Digital Financial Footprints: UPI Transaction Histories and Credit Access for Women-Owned Micro-Enterprises in India

Women-owned micro-enterprises in India face a persistent credit gap, partly because lenders cannot verify the financial performance of businesses that lack formal records, collateral or credit histories. This paper asks to what extent UPI transaction histories can reduce information asymmetry in credit markets for these enterprises. Drawing on Akerlof, Stiglitz and Weiss, and Spence, it treats UPI records as an additional verifiable signal rather than a replacement for existing documentation. A mixed-methods design combined a questionnaire of 100 women entrepreneurs, recruited through convenience sampling, with 12 purposive interviews. Results show that UPI use is near universal (95%), that 90% hold UPI records, and that owners with more consistent and broader records were more likely to find it easy to demonstrate financial performance. However, respondents widely reported that UPI cannot show profitability (80%), expenses, cash transactions or assets (75% each), and lenders still requested traditional documents. UPI therefore increases observability without eliminating information asymmetry. Because the design observes only the borrower’s side and uses a non-random sample likely to over-represent digitally active owners, findings should not be generalised; future research should examine lenders’ decisions directly.