In India, small-business payment has become one of the key aspects of digital payments, especially following a sudden scaffolding of account-to-account applications like Unified Payments Interface (UPI) and proliferation of acceptance based on QRs. In the case of micro and small enterprises, digital payments may help to mitigate cash-handling frictions, enhance speed and convenience of transactions, reach more customers, as well as create digital records that benefit bookkeeping and formal finance. Simultaneously, the rates of adoption and impact are also not evenly distributed: merchants experience limitations regarding device/internet reliability, transaction failures, settling delays, interoperability learning expenses, platform charges and hardware expenses in certain rails, cyber-fraud risk, and consumer dispute illiteracy. The present paper summarizes the available evidence on the impact of digital payment acceptance on the small-business performance in India, sales, customer retention, operating performance, credit access, formalization, and tax compliance. The framework provided by the paper is based on a systematic review/structured narrative method and secondary indicators as it links drivers of payment adoption (technology readiness, trust, perceived value, and ecosystem support) to business performance and resilience. Findings indicate that the greatest short-term benefits are obtained by increasing throughput (shorter checkout), lowering cash-management expenses, and enhancing customer convenience; medium-term benefits are facilitated by data trails which enhance lender confidence and supplier contacts. Nonetheless, gains can be neutralized by risks, particularly exposure to fraud and reliance of operations on networks in case merchants are not properly protected. The research ends with policy recommendations that can be applied by policymakers, payment operators, and institutions that support MSMEs in enhancing their inclusivity in digitalizing their merchants besides increasing security, reliability, and dispute resolution.
Saxena et al. (Thu,) studied this question.