[11] ADOPTION OF UPI IN INDIAN RURAL MARKETS: A STUDY ON CHANGING PURCHASE BEHAVIOUR IN THE FMCG SECTOR

ARTICLE INFO: Date of Submission: Mar 21, 2026, Revised: Mar 30, 2026, Accepted: Apr 04 , 2026, CrossRef d.o.i : https://doi.org/10.56815/ijmrr.v5i4.2026.114-134. HOW TO CITE: Sunil G E, Shivakumar C Y, Jayanandhini C, Lakshmi K Raju & Manjushri N Halgekar (2026). Adoption of UPI In Indian Rural Markets: A Study on Changing Purchase behaviour in the FMCG Sector. International Journal of Multidisciplinary Research & Reviews, 5(4). 114-134.

Authors

  • Sunil G E, Shivakumar C Y, Jayanandhini C, Lakshmi K Raju, Manjushri N Halgekar

Abstract

Background: The Unified Payments Interface (UPI), launched by the National Payments Corporation of India (NPCI) in 2016, has emerged as the world's most widely adopted real-time digital payment infrastructure, processing over 131 billion transactions worth INR 200 lakh crore in FY 2023-24. While urban adoption has been extensively studied, the transformative impact on rural India's consumption ecosystem—particularly in the Fast-Moving Consumer Goods (FMCG) sector—remains inadequately explored in peer reviewed literature. Objectives: This study examines the adoption trajectory of UPI in Indian rural markets, analyses its influence on consumer purchase behaviour in the FMCG sector, identifies key barriers and enablers, and develops a predictive framework for rural digital payment diffusion. Methodology: Employing a secondary data analysis approach, this study synthesises data from NPCI Annual Reports (2019-2024), RBI Payment System Reports, Nielsen Rural FMCG Reports, PhonePe Pulse data, BCGFICCI digital adoption surveys, and TRAI internet penetration indicators. A meta-analytical review of 42 peer-reviewed studies (2017-2024) and TAMUTAUT model adaptation were applied. Multiple regression analysis on secondary panel data (15 states, 6 years = 90 state-year observations) was conducted. Findings: Rural UPI users grew from 38 million (2020-21) to 298 million (2023-24), representing a CAGR of 98.2%. Rural UPI adoption has significantly altered FMCG purchase behaviour: purchase frequency increased by 18.4%, average transaction value rose 24.7%, and basket size grew by 2.1 SKUs on average. Governance (perceived ease of use) emerged as the strongest predictor (beta=0.342, p<0.01) of UPI adoption intention, followed by digital infrastructure quality (beta=0.289) and perceived usefulness (beta=0.318). State-level analysis reveals significant heterogeneity, with Maharashtra (71.3%), Karnataka (68.4%), and Punjab (69.4%) leading rural UPI penetration, while Bihar (32.6%) and Madhya Pradesh (41.2%) lag significantly. Conclusion: UPI is catalysing a fundamental shift in rural India's FMCG purchase behaviour, acting as a financial inclusion lever that expands market access, boosts discretionary spending, and enables premium brand adoption. The study provides actionable policy recommendations for NPCI, FMCG companies, rural retailers, and state governments.

Keywords:

UPI Adoption, Rural FMCG, Digital Payments, Purchase Behaviour, Financial Inclusion, Rural Marketing

Author Biography

Sunil G E, Shivakumar C Y, Jayanandhini C, Lakshmi K Raju, Manjushri N Halgekar

Sunil G E, Guest Faculty, Department of Commerce, Maharani's Arts, Commerce and Management
College for Women, Maharani Cluster University, Bengaluru – 560001, Karnataka, India.
Shivakumar C Y,Assistant Professor, DoS in Commerce, Vidyavardhaka First Grade College, University of
Mysore, Mysore District – 570001, Karnataka, India.
Jayanandhini C, Guest Faculty, Department of Management, Government First Grade College, Peenya –
560058, Karnataka, India.
Lakshmi K Raju, Guest Faculty, Department of Commerce, Maharani's Arts, Commerce and Management
College for Women, Maharani Cluster University, Bengaluru – 560001, Karnataka, India.
Manjushri N Halgekar, Guest Faculty, Department of Commerce, Government First Grade College, Peenya – 560058, Karnataka, India.

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