UPI Leads Digital Shift as Half of MSMEs Adopt It for Business Payments

A new report by PayNearby shows that almost half of India’s micro, small, and medium enterprises (MSMEs) now prefer using UPI for their business payments. About 48% of MSMEs have chosen UPI as their main payment method. Aadhaar-enabled banking comes next, used by 39% of businesses.

Women Entrepreneurs Trust Aadhaar Payments

The report also found that among women-led businesses, Aadhaar-based transactions were even more popular. Around 42% of these businesses used Aadhaar for banking, showing growing trust in secure verification methods like fingerprints and face recognition.

Smartphones Are Essential for Small Businesses

Smartphones have become the main tool for running businesses, with 71% of all surveyed users relying on them. Among women entrepreneurs, smartphone usage was even higher at 84%. This shows that mobile technology is helping small businesses work more efficiently.

Survey Covered Many Sectors

The data came from a nationwide survey of 10,000 individuals and MSMEs. These businesses included Kirana stores, mobile recharge shops, medical stores, customer service points (CSPs), and travel agencies. The findings highlight how digital tools are transforming a wide range of sectors.

Benefits of Going Digital

When asked why they adopted digital payments, about one in three respondents said it helped improve operational efficiency. Over 73% of MSMEs in semi-urban and rural areas reported that using digital tools had either increased their income or made their operations smoother.

AI and Automation Slowly Catching On

The report noted that a small but notable 7% of respondents have started exploring automation and AI-based tools. These include inventory management apps, automated billing systems, and customer engagement platforms. Most of these solutions are provided by third-party companies.

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Industry Perspective

Anand Kumar Bajaj, the founder, Managing Director, and CEO of PayNearby, said the MSME sector is the backbone of India’s economy. He added that the quick adoption of UPI, Aadhaar-enabled banking, smartphones, and emerging AI workflows shows that small businesses are eager to modernise and embrace new technologies.

About PayNearby

PayNearby is a DPIIT-certified company that offers branchless banking and digital financial services to help businesses and individuals access modern banking solutions.

Conclusion

The rise of UPI and other digital tools among MSMEs is changing how small businesses operate in India. With better income, smoother workflows, and growing trust in secure technology, India’s MSME sector is moving confidently toward a more digital and efficient future. This trend not only boosts their growth but also supports India’s broader push for a cashless economy.

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