This study aims to investigate the adoption of online payments while focusing on the role of “Unified Payments Interface (UPI)” in automation of “small and medium enterprises (SMEs)” located in Jabalpur, India. With the rise in digital economy in India, UPI has made a transformative impact with evidence on its effect among SMEs in tier-2 city like Jabalpur. It addresses the gap by determining frequency and level of adoption of UPI and evaluating important factors affecting its use.

A self-structured questionnaire was prepared with close-ended questions (based on 5-point Likert scale) and distributed to 300 SMEs across retail, manufacturing, and service sectors. Collection of data includes modes of payment, business profile, frequency of using UPIs, and in-depth perceptions of convenience of UPI, payment modes, business profile, automation benefits, user attitudes, and challenges. Before hypotheses testing, Cronbach’s Alpha test was conducted to determine the reliability of questionnaire (Alpha = 0.955). Both multiple linear regression and one-sample t-tests were conducted using SPSS software to determine the impact of adoption of UPI and predictive strength of security, perceived ease of use, and digitalization.

Findings of the study reveal that there is high prevalence of UPI, as majority of SMEs perceive adoption of UPI to improve operational efficiency, promote processing of payments, and automate transactions. With regression analysis, it is found that perceptions of security and digital preparedness are strong predictors of adoption of UPI, while there are significant challenges due to perceived costs. It is concluded that integrating UPIs successfully is closely related to factors like confidence in security and digital infrastructure. Digitalization of SMEs in emerging economies is further accelerated by addressing technical issues and adoption costs. Findings of this study provide important insights for fintech providers, policymakers, and business leaders looking forward to modernize operations and improve financial inclusion with online payments.