Informal economy plays a pivotal role in economic growth. It serves as a significant source of employment. This sector is a major creator of jobs as it employs a huge quantum of labour force with access to other available opportunities. The distinctive feature of the informal sector is, it allows individuals to set up small businesses with minimum capital and regulatory overheads, thereby enabling entrepreneurship and innovation anticipated on a way of doing business. It supports economic resilience by providing the flexibility and adaptability needed to respond to economic changes and shocks. The informal economy also works to support formal sectors - the goods and services it provides to formal sectors are often supplied at lower costs, and hence contribute to increased economic productivity overall. Payment system plays a pivotal role in formalisation of this sector. UPI services streamline transactions, enhancing transparency and traceability, thus facilitating the integration of informal businesses into the formal economy. This study evaluated a conceptual model that investigates UPI adoption in informal businesses, their growth, and eventual formalisation. Utilising a cross-sectional in-depth survey design, primary data was gathered from 192 vendors in Bangalore, complemented by secondary data from e-shram, ILO, and other relevant official sources. The results indicated a notable gender imbalance, with a higher number of male business owners compared to females. Majority of respondents were 25-34 years old, accounting for 31.3% of the sample, followed by 29.2% in age groups of 35-44., and only 2.1% aged 55 and above. The findings demonstrated significant positive relationships between UPI adoption, the growth of informal businesses, and their formalisation. The study concludes that the growth of informal businesses mediates the relationship between UPI adoption and their formalisation.