ADAPTABLITY OF UPI SYSTEM IN DAVANGERE

Chandan Y V1, Prof. Usha H S2, Dr. Navin Nagaraj3

Bapuji Academy of Management and Research, Davangere

Abstract

Technology is a heart of business and transactions are the blood for business, when heart and blood
works together, then only business become healthy. Any small change in technology leads to enormous
influence on business. We are living in a digital economy, in the era of digitalization, everyone wants
to do things quickly and easily without any interruption The Unified Payments Interface (UPI) has
revolutionized the digital payments landscape in India, offering a seamless and secure platform for
financial transactions. While UPI has gained significant popularity among individual users, its adoption
in organized and unorganized businesses remains relatively limited.

This study employs a mixed-methods approach, combining qualitative interviews with organized and
unorganized business owners, and UPI service providers, along with quantitative surveys conducted
across Davangere. The findings highlight several key factors hindering UPI adoption in organized and
unorganized businesses, including lack of awareness, technological barriers, resistance to change, and
concerns over transaction fees and security.

The benefits of UPI adoption are numerous and compelling. Organized and unorganized businesses
stand to gain from increased efficiency in payment processes, reduced reliance on cash, enhanced
financial transparency, and improved customer satisfaction. UPI can also enable businesses to access
credit facilities, manage inventory and sales data, and leverage analytics for informed decision-making.

INTRODUCTION
The adoption of digital payment systems has gained considerable momentum in India, with the Unified
Payments Interface (UPI) emerging as a transformative force in the country's financial landscape. While
UPI has witnessed widespread acceptance among individual users and larger businesses, its adoption
by small and wholesale businesses in Davangere remains a relatively untapped area.

Davangere, known for its thriving commercial activities, encompasses a diverse range of businesses,
including small enterprises and wholesale establishments. Despite the city's economic vibrancy, many
businesses in Davangere still rely heavily on cash transactions, facing challenges such as cash handling,
delayed payments, and record-keeping complexities. The introduction of UPI presents an opportunity
to address these challenges and unlock the potential for growth, efficiency, and financial inclusion in
the city's business ecosystem.
The benefits of UPI adoption for businesses in Davangere are manifold. Firstly, UPI enables businesses
to transition from cash-based transactions to seamless digital payments, eliminating the risks associated
with cash handling and promoting transparency. Secondly, UPI offers convenience and instant
transactions, allowing businesses to process payments swiftly and avoid delays in receivables. Thirdly,
UPI provides businesses with a wide range of payment options, enabling them to cater to diverse
customer preferences and expand their reach.

Technological barriers also play a role in hindering UPI adoption in Davangere. While the city has
witnessed significant progress in terms of digital infrastructure, ensuring reliable internet connectivity
and access to smartphones for all businesses remains crucial. Additionally, addressing concerns related
to data security, privacy, and transaction fees are essential to install confidence and encourage
businesses to adopt UPI as a reliable payment solution.

Regulatory support and incentives can also prove instrumental in driving UPI adoption in Davangere.
Streamlining compliance procedures, reducing transaction fees, and providing tax benefits for
businesses adopting digital payment systems can act as catalysts for widespread adoption. By creating
an enabling environment through policy interventions, the government can encourage businesses to
embrace UPI and contribute to the growth of Davangere's economy.

Unified Payments Interface(UPI)

Over decades, India has made slow but steady progress in the field of electronic payments. The
innovations in payments have leveraged major technological innovations in each era. However, given
the scale of our country, and that so many are unbanked, we cannot rest on our laurels.

The RBI Payment System Vision document emphasizes the mission and vision clearly: Mission
Statement to ensure payment and settlement systems in the country are safe, efficient, interoperable,
authorized, accessible, inclusive and compliant with international standards. Vision to proactively
encourage electronic payment systems for ushering in a less-cash society in India.

The Mission statement indicates RBI’s renewed commitment towards providing a safe, efficient,
accessible, inclusive, interoperable and authorized payment and settlement systems for the country.

Payments systems will be driven by customer demands of convenience, ease of use and access that will
impel the necessary convergence in innovative e-payment products and capabilities. Regulation will
channelize innovation and competition to meet these demands consistent with international standards
and best practices.

