A Classification Approach to UPI Transaction Efficiency and Its Impact on Microbusinesses in Digital India

The Unified Payments Interface (UPI) has revolutionized India’s digital payment ecosystem, offering significant benefits to micro-businesses by enhancing financial inclusion, operational efficiency, and transparency. However, adoption is hindered by barriers such as digital illiteracy, infrastructural challenges, and cybersecurity concerns. This paper aims to analyze UPI’s impact on micro-businesses, identifying the factors driving and obstructing its adoption, and evaluating its role in improving financial systems. Employing a mixed-methods approach, including the Random Forest algorithm, empirical research, case studies, and secondary data analysis, the study examines transaction volumes, user growth, and sectoral adoption trends. Results indicate that UPI has improved cash flow, expanded market reach, and connected micro-businesses to formal financial systems. To maximize UPI’s potential in fostering inclusive economic growth, the study recommends enhancing digital literacy, improving infrastructure, and strengthening cybersecurity, ensuring its transformative impact on India’s micro-businesses.