That crisp ₹500 note slipping through your fingers feels like a real loss, doesn't it? But when you tap your phone to pay, that same ₹500 seems to vanish into thin air. It's not just you; digital payments are subtly rewiring your brain, and the consequences could be bigger than you think.
Here's a bizarre truth: ₹500 isn't always ₹500. At least, not in the way your brain perceives it. Think about it.
Handing over a physical ₹500 note evokes a slight wince, a moment of hesitation. There's a tangible sense of parting with something valuable. But when you effortlessly scan a QR code or use UPI, that feeling largely disappears. It's smooth, convenient, and almost...painless.
Let's delve into what's happening beneath the surface.
The Pain of Paying: It's Not Just in Your Head
Research from Carnegie Mellon and Stanford universities reveals that spending money activates the same brain regions associated with physical pain. That's right, that twinge you feel when you hand over cash isn't just emotional; it's neurological. Cash creates salience. You physically witness it leaving your possession, your wallet feels lighter, and your brain registers a clear loss.
Digital payments, however, obscure that crucial moment of loss. You never visually track your money's departure. Instead, you're greeted with a seamless "payment successful" message. No discomfort, no pause for reflection, no visceral awareness. Your brain doesn't process it as a loss; it simply registers a completed action. And this is the part most people miss...the absence of a negative sensation is actually encouraging you to spend more!
Dr. Sandeep Vohra, a distinguished psychiatrist and founder of NWNT.ai, sheds light on this shift: "Our brains aren't naturally wired for digital money. When you physically hand over a ₹500 note, the action creates a moment of discomfort, the 'pain of paying'. With UPI or other seamless digital payments, that sensory experience disappears. The absence of physical cash short-circuits that moment of hesitation, encouraging more impulsive decisions. Over time, this makes us detach emotionally from money, simply because the act of parting with it now happens quietly, almost invisibly, in the background.”
UPI: The Ultimate Spending Enabler?
In India, UPI has redefined effortless spending. Forget fumbling for your wallet – a quick thumbprint and a 4-digit PIN are all it takes. Every layer of friction that once protected you – opening your wallet, counting notes, watching cash disappear – has been eliminated.
These steps forced you to pause and think. Now? You're casually spending ₹300 on coffee, ₹499 on sushi, and ₹999 on impulse buys on Blinkit, often without truly feeling the impact.
Your brain may even interpret UPI as a game mechanic, not a real transaction. Tap. Done. Dopamine rush. Repeat.
Bhargav Errangi, founder of POP UPI, offers a balanced perspective: “UPI is undoubtedly one of the most frictionless payment innovations, a true enabler for Digital India. But the idea that it makes spending ‘too easy’ is only partially true. The behavioural shift is most visible in small-ticket transactions under ₹500, where the tactile sense of giving away money has disappeared. At the same time, UPI has introduced a new kind of precision in spending; every rupee is accounted for. The sweet spot lies in maintaining convenience while preserving moments of intent, where payments feel effortless but not thoughtless.”
Cash vs. UPI: A Tale of Two Realities
Cash feels tangible, finite. You can see it, count it, feel its texture, and grasp its value. It has weight, literally and figuratively. You feel a sense of ownership.
UPI money feels abstract, almost infinite. It's just numbers on a screen. You can't physically touch it, which makes it harder for your brain to process it as "real" money. It's just a number that decreases slightly after each transaction, until one day, you realize it's far lower than you anticipated.
This is known as the money abstraction bias. The more abstract money becomes, the more emotionally detached we become from its true value.
Mukesh Pandey, Director of Rupyaa Paisa, connects this directly to India’s digital revolution: “Your brain has a different perspective toward a ₹500 bill than toward ₹500 spent via UPI. Cash has a physicality that creates a sense of loss. Digital money creates more emotional space, so it’s easier to spend. UPI has changed purchasing psychology, as seen in over 11,761 crore UPI transactions worth ₹180 lakh crore in FY 2024–25, representing 84% of India’s retail digital spends. Consumers today are spending more fluidly, budgeting less consciously, and redefining affordability in a fast-digitising economy.”
Digital Spending: A Dopamine-Fueled Cycle
Every UPI purchase triggers a quick dopamine hit. That satisfying "payment successful" buzz is chemically rewarding.
With cash, the reward cycle is slower. You hand over the money, see it disappear, maybe even count change. There's time for second thoughts. With UPI, the feedback loop is instantaneous. No pain, just gain. Your brain begins to favor this method of spending.
Vidhi Ashok Bhatt, CEO and Co-founder of LIGHT – Credit for UPI, presents a more nuanced perspective: “Money always matters, and Indian consumers have always been conscious about how they spend it. While a ₹500 note in the wallet is often preserved, UPI payments are weighed against the available bank balance, which is usually higher. UPI is an intent-based payment; frictionless payments haven’t made people careless, just more effortless. Today’s consumers are far more aware and informed; the decision-making lies in whether to buy, not how to pay.”
Outsmarting Your Brain: Practical Strategies
So, how can you regain control and prevent digital spending from spiraling out of control?
Recreate Friction: Don't link UPI to your primary bank account. Instead, transfer a fixed monthly spending allowance to a separate digital wallet.
Track Every Scan: Use apps like Walnut or Money Manager, not for strict budgeting, but to make the invisible visible. Simply being aware of your spending is half the battle.
Carry Small Amounts of Cash: Occasionally, pay with physical notes. The tactile sensation will remind your brain what real money feels like.
Introduce a Delay: Pause for 10 seconds before finalizing any UPI payment. You'll be surprised how many small, unnecessary purchases you'll reconsider.
UPI hasn't altered the fundamental nature of money; it's changed our emotional relationship with it. A ₹1,000 note still holds the same purchasing power, but your brain perceives it differently. Cash spending feels like a loss, while UPI spending feels like nothing. And that's the danger: when spending feels effortless, saving becomes an invisible, forgotten concept.
So, the next time you see that green tick accompanied by the "payment successful" notification, take a moment to truly feel it, because your brain probably won't.
But here's where it gets controversial... Is this "rewiring" of our brains necessarily a bad thing? Could this detachment from physical money actually lead to more efficient and less emotionally-driven financial decisions in the long run? Or are we doomed to a future of mindless spending and financial instability? Share your thoughts in the comments below!