It also identifies the challenges very clearly:

▪ Currently the number of non-cash transactions per person stands at just 6 per year.
▪ A fraction of the 10 million plus retailers in India have card payment acceptance infrastructure
– presently this number stands at just 0.6 million.
 ▪ Of the six lakh villages in India, the total number of villages with banking services stands at
less than one lakh villages as at end March 2011 and nearly 145 million households are excluded
from banking. Over the last few years, significant improvements have come in terms of
coverage and with Direct Benefits Transfer (DBT) and Jan DhanYojana (PMJDY), number of
households having bank account has also gone up.

UPI is a simple payment tool created by NPCI that is based on IMPS system. UPI is a system that
powers multiple bank accounts into a single mobile application (of any participating bank), merging
several banking features, seamless fund routing & merchant payments into one hood. UPI can operate
on a smart phone and it works as an email ID for money. It facilitates virtual Payment address (VPA: A
VPA is an ID, which a user creates by linking their accounts to a bank’s mobile application) as a payment
identifier for sending and collecting money and works on single click 2 factor authentications (2-FA).
It also provides an option for scheduling push and pull transactions for various purposes like sharing
bills among peers. One can use UPI app instead of paying cash on delivery on receipt of product from
online shopping websites and can perform miscellaneous expenses like paying utility bills, over the
counter payments.

Unified Payment Interface (UPI): A Cashless Indian e-Transaction Process barcode (scan and pay)
based payments, donations, school fees and other such unique and innovative use cases. UPI will offer
a facility to identify a bank customer with an email-like virtual address. It allows a customer to have
multiple virtual addresses for multiple accounts in various banks. To ensure privacy of customer’s data,
there is no account number mapper anywhere other than the customer’s own bank. This allows the
customer to freely share the financial address with others. A customer can also decide to use the mobile
number as the name instead of the short name for the virtual address

3.1 Features of UPI

• Interoperability: UPI allows users to transfer funds between different banks and payment
service providers seamlessly. It enables transactions across multiple platforms, making it easy
to send and receive money regardless of the participating banks.

• 24x7 Availability: UPI operates round the clock, including weekends and holidays. Users can
initiate transactions at any time, making it highly convenient and accessible.
• Instant Transfers: UPI facilitates real-time fund transfers, providing instant credit to the
recipient's account. This feature ensures quick and efficient transactions without any delays.
• Mobile-Based: UPI is primarily a mobile-based platform, and users can perform transactions
using dedicated UPI-enabled mobile applications provided by their respective banks or third-
party payment apps. It leverages smartphones and enables users to make payments with just a
few taps on their screens.
• Virtual Payment Address (VPA): UPI uses Virtual Payment Addresses (VPAs) as unique
identifiers for users. A VPA is a personalized address that allows users to receive money without
 sharing their bank account details. It typically follows the format username@upi.
• Multi-Bank Account Linking: UPI supports the linking of multiple bank accounts to a single
UPI ID. This feature allows users to choose any of their linked accounts while initiating a
transaction, providing flexibility and convenience.
• QR Code Payments: UPI simplifies transactions through the use of Quick Response (QR) codes.
Merchants and individuals can generate QR codes, which can be scanned by UPI- enabled apps
to initiate payment requests or receive funds.

Products of UPI

Upi id:- A UPI ID, also known as a Virtual Payment Address (VPA), is a unique identifier used in India's
Unified Payments Interface (UPI) system. It follows the format "username@upi" and serves as an
alternative to sharing bank account details. Users can create a UPI ID by linking their bank account
to a UPI-enabled mobile app. With a UPI ID, users can receive payments directly to their linked bank
account by sharing their ID with the sender. UPI IDs enhance security by avoiding the need to share
sensitive bank account information.

UPI-based Apps: Numerous mobile applications in India provide UPI-based payment services,
allowing users to perform various financial transactions such as bill payments, ticket bookings,
recharges, and more.

UPI QR Code Payments: UPI enables merchants to generate unique QR codes that customers can
scanusing their UPI-enabled mobile apps to make payments. This method eliminates the need for
physical point-of-sale (POS) terminals and makes transactions quicker and more convenient.

