The real test of digital India: Can UPI and QR code payments bridge the poverty gap?

Hyderabad: Every time we scan a QR code at a roadside tea stall, it feels like a glimpse of a new India, one that’s more connected, transparent and financially confident than ever before.

Over 400 million Indians now use the Unified Payments Interface (UPI), and for many low-income citizens, it has replaced cash as their first brush with formal banking.

But the question on this International Day for the Eradication of Poverty is deeper: Can digital inclusion truly lift people out of poverty? Or are we mistaking access for empowerment?

JAM trinity – A revolution in reach, not always in results

Over the past decade, India has built what economists call the 'JAM trinity': Jan Dhan accounts, Aadhaar and mobile networks. Together with UPI, they form a vast digital public infrastructure that allows the government to send money directly to beneficiaries, without middlemen or leakage.

Financial inclusion, at least on paper, has been a runaway success.

Yet, the lived reality of poverty, malnutrition, debt, health shocks, and informal employment cannot be solved by digital rails alone.

“The digital stack is an extraordinary tool,” said economist Dr Rituparna Dey, who studies financial inclusion, speaking to NewsMeter. “But technology does not erase inequality; it only moves it to a different layer. For someone who earns Rs 200 a day, what matters is income security, not app downloads.”

What technology has actually changed

1. Leakage-free welfare

Direct Benefit Transfers (DBTs) have replaced cash disbursements riddled with corruption. With Aadhaar-linked accounts, subsidies and wages reach recipients directly. Several State governments now pay MGNREGA wages or pension amounts digitally.

A farmer in Nizamabad or a daily-wage worker in Khammam no longer depends on an intermediary to collect payments.

“For the first time, we are being paid without begging someone to release the money,” said Kavitha, a labourer from Telangana. “If I have my phone and fingerprint, I can get my salary.”

2. Formalisation of micro-income

Small businesses from kirana stores to vegetable vendors now accept UPI, which gives them a digital record of cash flow. This can later help them qualify for small loans, government schemes, or insurance.

3. Women and control over money

According to data from various women’s self-help groups, when money reaches a woman’s own account, household decisions become more balanced.

Digital transactions, when combined with community banking and savings groups, can strengthen women’s control over income, a critical, if often overlooked, dimension of poverty reduction.

When access is not agency

1. Digital literacy gap

In many rural areas, the digital divide is still about confidence, not connectivity. Having an account doesn’t mean knowing how to use it. Women often hand over their ATM cards or OTPs to male relatives.

“We need to move from digital inclusion to digital comprehension,” said Prakash Menon, a financial literacy trainer from Hyderabad. “People must understand how to protect their PINs, verify a merchant, or check a balance; that’s real empowerment.”

2. Informal work, unstable income

Most low-income Indians work in the informal sector as drivers, vendors or domestic workers, where income is irregular. Even if they have UPI and bank accounts, there’s little to transact with when jobs are seasonal or underpaid.

Technology cannot solve the absence of stable employment.

3. Small merchants under pressure

UPI’s success depends on merchants accepting payments, but for tiny businesses, digital infrastructure costs, QR stickers, smartphones, and data plans still eat into profits. And when payments fail, there’s no clear redressal mechanism.

“I use UPI because customers expect it,” said Aslam, who runs a tea stall in Secunderabad. “But if the network is down, I lose both time and patience.”

4. Privacy and data concerns

With every digital payment, users leave a data trail. For low-income groups, the misuse of data, say by aggressive lenders, can lead to harassment or debt traps.

The poor need protection not just from poverty, but also from predatory digital capitalism.

When tech meets trust: Examples that work

Some pilot programs show what real digital empowerment can look like.

• In Andhra Pradesh, a rural initiative called Smart Sakhi trains women in villages to use UPI for community banking. When women understand how digital payments work, they use them not just for transactions but for saving collectively.

• In Hyderabad, NGOs working with street vendors have helped hundreds formalise through digital receipts, enabling access to government welfare and microcredit.

These cases show that the success of digital systems depends less on the technology itself and more on the social scaffolding around it, training, trust, and human support.

Why the poor need more than fintech

Poverty is not just a lack of cash; it’s a lack of capability. Without health security, affordable housing, and quality education, digital money transfers can only address symptoms, not causes.

“Digital India can make welfare efficient,” said Dr Ananya Rao, a development economist. “But to make people truly self-reliant, we need real jobs, social safety nets and accessible credit. Pixels don’t replace policy.”

Combining tech with empathy

If India wants its fintech revolution to also be a poverty eradication revolution, three shifts are needed:

1. Invest in digital literacy – especially for women, elderly citizens, and rural youth.

2. Protect users from exploitation – clear, simple grievance systems and data privacy safeguards.

3. Use data responsibly – digital footprints should enable fair credit, not profiling or surveillance.

Finally, government and private players must treat digital payments as a tool, not a trophy. The true measure of progress is not how many transactions happen per second, but how many lives become more secure because of them.

A quiet digital dignity

At its best, digital inclusion is not about technology; it’s about dignity. The right to hold your own money, make a choice, send or receive funds without fear or dependency.

A QR code at a chai stall may not end poverty, but it can signal something deeper, a shift from helplessness to control. And that, in a country where poverty is often about invisibility, is already a small revolution.