a)     Completely standard                                              c)  Calm

b)     Slightly worried                                                       d)  Indifferent

       QUES.8 Does your local grocery store/vendor prefer cash or digital?

a)     Strictly cash                                                          c) Prefers digital, but accepts cash

b)     Prefers cash, but accepts digital                          d) Strictly digital

        QUES.9 How much do you trust digital apps with your financial data?

a)     Completely trust                                                    c)  Neutral/unsure

b)     Somewhat trust                                                     d)  Do not trust at all

          QUES.10 What is your primary concern regarding digital currency?

a)     Cyber-hacking and fraud

b)     Lack of transaction privacy

c)     Internet/phone battery dependency

d)     Accident wrong transfers

         QUES.11 Do you feel physical cash offers better privacy than digital?

a)     Strongly agree                                                          c)  Disagree

b)     Agree                                                                         d)  Strongly disagree

         QUES.12 In an emergency, which currency form do you feel is more    reliable?

a)     Physical cash                                                            c)  Both are equally reliable

b)     Digital currency                                                       d)  Neither is reliable in a crisis

        QUES.13 Have you ever been a victim of a digital payment scam?

a)     Yes, lost money                                                      c)  No, but i know someone who was

b)     Yes, but no money was lost                                 d)  No, never

        QUES.14 Which method makes it easier for you to budget your monthly income?

a)     Physical cash                                                           c)  Excel sheets

b)     Digital apps                                                             d)  I do not keep a budget

       QUES.15 If the govt. Launched an official digital note would you use it?

a)     Yes, immediately                                                      c)  Only if forced to

b)     Yes, after seeing other use it                                  d)  Never

      QUES.16 Which application do you use to make online payments?

a)     Paytm                                                                           c)  Google pay

b)     Phonepe                                                                      d)  Bhim

      QUES.17 If physical cash was no longer available, how would it affect your daily life?

a)     Very Negatively                                                           c)  No Impact

b)     Somewhat Negatively                                           “A Comparative Survey Study on “Physical Currency v/s Digital Currency” (With Special Reference to Alwar Region-Rajasthan)

¹ Bharat Prakash Goyal, ² Rajesh Kumar, ³ Dr Vikas Mahalawat ,

¹Student. MBA Modern Institute of Technology & Research Centre, Alwar

E-Mail ID: -goyalb089@gmail.com

²Assistant Professor DMS, MITRC Alwar & Research Scholar- Research Centre- BISM, Jaipur

(Rajasthan Technical University-Kota -Rajasthan)

²³Head, Department of Management Studies, Modern Institute of Technology & Research Centre, Alwar (Rajasthan)

 

 

Abstract: -

In India, physical currency (cash) is tangible, decentralized in possession, and anonymous, while digital currency—specifically the RBI's Central Bank Digital Currency (CBDC) or e₹—is an intangible, sovereign digital form of cash offering instant, secure, and traceable transactions. While UPI (Unified Payments Interface) uses existing bank accounts, the Digital Rupee behaves exactly like physical cash (no interest earned) but exists in a digital wallet.

Physical currency (cash) offers anonymity and offline usability but involves high logistical, printing, and security costs, whereas digital currency (including UPI and e-Rupee) provides 24/7 instant, secure, and traceable transactions, fostering financial inclusion. The Reserve Bank of India (RBI) is actively promoting the e-Rupee (CBDC), a secure, sovereign digital alternative meant to directly mimic the legal tender status and liability of physical cash, without interest. Digital payments, particularly through UPI, have surged to over 10 billion monthly transactions by 2026, significantly reducing reliance on cash and streamlining retail transactions.

 

Key-Words: -CBDC, UPI, RBI.

Introduction: -

The Physical currency, often referred to as cash, is the tangible Medium of exchange used to pay far goods & services, Settle debts, and stare Value. It primarily exists in two forms: banknotes (Paper or polymer notes) and coins. "Historical Evolution" Early human societies relied on direct trades of goods (e.g, grain for tools), which was limited by the "double coincidence of wants" Naturally occurring objects like cowrie shells, salt, and beats were used as early standardized Currency, standardized Metal coin appeared around the 7th century BCE in Lydia (modern Trader). Originating in china during the Tang Dynasty, Confer money initially served as promissory notes redeemable for gold or sliver Most modern Money is not backed by physical commodities but by the "Fiat" (decree) and trust of the issuing government, Modern security Features Governments use advanced technology to prevent counterfeiting.

