UPI AND THE TRANSFORMATION OF BUSINESS PAYMENT MODELS IN INDIA

The rapid digitization of financial transactions in India has positioned the Unified Payments Interface (UPI) as a central pillar of the countrys digital public infrastructure. Since its launch in 2016 by the National Payments Corporation of India under the regulatory oversight of the Reserve Bank of India, UPI has evolved into the dominant retail digital payment mechanism, accounting for more than 80% of digital transaction volumes. While prior research has primarily focused on user adoption, security perceptions, and financial inclusion, limited scholarly attention has been given to UPIs structural impact on business payment models. This study examines how UPI has transformed merchant economics, liquidity cycles, transaction cost structures, and competitive dynamics within Indias payment ecosystem. Using secondary data from RBI reports, NPCI statistics, and peer- reviewed literature, the study analyzes the economic and institutional implications of UPIs growth. Findings suggest that UPI has significantly reduced transaction frictions, enhanced working capital efficiency, accelerated MSME formalization, and reshaped fintech competition through a platform-based ecosystem model.