From Coins To QR Codes

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From tea stalls in Trichy to buses in Buldhana, UPI is reshaping and revolutionising how smaller cities in India are making transactions. As digital payments surge beyond metros, stories of growth stand alongside cautionary tales of cybercrime and frozen accounts. While UPI expands access and ease, questions around digital security and awareness also emerge. What does this digital leap mean for the everyday economy in India’s less-hyped cities?

A neighborhood convenience store owner displays the payment QR code | Source: News 18 Hindi

Launched in 2016, the Unified Payments Interface (UPI) is India’s homegrown system that has transformed the country’s financial landscape. For those entering the formal financial system for the first time, UPI serves as an accessible medium that transcends language barriers and complex banking processes. Merchants ranging from tea stalls to jewellery shops have leveraged UPI to streamline transactions.

Source: Paytm

Paytm has revolutionized digital payments for merchants with its Soundbox which provides instant audio confirmation for transactions made through Paytm QR codes. The device has witnessed extraordinary adoption, with a new one purchased by a merchant every 6 seconds! Introduced in 2019, the Soundbox provides confirmation in the merchant's preferred language, minimizing the risk of fraud.

The surge has been particularly high in Tier-II and Tier-III cities and is driven by improved digital infrastructure, a rise in last-mile delivery, and the growth of online businesses post-pandemic. Notably, nearly two-thirds of Paytm's – a popular Indian e-wallet – new users are from such cities.

Trichy is leading in UPI payments for food and beverages, while Amritsar has emerged as the top spender on health and grooming. Nagpur stands out for its substantial spending on micro-sellers and street vendors, while Katpadi Junction in Vellore has recorded a 7-fold growth in digital payments compared to 2021.

In 2022, Maharashtra State Road Transport Corporation (MSRTC) buses enabled cashless transactions for commuters in Akola, Buldhana, Bhandara, and Latur through Android-based machines.

Similarly, the North Western Karnataka RTC plans to adopt UPI this year. During its piloting, conductors in Hubballi used individual QR codes from PhonePe and Google Pay for cashless transactions. UPI payment has also been implemented in Public Distribution System (PDS) shops in Kancheepuram, enabling ration card holders to pay through UPI.

Officials of North Western Karnataka Road Transport Corporation launching UPI payments on a pilot basis in Hubballi on Friday. | Source: The Hindu

In Kashipur, Uttarakhand QR Codes were provided by Kashipur Municipal Corporation to street Vendors | Source: MoHUA_India on X

However, the Kerala High Court expressed concerns, emphasising the need for safeguards against cybercrime and illicit fund movements through UPI. Authorities have frozen the bank accounts of traders impacted by cybercriminals exploiting UPI, affecting their businesses. As UPI proliferates in smaller cities, addressing security concerns and raising awareness about safe usage becomes crucial.

क्या आपके शहर में ऐसी कोई पहल है जिसने यूपीआई के उपयोग को बढ़ाने के लिए प्रेरित किया है?

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Have you faced any challenges in using UPI in your city?