UPI Adoption and Financial Behaviour of Small Merchants: Evidence from Karnataka

Tharamani S

doi:10.62127/aijmr.2025.v03i04.1536

UPI Adoption and Financial Behaviour of Small Merchants: Evidence from Karnataka

Author(s)	Ms. Tharamani S
Country	India
Abstract	The rapid growth of digital payments has transformed the financial practices of small businesses in India. Among the various digital payment mechanisms, the Unified Payments Interface (UPI) has emerged as an important payment channel because of its convenience, interoperability, and ability to facilitate real-time bank-to-bank transactions. While existing studies have extensively examined consumer adoption of digital payments, comparatively less attention has been given to the relationship between UPI adoption and the financial behaviour of small merchants. The present study examines UPI adoption and its relationship with financial behaviour among small merchants in Karnataka. The study has two objectives: to examine the extent and determinants of UPI adoption among small merchants and to examine the relationship between UPI adoption and their financial behaviour. Primary data from 260 small merchants are considered for the analysis. Data were collected using a structured questionnaire based on a five-point Likert scale. Perceived usefulness, perceived ease of use, trust and security, digital financial literacy and facilitating conditions were considered as determinants of UPI adoption, while transaction recording, banking engagement, savings behaviour, financial planning and formal financial-service usage were considered dimensions of financial behaviour. Descriptive statistics, Cronbach's alpha, Pearson correlation, and multiple regression were employed for analysis. The findings indicate that perceived usefulness, perceived ease of use, trust and security, digital financial literacy, and facilitating conditions significantly influence UPI adoption. The results further reveal a significant positive relationship between UPI adoption and financial behaviour. The strongest relationship is observed between UPI adoption and transaction-recording practices, followed by banking engagement and formal financial-service usage. The study concludes that UPI adoption among small merchants extends beyond payment convenience and has the potential to strengthen transaction visibility and engagement with formal financial services. However, digital financial literacy and financial-management capabilities remain important for converting digital-payment adoption into broader financial improvement.
Keywords	UPI, digital payments, small merchants, financial behaviour, digital financial literacy, financial inclusion, Karnataka, FinTech
Discipline	Sociology > Commerce / Economics
Published In	Volume 3, Issue 4, July-August 2025
Published On	2025-08-11
DOI	https://doi.org/10.62127/aijmr.2025.v03i04.1536

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UPI Adoption and Financial Behaviour of Small Merchants: Evidence from Karnataka

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