The present study focuses on the usage of digital payment services among the rural and urban customers of Rajasthan. The major objectives of the study are to understand the concept of digital payments and to study the challenges being faced by rural and urban customers of Rajasthan in usage of digital payment services. The paper tried to find out any association between socio-economic factors and usage of digital payment services among the users. The study was empirical in nature. Structured questionnaire and convenience sampling method were used. Chi square test was performed to test the hypothesis. The result of the study revealed the rejection of null hypothesis. It is concluded that challenges in usage of digital payment services amongst the rural and urban customers of Rajasthan acts as hindrance and are to be taken care of. Further, it is recommended that technology driven risks need to be addressed on priority and security issues should be sorted out to promote trust and confidence among the people. And more emphasis on digital literacy and awareness is needed to avoid the digital payment frauds.

KEYWORDS: Digitalization, Technology, Digital Literacy, Security, Payment Gateway.