The Digital currency is any foam of Money or payment that exists only is an electronic form, lacking a tangible representation such as paper bills, checks, as coins. It is managed, stored, and exchanged on digital computer systems, primarily over the internet. A digital version of a country's flat currency issued and regulated by its central bank for example, the Reserve Bank of India (RBI) launched the Digital Rupee in 2022 to provide a safe, sovereign-backed digital alternative to physical cash. ‘Historical Evolution" Crypto grapher David chaum introduced the idea of "digital cash in 1983 and founded Digicash in 1989. Early experiments like e-gold (1996) gained millions of users before being shut down by the government. over 114 countries are now exploring or piloting CBDCs.

Objectives of the study: -

1.To understand the concept of physical and digital currency

·       This objective focuses on explaining what both types of currency mean and how they work.

Physical currency: Cash like 10, 100, 500 notes and coins used for direct payment.

Digital currency: Money transferred electronically through UPI, debit cards, credit cards, and mobile wallets.

Example: Paying 200 in cash at a local shop vs paying through Google Pay or PhonePe.

2. To compare the usage patterns of both currencies

·       This helps to identify how frequently people use cash and digital payments in their daily life.

Example:

A vegetable vendor may prefer cash.

A college student may mostly use UPI for payments.

3. To examine the advantages and disadvantages

·       This objective highlights the pros and cons of both systems.

Physical Currency:

Advantage: Easy to use, no internet needed

Disadvantage: Risk of theft or loss

Digital Currency:

Advantage: Fast, convenient, no need to carry cash

Disadvantage: Risk of cyber fraud, requires internet

Example:

Using cash in rural areas vs using online payment apps in cities.

4. To study consumer preference and behavior

·       These objective studies which type of currency people prefer and the reasons behind their choice.

Example:

Elderly people may prefer cash due to lack of digital knowledge.

Young people prefer digital payments due to ease and speed.

5. To analyze the impact of digital currency on cash usage

·       These objective checks whether digital payments are replacing cash.

Example:

After demonetization and increased UPI use, many people shifted to digital payments instead of cash.

6. To assess the level of awareness about digital payment systems

·       This objective measures how much people know about digital payment methods.

Example:

Some people know how to scan QR codes.

Others may not know how to use mobile banking apps.

 

Review of Literature:-

Digital Currency Research studies conducted by Harshdeep Kaur, Kanika Mehta, and Monita Mago found that Indian households are increasingly adopting digital currency due to convenience, trust, and security features in CBDC systems.

The researchers observed that younger consumers prefer digital payments such as UPI and CBDC over physical cash because of faster transaction processing and ease of use.

Vaibhav Dixit and colleagues highlighted that awareness and technological infrastructure are major determinants influencing the adoption of India’s digital rupee system.

Their study further explained that physical currency continues to be preferred in rural and low-digital-literacy areas because of trust and accessibility concerns.

A comparative survey by E Shyamaladevi revealed that consumers increasingly use digital currency for online shopping, bill payments, and merchant transactions, while cash is mainly used for small offline purchases.

The study also noted that digital currency improves transaction transparency and reduces dependency on paper-based money systems.

Research on UPI adoption demonstrated that digital payment systems have transformed India into a rapidly growing cashless economy with strong consumer acceptance.

However, scholars found that concerns regarding cybersecurity, privacy, internet connectivity, and digital fraud still encourage many people to retain physical currency for daily security.

Comparative findings indicate that physical currency provides psychological satisfaction and universal acceptance, whereas digital currency offers speed, transparency, and lower transaction costs. Overall, recent literature concludes that both physical and digital currencies currently coexist in India, but digital currency usage is expected to increase significantly with technological advancement and government support for cashless transactions.

The review of literature on the comparative study of physical currency and digital currency highlights the changing trends in payment systems and consumer behavior across the world. Earlier studies emphasized the importance of physical currency due to its universal acceptance, ease of use, and trust among rural and elderly populations. Recent research indicates that digital currency and digital payment systems have grown rapidly because of technological advancement, smartphone penetration, internet banking, and government initiatives such as Digital India. Several scholars found that digital currency offers advantages like speed, transparency, convenience, and reduced transaction costs, while concerns related to cyber security, privacy, and digital literacy still remain significant challenges. Comparative studies reveal that urban consumers prefer digital transactions for efficiency, whereas many rural consumers continue to rely on cash because of limited digital infrastructure and trust issues. Literature also suggests that the COVID-19 pandemic accelerated the adoption of digital payments and reduced dependence on physical cash in many sectors. Overall, previous research concludes that both physical and digital currencies continue to coexist, with digital currency gradually gaining greater acceptance in modern economies.

