Impact of UPI on Working Capital Management of Kirana Shops in Nagput City

Abstract

Abstract Digital payment has changed the way small shops do business in India. After the launch of UPI in 2016 and after Covid-19, even small Kirana shops in Nagpur started using QR codes for payment. This study checks how UPI and digital payment affect the working capital management of Kirana shops in Nagpur city. Working capital means the money needed for daily business-like buying stock, paying rent and wages. For this study, 60 Kirana shop owners from Sitabuldi, Dharampeth and Pratap Nagar were interviewed using a structured questionnaire. The findings show that 67% of shops now get more than 50% of their sales through UPI. This has helped them in three ways. First, money comes to the bank account within seconds, so they need to keep less cash in the shop. Second, they give less credit to customers because digital payment is instant. Third, their stock sells faster and they can order new stock more quickly. However, shops still face problems like poor internet, transaction failures, and lack of training. The study concludes that digital payment has reduced the working capital requirement for Kirana shops and made their business more efficient. The paper suggests that banks and government should provide better network and free training to small retailers.