The Impact of Digital Finance Adoption on MSMEs in Indonesia - State of the Art

Background Digital finance is currently experiencing significant developments. This development is global, in both developed and developing countries. One impact is that MSMEs must adopt digital finance to compete globally. The development of field papers from year to year needs to be summarized and analyzed carefully to produce findings relevant to scientific research. Methods This study presents a state-of-the-art review of the impact of digital finance adoption on Micro, Small, and Medium Enterprises (MSMEs) in Indonesia using the PRISMA (Preferred Reporting Items for Systematic Reviews and Meta-Analyses) method. Through a systematic search, selection, and filtering process in the Scopus database, 31 selected scientific articles were obtained as the basis for the analysis. Results The study results show that digital finance, including electronic payments, mobile banking, peer-to-peer lending, and fintech platforms, has been widely adopted across countries and has contributed to increased financial inclusion, improved financing efficiency, innovation, and stronger MSME performance. However, the adoption of digital finance also faces several challenges, such as low digital financial literacy, cybersecurity risks, and access disparities between urban and rural areas. Conclusions In the Indonesian context, the success of digital finance adoption is greatly influenced by the government’s role through financial inclusion and economic digitalization policies, as well as by collaboration with business actors such as fintechs, digital banks, and e-wallet providers. This study also identified that digital payment applications and e-wallets are the most dominant technologies used by MSMEs in Indonesia. Overall, this study confirms that digital finance has a strategic role in supporting the transformation and sustainability of MSMEs in Indonesia and provides direction for the development of more contextual and sustainable future policies and research agendas.