THE ROLE OF DIGITAL PAYMENT ADOPTION IN MEDIATING THE EFFECT OF FINANCIAL LITERACY, PERFORMANCE EXPECTANCY, EFFORT EXPECTANCY, AND DIGITAL LITERACY ON SMES PERFORMANCE

This study examines the mediating role of digital payment adoption in the relationship between financial literacy, performance expectancy, effort expectancy, and digital literacy on the performance of small and medium-sized enterprises (SMEs). By integrating the Unified Theory of Acceptance and Use of Technology 2 (UTAUT-2) and financial literacy frameworks, this research provides empirical insights into how SMEs leverage digital payment systems to enhance financial management and business sustainability in Indonesia. Using Structural Equation Model Partial Least Squares (SEM-PLS), data were collected from 240 SMEs in Kuningan, West Java. The results indicate that digital literacy and performance expectancy significantly influence the adoption of digital payments, which in turn enhances SMEs performance. However, effort expectancy and financial literacy do not have a significant impact on digital payment adoption. Moreover, digital payment adoption is found to mediate the relationship between digital literacy and performance expectancy on SMEs performance. These findings highlight the importance of digital literacy and perceived usefulness in driving SMEs digitalization. Therefore, policymakers and financial institutions should focus on enhancing digital literacy programs and promoting the benefits of digital payments to accelerate SMEs adoption. Future research should expand the geographical scope and consider external factors such as government regulations and technological infrastructure.