Nearly half of India’s micro, small, and medium enterprises (MSMEs) are embracing Unified Payments Interface (UPI) as their preferred transaction mode, with 48% opting for its seamless efficiency, according to the MSME Digital Index Report by PayNearby. Aadhaar-enabled banking follows closely at 39%, with women entrepreneurs showing a stronger preference at 42%, driven by trust in secure biometric authentication like fingerprint and face recognition.

The report, based on a nationwide survey of 10,000 individuals and MSMEs across retail segments such as kirana stores, medical shops, mobile recharge outlets, customer service points, and travel agencies, highlights the rapid rise of digital payments. Smartphones dominate as the primary business device, used by 71% of MSMEs and 84% of women entrepreneurs, underscoring their role in modernizing operations.

Digital adoption is yielding tangible benefits: 73% of small businesses in semi-urban and rural India report increased income or enhanced operational efficiency. A third of respondents specifically noted improved efficiency, while 7% are exploring AI-powered tools like inventory apps, automated billing systems, and customer engagement platforms, often through third-party solutions.

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Anand Kumar Bajaj, Founder, MD & CEO of PayNearby, a DPIIT-certified branchless banking and digital network, emphasized, “The MSME sector, the backbone of Bharat’s economy, is rapidly modernizing. The widespread adoption of smartphones, UPI, Aadhaar banking, and emerging AI tools showcases their readiness to embrace digital transformation.”

As MSMEs leverage these technologies, the report signals a robust shift toward a digital-first approach, empowering small businesses to thrive in India’s evolving economic landscape.

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