Research Methodology: -

Population and area of the study: - Population of the present study consists of the Physical Currency v/s Digital Currency in the Alwar City. As the population is very large, descriptive research design was adopted and convenience sample method has been used in the present study.

 

Research Analysis: -

Q.1- To study a financial researcher wants to test whether users spend more per transaction when using digital currency of three rural areas A, B and C and different age groups

Age group	A	B	C
21-30	47	45	50
31-40	39	42	52
41 and above	44	36	48

Make the ANOVA For the given data.

Solution. Step-1 Calculation of grand total & Correction factor, if we assume any value in given data (45)

Age group	A	B	C	Total
21-30	+2	0	+5	+7
31-40	-6	-3	+7	-2
41 and above	-1	-9	+3	-7
total	-5	-12	+15	-2

 

 

 

 

 

 

                  Grand total (T) = -2, Correction Factor =  = =0.444

Step-2, calculation of SSC (sum of square between the columns)

SSC = A²/n_A+ B²/n_B+ C²/n_C –correction factor

     =(-5)²/3+(-12)²/3+(15)²/3-0.444

     =25/3+144/3+225/3-0.444

     =   130.88

  Step-3, SSR = (Cold water)²/n_c+ (Warm water)²/n_r+ (Hot water)²/n_h – correction factor

              = (7)²/3+(-2)²/3+(-7)²/3-0.444

              =  49/3+4/3+49/3-0.444

              = 33.556

Step 4: calculation of SST {Total Sum Of Square}

        SST= (+2)²+(0)²+(5)²+(-6)²+(-3)²+(7)²+(-1)²+(-9)²+(3)²-correction factor

              = 214-0.444

              = 213.556

Step 5: calculation of SSE {Total Sum Of Square Due To Error}

            SSE= SST-{SSC+SSR}

             = 213.556-{130.88+33.556}

             = 213.556-164.436

            = 49.126

Step 6: calculate the ratio of F

            F= MSC/MSE                                                                 

             = 65.44/12.28

             = 5.32

        Where, MSC= SSC/C-1= 130.88/3-1

                              = 130.88/2 = 65.44

        MSE= SSE/(C-1)(r-1) = 49.126/(3-1)(3-1)

                = 49.126/2*2  = 49.126/4 = 12.28

·       F = MSR/MSE

           = 16.775/12.28

           = 1.36

Where, MSR= SSR/r-1= 33.556/3-1

                       = 33.556/2 = 16.775

Step 7: Tabulated value of F :

         Level of significance = assume 5%

               V_1c = C-1=3-1= 2

                V_1r = r-1=3-1= 2

                 V₂ = (c-1) (r-1) = (3-1) (3-1)=2*2= 4

                 V = (n-1) = 9-1 = 8

F tabulation (2,4) = 6.94

F tabulation (2,4) = 6.94

8 Step-; comparison & Decision

F tabulation (2, 4) = 6.94  F Calculate 5.32

It is not significant so this is no significance difference in digital currency & no significance in age group

Decision Rule for F-test:

Critical Value (F-table) → 6.94
│
│
│
│
│ F-calculated = 5.32 (falls here)
│
│
│
│
│ Reject H₀ zone → F > 6.94
│
────────────────────────────→ F values

Conclusion: F-calculated < F-table → Fail to reject H₀

Q.2 - We have the number of people per house hold using physical cash (sample of 50 households):

3,4, 2, 5, 3, 4, 4, 3, 5, 2, 3, 4, 3, 3, 4, 5, 2, 4,3, 3, 4, 3, 5, 4, 3, 2, 4, 3, 3, 4, 5, 3, 4, 3, 2, 4,3, 4, 3, 3 , 4, 3, 5, 3, 4, 2, 3, 4, 3, 3

We want to test if the average number of people using cash per household is 4.

Sol.    Step 1: State Hypotheses

·      Null hypothesis (H₀):  =4 (mean =4)

·      Alternative hypothesis (H₁): µ  4 (mean  4)

        This is a two tailed T-Test

        Step 2: calculate sample mean ( )

We sum the number and divide by 50. Lets calculate it step by step.

