Assessing the Role of Digital Payment Systems in Enhancing Operational Efficiency among Unorganized Retailers

Abstract

The rapid proliferation of digital payment systems in India has significantly transformed the retail landscape, especially in the organized sector. However, their adoption and impact in the unorganized retail segment—comprising local kirana stores, roadside vendors, and small-scale traders—remain underexplored. This study aims to assess the role of digital payment systems in enhancing operational efficiency among unorganized retailers. Specifically, it investigates how digital payment adoption influences sales volume, inventory management practices, and overall business process optimization. The research adopts a mixed-methods approach, combining quantitative data collection through structured questionnaires with qualitative insights gathered via interviews. The target sample includes unorganized retail outlets across urban and semi-urban areas, with emphasis on those that have integrated digital payment platforms such as UPI, mobile wallets, and QR-based payment apps. Statistical analysis is employed to measure correlations between digital payment usage and indicators of operational efficiency, including sales trends, inventory turnover, and reduction in transaction time. Preliminary findings suggest that digital payments not only streamline financial transactions but also contribute to better tracking of inventory, improved cash flow management, and increased customer trust. Despite challenges such as digital illiteracy, intermittent connectivity, and reluctance among some retailers, the overall trend indicates a positive impact on business efficiency. This study contributes to the growing literature on digital transformation in the informal economy and offers policy recommendations to accelerate financial inclusion and digital adoption among grassroots-level retailers. It also provides practical insights for fintech companies and government agencies aiming to empower the unorganized sector through digital means.