Barriers to small-scale merchants’ acceptance of bank-owned Unified Payment Interface payment apps

Purpose The purpose of the study is to explore the primary barriers impeding the adoption of bank-owned Unified Payment Interface (UPI) payment applications among small-scale merchants (SSMs). Drawing from Innovation Resistance Theory (IRT), the study seeks to uncover the barriers that deter merchants from embracing bank-owned UPI payment apps. Design/methodology/approach The study uses qualitative research enquiry from two primary stakeholders: SSMs and banks. A qualitative semi-structured interview was conducted with 12 banks and 37 SSMs operating in varying levels of human development index regions. Findings The study identifies four key barriers that hamper the adoption of bank-owned UPI payment applications. Usage barriers emerge because of the complexity of the user interface, while the value barrier is associated with insufficient motivation to shift to bank-owned UPI applications, delayed entry of the banks in the UPI ecosystem and dominance of free deals and offers provided by third-party payment service providers. Image barrier due to unsatisfactory customer service experience and a traditional barrier resulting from low awareness and limited customer demand have impeded the adoption and utilisation of bank-owned UPI payment applications. The SSMs did not report any risk barrier, indicating trust. Research limitations/implications This study offers critical insights for banks and policymakers aimed at fostering greater adoption of bank-owned UPI applications among SSMs. The study underscores the need to enhance the bank-owned UPI application by improving interface intuitiveness, expanding promotional outreach, improving customer service and offering usage-based incentives. Originality/value By identifying the barriers faced by SSMs in adopting bank-owned UPI payment apps and substantiating these insights with bank managers’ perspectives, this study offers a novel, triangulated perspective on the lesser-studied stakeholders of the UPI ecosystem. Drawing on IRT, the findings indicate that risk barriers do not influence the adoption of bank-owned UPI apps.