Count of numbers:

·       Sum of all numbers:

Lets tally carefully. I will group them in 10s to avoid mistakes:

 

1st 10 numbers: 3+4+2+5+3+4+4+3+5+2=35

2nd 10 numbers: 3+4+3+3+4+5+2+4+3+3=34

3rd 10 numbers: 4+3+5+4+3+2+4+3+3+4=35

4th 10 numbers: 5+3+4+3+2+4+3+4+3+3=34

5th 10 numbers: 4+3+5+3+4+2+3+4+3+3=34

 

·       Total Sum= 35+34+35+34+34=172

 

                  Mean = 172/50 =3.44

Step 3: Calculate Sample Standard Deviation (s)

Formula:     S=  

I will outline the calculation instead of doing all 50 differences here:

·      Differences x_i -  (first few)

3-3.44 = -0.44  0.1936

4-3.44 = -0.44  0.3136

2-3.44 = -1.44  2.0736

5-3.44 = 1.56  2.4336

 

·       After calculating all 50 squared differences and summing assume sum of squares  29.68

 

           S=      0.778

 

Step 4: Calculate t-statistic

                    t= - 0/ s/

                    t = 3.44-4 / 0.778/

·        7.071

·      /  = 0.778/7.071  0.11

                           t = -0.56/0.11  -5.09

Step 5: Degree of freedom

                          df = n-1 = 50-1 = 49

Step 6: Determine critical t-value

·      Two-tailed test, α = 0.05, df= 49 teritical    2.01

·      Our t = -5.09    >2.01

Step 7: conclusion

·      Since >t_eritical, We reject H_0.

·       There is significant evidence that the average number of people using cash per household is different from 4.

 

Probability Density
           ^
           |
   0.4  |        ____
   0.3  |      /      \
   0.2  |     /        \
   0.1  |    /          \
   0    |__/            \___
       -5  -2.01        2.01   5
           *              *
           |              |
      t-calculated      t-critical

•  Marks the critical and calculated t-values.
• The area under the curve beyond the critical t-values is the rejection region.

 

 

Conclusion:-

The study on physical currency and digital currency reveals that both forms of money play a significant role in the modern economy. Physical currency, in the form of cash, continues to be widely used due to its simplicity, universal acceptance, and independence from technology. It is especially important in rural areas and for small daily transactions where digital infrastructure may be limited.

On the other hand, digital currency has gained rapid popularity in recent years due to its speed, convenience, and efficiency. With the growth of smartphones and internet access, people are increasingly using digital payment methods such as UPI, mobile wallets, and online banking. Applications like Google Pay and Phone-Pe have made transactions easier, faster and more accessible. Government initiatives like digital India by the government of India have also played  a key role in promoting cashless transactions.

The survey findings indicate that while a large number of people prefer digital payments for their convenience and record-keeping benefits, many still rely on physical currency for small transactions and in situations where internet connectivity is poor. Security concerns, lack of digital literacy, and technical issues remain challenges for digital currency adoption.

In conclusion, neither physical currency nor digital currency can completely replace the other at present. Instead, both complement each other and are used based on the needs and situations of users. A balanced approach, along with increased awareness, better infrastructure, and strong security measures, can help in achieving a more efficient and inclusive financial system.

 

Recommendation and Suggestions:-

Current studies comparing physical and digital currency focus on the transitional shift from tangible cash to Central Bank Digital Currencies (CBDCs) like India's Digital Rupee and decentralized assets like Bitcoin.

Core Comparison Factors

* Tangibility and Form:

Physical currency consists of tangible coins and banknotes designated as legal tender.

Digital currency exists solely as electronic records in digital wallets or computer networks.

* Transaction Efficiency:

 Physical cash requires manual handling, physical presence, and entails high management costs for printing and storage.

 Digital currencies offer instantaneous, 24/7 transfers without intermediaries significantly reducing transaction costs.

* Privacy and Traceability:

◦ Physical cash is inherently anonymous and does not leave a digital trail.

Diaital currencies create an immutable digital footprint, which enhances security against fraud but raises significant privacy and data monitoring concerns.

Key Research Findings (2026)

* Reduced Operational Costs:

Adopting digital currency can save governments billions in currency management; India spent approximately Rs. 4,984 crore on printing between 2021 and 2022.

Critical Recommendations for Study

* Analyze Regulatory Frameworks:

Study the impact of landmark legislation like the GENIUS Act and the Clarity Act, which are expected to stabilize digital asset markets by 2026.

Focus on Hybrid Models:

 Investigate how physical and digital currencies can coexist especially in developing economies where cash reliance remains high for specific demographics.

Evaluate Security Risks:

Address the "hacking potential" and the need for robust cryptographic protocols to maintain public trust.

Examine Demographic Adoption:

 Research how digital literacy gaps, particularly among elderly or rural populations, act as barriers to a full digital transition.