LITERATURE REVIEW

1] Upsurge Of Small Scale Businesses through UPI: A Study in Sagar Taluk by Shreelakshmi Shreepada
Bhat & Anjan A Kaikini

India moved a step closer towards becoming a cash less economy with the launch of Unified
Payment Interface(UPI). With this new payment method more customers, vendors, service
providers are going to accept payment through mobile. UPI will help increase cash flow in a
business and since the payments are electronic. The innovative features of UPI are motivating
the businessmen to make cash less transaction. UPI enables the smallest merchant to start
accepting digital payments without the for any POS machine. Compared to all other payment
systems it has no intermediaries like in card networks, which allows for low transaction cost
and instant settlement process. Therefore UPI can be a great enabler for financial inclusion in
India and allow a huge set of small business sectors to be a part of digital economy.

This paper is focused on understanding Unified Payment System’s (UPI) growth and its progression in
retail digital payment over the years.

UPI has shown remarkable growth in last couple of years due to customer’s shift towards contactless
payments over other methods. Study revealed that the growth of digital payments has increased
significantly, especially in the retail payment sector on the UPI platform.

3] Application of Technology and Innovation in Fintech and it's adaptability in India by Silky Sharma
Shalini Srivastav,Anubhuti Gupta,Anubhav Manglick, Umea,

India is a growing fintech market with a population of approximately 1.3 billion. The bankless and
majority of the bankless population makes India an exciting global space for financial technology.
Fintech is seen as a game changer and disruptive innovation that can rock traditional financial markets.
Fintech has grown rapidly in India over the last five years and is expected to continue to grow in the
near future. This article first focuses on the basic types of financial technology and its capabilities, and
also discusses the opportunities and challenges faced in the Indian business environment. This research
article basically extends FinTech's quantitative assessment of customer adaptability and qualitative
analysis of technical, economic and demographic factors that may lead to FinTech's adaptability in India

4] Analysis of Rural Customers' Dilemmas with Digital Banking Services In Indian Banking Systems
Study of Selected Villages In Pune District of Maharashtra State by Sawant, Roshni; Patil, D Y. 

A contribution to knowledge is made by investigating awareness, usage, and fraud involving digital
banking services among rural customers in the Pune district, India. Rural banking customers were most
likely to use UPI/BHIM because of its ease and compatibility. As a result of the introduction of cashless
facilities by the Government of India, UPI/BHIM was the most satisfied. payment service among all
payment systems. Despite technological advancements as well as the influence of cashless payment
systems on rural customers, rural bank customers were more convinced of the reliability of digital
payments. Contrary to that, rural banking customers were less likely to trust the digital payment system
due to a lack of belief in it. There was a significant concern regarding security issues of digital payment
systems among most of the banking customers interviewed in the present study. Payment systems are
being negatively impacted by technological advancements, which have caused economic losses and
further frustrations for those debited of money. UPI/BHIM popularity has been identified as the most
significant constraint to driving rural banking customers into online frauds. Furthermore, this study
investigates the relationship between trusting digital payments and increasing precautions during use of
digital payment services among rural banking customers.
 5] A Paradigm Shifts In Digital Payment Transactions: UPI, IMPS & NFS Before And After Covid-19
To Seize Opportunity Of Cashless Economy In India by R. Gopinath, S. Vevek, Dr. S. Sivaprakkash

The financial transactions must be swift and safe to drive our economy to a cashless society. In Indian
scenario people make use if UPI, IMPS & NFS for making and receiving payments. The growth of cash
less economy in India is quite inevitable. The study empirically investigated the recent trends in retail
banking transactions in India both in terms of volume and value. The study also investigated impact of
event (COVID-19) on volume and value transactions among UPI, IMPS and NFS in India. For the
purpose of achieving the objectives the data were collected from NPCI website from October 2017 to
November 2019 for before COVID-19 and after COVID-19 data are from January 2020 to February
2022. During pandemic and post-pandemic, UPI rallied up as the most preferred digital payment
transactions which was evident in terms of increased in value and volume of transactions. It is also
evident that people of India and its economy are gearing up towards a cashless econom

Research design of adoptability of UPI in davangere

Statement of the Problem

The research aims to investigate the adaptability of UPI (Unified Payments Interface) payments in
Davangere. As UPI has gained significant traction as a digital payment system in India, it is crucial to
assess its effectiveness and acceptance in a specific regional context like Davangere. The study will
focus on understanding the challenges and opportunities associated with the adoption and usage of UPI
payments in Davangere , including factors such as infrastructure, awareness, trust, and user preferences.
By identifying the specific barriers and drivers impacting the adaptability of UPI payments in
Davangere , this research aims to provide valuable insights and recommendations for enhancing the
uptake and usability of UPI as a digital payment solution in the region.

