Role of Digital Payments in Transforming Tourism for Sustainability

Abstract

The fast-rising digital payment systems have become a disrupting technology in the tourism industry especially in a developing economy such as India. Homestay operators, tour guides, vehicle operators, handicraft sellers and small hospitality facilities are micro-entrepreneurs in the tourism industry whose role is very significant in employment creation, preservation of culture and local sustainable development. Nonetheless, the challenges that such enterprises are likely to encounter include high transaction costs, excessive reliance on the use of cash transactions, lack of formal financial services, and inefficiencies in the operation. This essay discusses how digital payments have transformed the tourism system to become sustainable through a lower transaction cost and through enhancing a better system of conducting business among micro-entrepreneurs in the tourism sector. The results imply that online payments serve as a driving force of sustainable tourism change as they enhance operational effectiveness, financial inclusion, increased trust between both parties (tourists and service providers), and facilitate the sustainability of the environment via fewer cash addicts. The paper ends by offering policy recommendations to facilitate the inclusive adoption of digital payments as one of the strategies of attaining sustainable tourism development.