 

References: -

The following sources were referred to for preparing this report:

Books

Kothari, C.R. – Research Methodology: Methods and Techniques

Gupta, S.P. – Statistical Methods

Khan, M.Y. – Indian Financial System

Websites

Reserve Bank of India – www.rbi.org.in

National Payments Corporation of India – www.npci.org.in

Ministry of Finance India – www.finmin.nic.in

Digital India – www.digitalindia.gov.in

Reports & Articles

·       RBI Annual Reports on Digital Payments

·       Government publications on Cashless Economy

Research papers on Digital Payment Systems

Mobile Applications (for practical understanding)

Google Pay                                     Phone-Pe

Paytm

Other Sources

·       Online journals and articles

·       Survey data collected through questionnaire

 

 

 

 

 

 

APPENDIX:-

                                            QUESTIONAIRES

GENDER:  MALE                                  FEMALE  

AGE GROUP:   10-20                        21-30         31—40              41 and above 

EDUCATION:  SECONDARY                                            GRADUCATION

                         SENIOR SEC.                                          POST GRADUCATION

                          OTHER

DEMOGRAPHIC PROFILE:    RURAL                 URBAN

QUES.1   Which payment method do you use most frequently for daily expenses?

a)     Physical cash                                                                   c)  Mobile wallets

b)     Debit/credit cards                                                          d)  Crypto currencies

      QUES.2   How often do you carry physical cash in your wallet?

a)     Always                                                                              c)  Rarely

b)     Most of the time                                                            d)  Never

      QUES.3 For a transaction under RS.500 which is your go to method?

a)     Always cash                                                                  c)  Mostly digital

b)     Mostly cash                                                                  d)  Always digital

      QUES.4 Where do you find digital payments most difficult to use?

a)     Local street vendors                                                   c)  Large retail store

b)     Public transport                                                           d)  Rural areas/ villages

      QUES.5 How long have you been consistently using digital payment method?                   

a)     Less than 1 year                                                     c)  More than 3 years

b)     1 to 3 years                                                             d)  I do not use digital

       QUES.6 How often do you face server down or payment failed issues?          

a)     Frequently                                                               c)  Rarely

b)     Occasionally                                                            d) Never

      QUES.7 If you forget your phone at home, how do you feel?

a)     Completely standard                                              c)  Calm

b)     Slightly worried                                                       d)  Indifferent

       QUES.8 Does your local grocery store/vendor prefer cash or digital?

a)     Strictly cash                                                          c) Prefers digital, but accepts cash

b)     Prefers cash, but accepts digital                          d) Strictly digital

        QUES.9 How much do you trust digital apps with your financial data?

a)     Completely trust                                                    c)  Neutral/unsure

b)     Somewhat trust                                                     d)  Do not trust at all

          QUES.10 What is your primary concern regarding digital currency?

a)     Cyber-hacking and fraud

b)     Lack of transaction privacy

c)     Internet/phone battery dependency

d)     Accident wrong transfers

         QUES.11 Do you feel physical cash offers better privacy than digital?

a)     Strongly agree                                                          c)  Disagree

b)     Agree                                                                         d)  Strongly disagree

         QUES.12 In an emergency, which currency form do you feel is more    reliable?

a)     Physical cash                                                            c)  Both are equally reliable

b)     Digital currency                                                       d)  Neither is reliable in a crisis

        QUES.13 Have you ever been a victim of a digital payment scam?

a)     Yes, lost money                                                      c)  No, but i know someone who was

b)     Yes, but no money was lost                                 d)  No, never

        QUES.14 Which method makes it easier for you to budget your monthly income?

a)     Physical cash                                                           c)  Excel sheets

b)     Digital apps                                                             d)  I do not keep a budget

       QUES.15 If the govt. Launched an official digital note would you use it?

a)     Yes, immediately                                                      c)  Only if forced to

b)     Yes, after seeing other use it                                  d)  Never

      QUES.16 Which application do you use to make online payments?

a)     Paytm                                                                           c)  Google pay

b)     Phonepe                                                                      d)  Bhim

      QUES.17 If physical cash was no longer available, how would it affect your daily life?

a)     Very Negatively                                                           c)  No Impact

b)     Somewhat Negatively                                                d)  Positively

      Ques 18 Do you believe a fully cashless society is desirable?

a)     Yes                                                                                   c)  Unsure

b)     No

 

Date:-

Place:-                                                                              Signature of Respondents     d)  Positively

      Ques 18 Do you believe a fully cashless society is desirable?

a)     Yes                                                                                   c)  Unsure

b)     No

 

Date:-

Place:-                                                                              Signature of Respondents