Significance of this study

• This study helps to understand adoption pattern of UPI in davangere district

• This study also gives insight about the various business preference in adopting the UPI
• This study also helps in understanding the challenges and barriers faced by the organised and
unorganised business in adopting to UPI

OBJECTIVE

i. To study to what extent the public know about the UPI Facility provided by respective Banks
ii. To analyse the percentage of daily customer transaction through UPI Payments with respect to
organised business
Ho:-customer prefer cash significantly for daily transaction with organised business
H1:-customer prefer UPI significantly for daily transaction with organised business
iii. To analyse the percentage of daily customer transaction through UPI Payments with respect to
unorganised business
H0:- Customer prefer cash significantly for daily transaction with unorganised business
H1:- customer prefer UPI significantly for daily transaction with unorganised business

iv. To analyse the relationship between type of business and satisfaction level after adopting UPI
H0:-There is no relationship between the type of business and satisfaction level of UPI
H1:- There is relationship between the type of business and satisfaction level of UPI

RESEARCH METHADOLOGY

The present study has been confide businessmen’s perceptions and practice of UPI transaction in
Davangere. The research conducted with the help of both primary and secondary data.

Primary Data: Primary data has been collected through random sampling method with a well-structured
interview schedule for 30 respondents

Secondary Data: Secondary data has been collected from various journals, articles, reports and website.

Tools for Analysis: The data has been collected in Google Form question ere and has been analysed
with various statistical tools in excel sheet.

Scope of the Study: The study covers UPI users in organised and unorganised business sector in
davangere city.

Limitations of the Study

1. The study is limited to only davangere.

2. Only 30 respondents are interviewed for the purpose of the study.

3. The survey is subjected to the bias and prejudices of the respondents. Hence 100 percent accuracy
cannot be assured.

4. The researcher was carried out in a short span of time, where in the researcher could not widen the
study.
ANALYSIS AND INTERPRETATION

Objective i: To study to what extent the public know about the UPI Facility provided by respective
Banks
Table 4.1

Public aware about UPI by their

respective banks Frequency %
Yes 3 10%
No 27 90%

Table 4.2

which UPI payment apps do you use Frequency

ICICI bank 1
Karnataka bank 1
Paytm 4
Amazon pay 1
Phonepe 6
Axis bank 1
phonepe, Paytm, G PAY 12
phonepe, Paytm 2
BHIM 1
no UPI 1
Objective ii: To analyse the percentage of daily customer transaction through UPI Payments with
respect to organised business

Table 4.3

Organised business Percentage of an average daily total customer

transaction are currently being made through UPI
Payments
Provisional stores 38.57
Pharmaceutical stores 25.83
Grocery stores 8.67

Table 4.4

Unorganised business Percentage of an average daily total customer

transaction are currently being made through UPI
Payments
Flower vendors 10
Fruit vendors 8.75
Grocery vendors 15

• In flower vendors unorganised business around 10% of transaction happens through UPI
• In fruit vendors unorganised business around 8.75% of transaction happens through UPI
• In grocery vendors unorganised business around 15% of transaction happens through UPI

Percentage of an averge daily total

customer transaction are curently being
made through UPI payments
45
40
35
30
25
20
15
10

provisional pharmactical grocery stores flower shop fruit shop grocery shop
stores stores organised unorganised unorganised unorganised
organised organised

Series1 Series2
10
Objective iv:-To analyse the relationship between type of business and satisfaction level after adopting
UPI

Table 4.5

On a scale of 1 to
5, with 1 being
organised Unorganised percentage of percentage of
not at all
organised unorganised
beneficial and 5
being extremely
beneficial
1 1 1 6.25 7.14
2 1 1 6.25 7.14
3 6 9 37.5 64.29
4 2 3 12.5 21.43
5 6 0 37.5 0
Total 16 14 100 100

percentage of organised

6%
6%

38%

37%

13%

11
 percentage of unorganised
7.14
7.14

21.43

64.29

• In research we got to know that adoption of UPI in organised sectors is almost 100%,wheras
the merchants are taking extremely beneficial of UPI that is 38%,some are in neutral that is
37%,some merchants says not all beneficial that is 6-12%
• The adaption of UPI in unorganised sectors is also 100%,where the shop owners says about 0%
is extremely benefcial,most shop owners are in neutral that is 64.29%,some shop owners says
it is not all beneficial that is 7-14%.
Table 4.6:-Summary of outputs

