PAYMENT FAILURES AND REVENUE DISRUPTION: ASSESSING THE RELIABILITY GAP IN UPI ADOPTION AMONG INDIA'S INFORMAL VENDORS

Existing research on Indias Unified Payments Interface (UPI) has largely measured success through adoption, transaction volumes, and financial inclusion, treating uptake as evidence the system works. For informal vendors, running on thin margins and immediate liquidity needs, whether a payment can be depended on matters as much as whether it was accepted, a dimension that remains underexplored. This study examines how UPI payment failures affect vendors’ daily operations and liquidity, based on fieldwork with 55 vendors in Mira-Bhayander Market, interviewed in Hindi and Marathi, alongside a survey of 56 customers.The findings identify six recurring sources of reliability failure: liquidity access, supply-chain timing, institutional friction, technical unfamiliarity, fraud-driven loss, and settlement costs. These findings show that vendors’ capacity to use UPI is distinct from their preference for it, as many continue to rely on UPI despite preferring cash, reflecting accommodation rather than endorsement.A further asymmetry emerges between vendors and customers: vendors accommodate customers’ preference for digital payments, while customers carry backup cash and switch methods when failures occur, indicating that the risks of payment disruptions are distributed unevenly rather than falling disproportionately on vendors.Adoption statistics record whether a vendor accepts UPI, but not who bears the consequences of a delayed, disputed, or fraudulent payment. The reliability gap identified here appears not as a temporary technical shortfall but as an informal redistribution of risk onto those least able to absorb it. The study concludes with policy directions, including transparent payment status.The findings identify six recurring sources of reliability failure: liquidity access, supply-chain timing, institutional friction, technical unfamiliarity, fraud-driven loss, and settlement costs. These findings show that vendors’ capacity to use UPI is distinct from their preference for it, as many continue to rely on UPI despite preferring cash, reflecting accommodation rather than endorsement. A further asymmetry emerges between vendors and customers: vendors accommodate customers’ preference for digital payments, while customers carry backup cash and switch methods when failures occur, indicating that the risks of payment disruptions are distributed unevenly rather than falling disproportionately on vendors. Adoption statistics record whether a vendor accepts UPI, but not who bears the consequences of a delayed, disputed, or fraudulent payment. The reliability gap identified here is not a temporary technical shortfall but an informal redistribution of risk onto those least able to absorb it. The study concludes with policy directions, including transparent payment status.