How 16.73 billion UPI transactions killed the ubiquitous toffee business

India's Unified Payments Interface (UPI) transactions rose to 16.73 billion in December 2024, National Payments Corporation of India (NPCI) data revealed. And this exponential rise has hit an unlikely target –  it is killing the nation's Toffee or candy business.

UPI transactions rose 8 per cent month-on-month (MoM) to its December level, compared with 15.28 billion transactions in November 2024. 

India shopkeepers always had a “chutta nahi hai” or “no change available” mindset. Before UPI transactions,  shoppers were offered candy or toffees as payback, invoking the narrative that the correct sum, which could amount to as less as 30-40 paise, was not available.

This has nearly ended with UPI, which has changed the financial landscape of India's payment system. 

This transition to digital payment skips the requirement of shopkeepers to keep candy or toffee in handy in exchange, affecting sales of the latter. India has roughly 13 million kirana, or small neighbourhood shops, according to media reports.

Commenting on this narrative, Harshad Shah, a chartered accountant, said, “Before UPI, shopkeepers would trade Toffees for small change, stating shortage of Coins.” 

“These small amounts of change over weeks would amount to becoming vast sums of Money, which were never returned to customers at all, because Toffees were given to customers, in lieu of small change,” said Shah in the post on social media platform LinkedIn.

Shah also highlighted how people are now paying the exact amount due with their digital payment applications without the need to carry or ask for a change in a transaction. 

How UPI is nailing Toffee business

Citing the sales drop of major brands like Mondelez, Mars, Nestle, Perfetti, Parle & ITC, he said, “People paid the Exact Amount using UPI, with no scope for exchanging small change, ultimately eating up the daily sales of Toffees.” 

Mint reported earlier in October 2024, citing the Nestle India Chairman, that the Indian market faces muted demand. The executive also highlighted that food inflation, among other factors, is a cause for concern for FMCG companies operating in the Indian market. 

UPI has successfully changed this consumer behaviour, and now, as people use digital payments more than cash payments, this new technology is impacting business in a completely different sector.

“Technology can impact any Business,” said Shah, underlining how toffee-making companies could not have guessed that a financial product could drag their business.