SI NO HYPOTHESIS HYPOTHESIS EXPECTED

Objective:2 Ho:-customer prefer cash H1:-customer prefer UPI
To analyse the percentage significantly for daily significantly for daily
of daily customer transaction with organised transaction with organised
transaction through UPI business business
Payments with respect to H1:-customer prefer UPI
organised business significantly for daily
transaction with organised
business

Objective:3 H0:- Customer prefer cash H0:- Customer prefer cash

To analyse the percentage significantly for daily significantly for daily
of daily customer transaction with unorganised transaction with unorganised
transaction through UPI business business
Payments with respect to H1:- customer prefer UPI
unorganised business significantly for daily

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 transaction with unorganised
business

Objective 4: H0:-There is no relationship H0:-There is no relationship

To analyse the relationship between the type of business between the type of business
between type of business and satisfaction level of UPI and satisfaction level of UPI
and satisfaction level after H1:- There is relationship
adopting UPI between the type of business
and satisfaction level of UPI

Conclusion

The rapid advancement of technology has transformed the way we conduct financial transactions. One
such innovation that has revolutionized the payment landscape in India is the Unified Payments
Interface (UPI). This article explores the adaptability of UPI in Davangere, discussing its impact on the
organized sector, including businesses, retailers as well as its integration in the unorganized sector,
benefiting small businesses, individual merchants, and facilitating peer-to-peer transactions.

In research, irrespective of organized and unorganized businesses people are unaware of UPI facilities
provided by the respective bank. They are mainly dependent on digital payment platforms or mobile
apps.

Through the research, we got to know that organized sectors are utilizing UPI transactions more
compare to unorganized sectors. The acceptance of UPI payments as a mode of transaction is 70% in
organized business and in the unorganized business sector, it is 30%. The main factors influencing the
adoption of UPI are customer preference and customer convenience and faster payment process. After
adopting UPI following are the reasons that benefited their business such as reduction in cash handling
and associated risk, and increased convenience for customers. The unorganized sector has adopted UPI
because of the following reasons to attract new customers who prefer digital payments and to target a
younger generation.

As an owner, 93.3% prefer cash from their customer. Some prefer both UPI and cash which is 33%.
Both unorganized and organized rated the impact of UPI on their business 20.7% of owners say it is
extremely beneficial,51.7% of owners say it is average beneficial,3.4% of owners it is not all beneficial

As 40% of owners are facing technical issues concerning to UPI integration the main challenges while
adopting UPI are Insufficient infrastructure to support the UPI system, following UPI guidelines,
concern about security and fraud activities, Non-maintenance of records for fear of additional taxation.

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2] Digital Payment Service in India - A Case Study of Unified Payment Interface International Journal
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DOI: http://doi.org/10.5281/zenodo.5091207

3] Application of Technology and Innovation in Fintech and it's adaptability in India Publisher: IEEE
Date Added to IEEE Xplore: 18 April 2022, DOI: 10.1109/ICIPTM54933.2022.9753933 INSPEC
Accession Number: 21724645

4] ANALYSIS OF RURAL CUSTOMERS' DILEMMAS WITH DIGITAL BANKING SERVICES IN

INDIAN BANKING SYSTEMS STUDY OF SELECTED VILLAGES IN PUNE DISTRICT OF
MAHARASHTRA STATE Academy of Marketing Studies Journal Volume 27, Special Issue 1, 2023
DOI:10.1109/ICIPTM54933.2022.9753933

5] A Paradigm Shifts In Digital Payment Transactions: UPI, IMPS & NFS Before And After Covid-19
To Seize Opportunity Of Cashless Economy In India Central European Management Journal
ISSN:2336-2693 | E-ISSN:2336-4890 Vol. 30 Iss. 4 (2022) DOI:
https://doi.org/10.57030/23364890.cemj.30.4.89

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