Barriers to digital payment adoption: micro, small and medium enterprises

Abstract Technological developments that continue to develop make fintech applications compete to create innovations. Currently, people can transact using digital payment applications. As a result, digital payment application continues to innovate. This makes micro, small, and medium enterprises (MSMEs) adopt digital payments to run their business. This study aims to examine the adoption of digital payment systems for the digitization of MSMEs. The population in this study was 4,793 MSMEs in Blitar City, Indonesia. The sample in this study was 100 respondents using the Slovin formula. The data is processed through the SmartPLS software and analyzed using the SEM approach. The results of this study indicate that the barriers to use, value, and risk have a positive and significant effect on functional barriers. In contrast, barriers to tradition and image positively and significantly affect psychological barriers. However, the functional barrier variable is not significant for the actual use of digital payment. Furthermore, psychological barriers have a positive and significant effect on the actual use of digital payments.