Credit Cards and Digital Payments in India: Risks, Challenges, and Pathways to a Cashless Economy.

         Goyal, K., Garg, M., & Malik, S. (2025) highlights how Indian banks are moving from old statistical models to advanced AI for credit risk and fraud detection. By using tools like predictive analytics and deep learning, banks can process huge amounts of data instantly spotting fraud as it happens and predicting loan repayment more accurately. A survey of 271 banking professionals showed that long‑term success depends not just on ease of use, but also on employees’ attitudes, technical knowledge, and experience. The authors stress that banks must build trust in AI decisions and educate customers about fraud (like fake emails) to keep transactions safe. Overall, AI acts as a powerful shield, making credit card use more secure and loan approvals faster in India’s growing digital economy. 

           5. Credit Score Literacy and Borrowing Behaviour 

          Altaf, Z., & Shah, F. (2025) in this study talks about a major problem happening in India like many people simply don’t understand how credit scores work, which leads to poor financial decisions. By analysing 425 borrowers, researchers found that this lack of “credit literacy” often causes people to misuse their credit cards, resulting in trapped cycles of high interest rates, late fees, and mounting debt. Beyond just a lack of knowledge, the study points out that psychological traits like a desire for status through “materialism” or a lack of self-control create impulsive spending that further creates a problem for a person’s financial health. On the flip side, those who actually understand the “rules of the game” tend to borrow much more wisely. By knowing how interest rates and repayment terms work, informed borrowers can negotiate better deals and maintain a clean credit history. The core message is that a credit score isn’t just a number; it is a tool for financial freedom. When individuals take the time to learn how it works, they are much less likely to fall into the trap of over indebtedness and are better positioned to build a stable, stress-free financial future. 

           6. Understanding the Influence of Family on Financial Health  

              Kaur, R., & Singh, M. (2025)shows how family financial socialization—parents teaching kids about saving, spending, and money management shapes the financial well‑being of students in Punjab. Surveying 242 undergraduates, the researchers found that open discussions about money build stronger financial attitudes and confidence (self‑efficacy), which in turn improve overall financial satisfaction. The impact works partly through these traits: good attitudes and confidence act as bridges between family lessons and financial well‑being. The authors suggest that policymakers and banks should encourage families to go beyond simple advice and provide hands‑on financial learning, helping young adults transition into financially secure, independent lives.

           7. Credit Risk Prediction in P2P Lending and Credit Cards 

         Souadda, L. I., Halitim, A. R., Benilles, B., Oliveira, J. M., & Ramos, P. (2025) studies how banks and peer‑to‑peer lenders are replacing traditional credit scores with advanced machine learning models like LightGBM and XGBoost. By fine‑tuning these models with tools such as Optuna and Hyperopt, they achieve faster results up to 75 times quicker while reaching over 93% accuracy. Key risk signals include debt‑to‑income ratios and employment details. The authors emphasize that these AI‑driven systems not only improve accuracy and efficiency but also make lending fairer and more transparent, helping financial institutions approve loans safely and protect credit card users. 

             8. Awareness of Small Retailers in Cashless Transactions 

          Chattopadhyay, S., Gulati, P., & Bose, I. (2018) looks at how small shopkeepers in Bareilly, India, handled the push toward digital payments after demonetization. By surveying 117 retailers, researchers found a big gap between what shopkeepers knew and what they used. While most were aware of debit and credit cards, very few actually accepted them. The biggest roadblocks weren’t just a lack of gadgets; they were a lack of trust and “fear of the unknown.” Many retailers worried that technical glitches would lead to lost money or that digital systems were too complicated compared to the reliability of cash. Even though the government pushed for a “cashless India,” tools like UPI and banking apps had surprisingly low recognition at the time of the study. For credit cards specifically, the struggle was even greater because many shops didn’t have the swipe machines (POS terminals) needed to process them. The study concludes that simply telling people about digital payments isn’t enough to change their habits. To get small businesses to ditch cash, there needs to be better technology in place, stronger security to prevent fraud, and more hands-on education to build confidence. Until these “technical barriers” and fears are addressed, many small retailers will continue to see cash as the safest and easiest way to do business. 

             9.  Demonetization and Credit Card Usage in India 

             In 2016 demonetization on digitization in India took place, with a particular focus on credit card usage. On November 8, 2016, the Indian government withdrew INR 500 and INR 1000 notes, removing 86% of cash from circulation. While this caused short-term disruption and liquidity issues, it accelerated the adoption of digital payment systems such as internet banking, mobile wallets, debit/credit cards, RTGS, and NEFT. Using RBI data from March 2015 to July 2018, the study compares pre- and post-demonetization trends. Results show a significant rise in digital transactions, especially in credit card usage, which saw an increase of over 11% in transaction volume and more than 109% in transaction value. Debit card usage, however, declined due to withdrawal limits at ATMs. Credit cards became more prominent as consumers shifted to cashless modes for convenience, security, and accessibility. Overall, demonetization acted as a catalyst for digitization, positioning credit cards as a key driver of India’s transition toward a cashless economy. Chavali, K., Prasad, C., & Srinivasa Rao, K. S. (2019).  

           10. Data Privacy in Digital Credit 

           Koul, S., Verma, R., & Ajaygopal, K. V. (2025) study explores the high-stakes world of digital lending in India, where the market is booming toward a trillion-dollar future. To decide who gets a credit card or a loan, modern “fintech” companies are now looking far beyond your bank balance; they track your mobile app usage, shopping habits, and even social media activity. While this helps more people get credit, it creates a massive privacy risk. By surveying over 1,500 people, including users and regulators, the researchers found that most people are worried about how their personal data is being shared or stolen. Even though India has laws like the IT Act to protect us, the study points out that these rules aren’t always followed consistently by every company. Ultimately, making sure your private information stays private is the only way to keep the digital credit system from collapsing under the weight of public distrust. 

              Conclusion: