Digital
Payment Adoption and Business Performance of Retail SMEs: A
Mediation–Moderation Analysis
Ms. Daniya Javed1*, Dr. Nishtha
Pareek2
1 Research Scholar, Banasthali
Vidyapith, Rajasthan, India
daniyaj@gmail.com
2 Associate Professor, Department of
commerce and Management, Banasthali Vidyapith, Rajasthan, India
Abstract: The study examines the
impact of digital payment system use in retail small and medium-sized
enterprises (SMEs) its effectiveness, with particular attention given to
financial digital literacy as a moderator and operational efficiency as a
mediator. The quantitative approach is applied to this study, in which a
structured questionnaire related to retail SME stakeholders is used to collect
considerable aspects in conditions of digital payment system use and
organizational performance. The results of this research unequivocally affirm
and demonstrate a robust association exists between the use of digital payment systems
and company performance is further amplified through improvements in
operational efficiency. Besides that, financial digital literacy is considered
a significant and important aspect for gaining maximum benefits from digital
payment methods should be used appropriately that is effective and efficient in
maximizing the benefits and performance.
Keywords: Digital Payment adoption, Retail SME,
Business performance, Operational efficiency, Digital Financial literacy.
1
INTRODUCTION
A new digital economy signals the onset of a
revolutionary change that affects every aspect of human life. The
transformation is a result of the digitalization process. It calls for major
changes in the economic structure, namely, changes in the structure of the
marketplace, business, and delivery services. The large component of this
change is the growth of the FinTech sector, which increases the accessibility
of finance services by reducing physical restriction and lessening the need for
conventional mediators, thus bringing a radical change in the banking sector.
Of the major developments, Electronic Payment Services (EPS) play a pivotal
role, having become a major part of contemporary payment systems, indicating
the increasing need for a diverse array of electronic payment solutions,
including contactless technologies and digital currencies. These new systems
demand new technological tools and applications, interconnecting many people
and ensuring the utilization of state-of-the-art technological capabilities in
handling a large amount of data and electronic payments. It is, therefore, the
need of the hour to meet the difficulties arising in the context of a
sustainable electronic payment system, not only bringing major advantages to
the PayTech companies but also ensuring the provision of quality services to
the customers, adhering to legal requirements and security specifications.
Growing as a new sector in the international marketplace, it becomes essential
to improve the economic efficiency of EPS fully to explore the potentialities
of the electronic payment systems in the global digital economy (Khanin et al., 2022).
The
development of digital payment systems among Indians is impeded by many things such as costs associated with infrastructure
development, lack of financial literacy among business people, and high usage
of money among households. In many parts of rural India, there is no high-speed
internet connectivity to enable people to take part in digital payment systems.
Additionally, despite efforts by the Indian government to promote digital money
among Indians, people still love using money because of its familiarity and
security. In many aspects, there are 352 million internet users from rural
India; however, many of them lack literacy about the digital universe.
Additionally, internet speed and availability of resources are key issues.
Additionally, shop owners refuse to take part in digital money systems for fear
of taxation and regulation. They love using money for financial security (Trivedi & Sanchiher, 2023).
Small and Medium-sized Enterprises (SMEs) benefit significantly financially by implementing electronic payment services. Looking at reports by the European Central Bank and World Bank, SMEs that implement these services have increased sales earnings, reduced transaction charges, and enhanced cash flow management services. There are three methods of organizational performance measurement, encompassing financial performance measures, organizational performance measures based on effectiveness and efficiency measures of performance. Additionally, financial performance measures profitability while measures of performance and effectiveness and efficiency may be carried out by performance measures. Among the basic primary components of financially-successful SMEs include sales earnings, transaction operations based on sales, and financial services delivery. Mobile banking services have continued progressing with enhanced banking merged with mobile technical services; mobile banking increases bank access, particularly for the unbanked population (Awale, 2023), Electronic payment systems empower SMEs through an embossing of a bigger customer base, better customer services, and simplified costs, particularly for customers, and through an easy purchasing process.
2
LITERATURE REVIEW
(Lansita et al., 2024) investigated the correlation between human capital and financial performance in Micro, Small, and Medium-Sized Enterprises (MSMEs) and emphasized the moderating role of payment gateways. This descriptive quantitative research was conducted by randomly surveying 100 MSMEs situated in the city of Surabaya by collecting primary data with the help of WarpPLS 7.0 software. The important roles of human capital and payment gateways were emphasized in enhancing financial performance for MSMEs.
(Phatak, 2023) investigated the impacts of digital payment systems on small businesses in Pune City, Maharashtra, are analyzed in a rapidly shifting paradigm of financial technology. By a structured questionnaire survey of 300 small businesses, sale volume, cost per transaction, customer satisfaction, and implementation hassles are explored in this research. This study proves that digital payment systems raise sales, customer satisfaction, efficacy, and reduce cost but face tech-related hassles in terms of security.
(Najib & Fahma, 2020) researched the antecedents that lead to the adoption of digital payments in the context of the proposed extension of the Technology Acceptance Model (TAM). This research proposal adopted the survey approach with the questionnaire technique for the study involving 120 SME restaurant owner/managers in the city of Bogor, Indonesia for the proposed study using SEM-PLS. It was concluded that the perceived utility and simplicity of usage, attitudes towards online payments, and trust significantly and directly influence the desire to embrace digital payment methods.
In consideration of the evidence regarding the growth of digital payment adoption in the Indian market, this research tries to explore variables that play key roles in their adoption and perception by customers such as gender, age, income, and education. An online survey was conducted on 386 respondents, and evidence shows that variables such as perceived risk, trust, subjective norms, perceived usefulness, and convenience play key roles in adopting digital payment services. In line with that, scale non-invariance was identified using factors like education and gender. This research work will play a significant role in helping service providers and policymakers facilitate the adoption of digital payment systems (Banerjee & Pradhan, 2022).
(Affandi et al., 2024) involved 5,035 Umkm or Micro, Small, and Medium-sized Enterprises. In this study, it was revealed that digital adoption is affected by, inter alia, demographics, firm-specific factors, business environment, infrastructure factors, and culture variables, where a favourable correlation exists between digital adoption and company success.
This study aims to quickly assess the elements driving adoption of digital technologies in small local retail establishments, referred to as "Kirana Shops" within the framework of a rising economy. The theoretical framework designed in the research work is based on UTAUT2 and Technology Adoption Model. The model is proved to be accurate by a survey test among 285 unorganized retail shops in India. The work has been carried out using Structural Equation Model. The outcome indicates that the factors of “Perceived usefulness,” “Affordability,” “Compatibility,” and “Ease of use” influence the individual’s motive of adopting the concept of digitalization. The manuscript finds its place in a meager research literature domain perturbing the unorganized sections of the economies in developing nations post the occurrence of a pandemic outbreak (Bhattacharjee et al., 2024).
(Jacob & Jacob, 2024) studied factors that shape the intention of low-income class consumers in India in terms of adopting the usage of the Unified Payment Interface (UPI) mobile application. The results showed that Performance expectation, effort expectancy, facilitating circumstances, and hazards exert both positive and negative influences on the inclination to use the UPI mobile application, whereas social influence has insignificant impacts on the intention to usage. The findings addressed that the digital divide in India can be closed by policymakers through efforts concerning the usage of the UPI mobile application.
For the proposed research, an integrated/comprehensive approach was required for the study of determinants affecting customer behavioural intentions towards using M-wallet for payment. For this, a total of 600 survey papers were distributed, from which 482 papers were analyzed for structural equation modeling, confirming the stability of the proposed mode, with factors influencing the behavioral intention being value, trust, compatibility, and social factors, where trust was a dominant factor. The proposed research was done on people of a certain demographic, individuals residing in a particular urban area, and six M-wallets. For M-wallet service providers, recommendations for improvement include the importance of understanding factors of behavioral intention for enhanced customer trust, allowing people to use M-wallet for payment on a constant basis (Hasan et al., 2024).
(Journal et al., 2024) studied the acceptance of the Unified Payments Interface (UPI) among hawkers in Mangalore, India, to provide clarity to discussions surrounding financial inclusion and the digital economy. This study involved a sample population of 180 street vendors who were selected using convenience sampling. The study also employed a standardized questionnaire adapted to fit the context to obtain data. The role of Structural Equation Modeling (SEM) using AMOS software underscored the relationships among the variables, with special focus on ATU's interim relevance. The results of the investigation showed that PU is a crucial precursor to hikers' acceptance of UPI, which improves consumer satisfaction and efficiencies, respectively, meditated by ATU in BIU. Dimensions related to FC, for example, internet facilities, are essential in enabling the decrease in of barriers to acceptance, whereas PEOU is critical to those who belong to this group and lack skills to access the internet effectively.
A research was undertaken to examine the parameters influencing the persistent using electronic payment methods. systems as a result of having of empirical studies related to digital payment systems. Results indicated that perceived repute, perceived security, and perceived structural certainty favourably impacted trust and the desire to persist in using digital payment services. Such findings were important in aiding banks and the government in India in the modification of their approaches in the digital payment environment (Goel & Nath, 2020).
Digital payment systems are being accepted gradually but steadily by the customers, and it is expected to rise from $6.6 trillion to $10.5 trillion in 2025 in the cashless system. The reason for such rising acceptance is that different types of digital payment systems are available like debit cards, credit cards, NEFT, RTGS, and UPI. The pandemic situation caused by COVID-19 has boosted this trend among young technophiles to shift towards a paperless system. Digital payments are perceived by the customers as more secured, faster, transparent, and easily accessible. The basis behind conducting this research is to portray a picture of the current scenario of digital payments in India while exploring the possibilities and problems related to the digital payment system of India (Thakur & Kumar, 2023).
(Jain & Raja, 2025) studied the impact of these technologies on the operational efficiency of small businesses in Delhi, Noida, and Greater Noida. Using a quantitative approach, the authors collected data from 150 small business owners where 94% adopted digital payments which was part of over half of the transactional activities for 84.7 percent of the respondents. The study findings indicated that digital payments deployment has significantly enhanced transaction speed as reported by 89.3%, customer satisfaction as shown by 90%, and stock / Sales monitoring at 69.3%. Some of the discouraging factors towards the technology adoption include system breakdowns, customer resistance, and no internet connectivity. The study thus provided the effectiveness of automated the influence of payment mechanisms on operational efficiency of the small enterprises while calling for further improvement of the related government policies, training, and infrastructure.
2.1
Research gap
There are various gaps in research in the correlation between retail small and medium-sized businesses and the usage of digital payments, notwithstanding considerable knowledge has already been circulated in the prior investigations concerning the introduction of digital payment systems. The prior research confined their attention only to the acceptance aspects on a general scale or to the functioning/acceptance aspects. The previous studies did not examine the holistic interconnection the connection between using digital payments and enhancements in performance among retail SMEs. Very limited research studies have already been conducted in this scenario of retail enterprises that depend to a considerable extent on the efficiency of transactions and enterprise performance. The role of digital payments in performance enhancements is stated to be vaguely explained in the overall state of the existing state of the art in this particular scenario. The previous existing studies on the topic focused on standalone theories and did not have a deficit in formulating overall models in this scenario of different aspects of digital payments in retail enterprises in this relation of modulating aspects of behavioural features, in addition to performance enhancements in retail enterprises. There is an attempt to be made to form a firm model in this overall understanding of modulation implications of this discussed topic in this particular retail scenario of enterprises.
3
METHODOLOGY
3.1
Research Design
This research examined the uptake of digital payments
using a quantitative technique and the business performance of retail SMEs: A
Mediation–Moderation Analysis. A total sample of 384, managers, store in
charge, finance staff, customers, retail SEMs and any small retail business who
are planning to adopt the banking payments that effect on their business
performance are used for collecting the data pertaining to the research. Data
were collected with a standardised questionnaire that included 5-point Likert
scale questions, covering five main constructs: Adoption of Digital Payments,
Business Performance, Operational Efficiency, and Digital Financial Literacy.
3.2
Conceptual Framework
Figure 3.1 Conceptual framework
3.3
Research Objectives
·
To assess the impact of digital payment
adoption on the business performance of retail SMEs.
·
To find out whether operational efficiency
mediates the link between digital payment adoption and business performance.
·
To examine whether digital financial literacy
moderates the relationship between digital payment adoption and business
performance.
3.4
Hypothesis
·
H1: Digital payment
adoption has a positive effect on the business performance of retail SMEs.
·
H2: Operational efficiency
mediates the relationship between digital payment adoption and business
performance of retail SMEs.
·
H3: Digital financial
literacy moderates the relationship between digital payment adoption and
business performance.
3.5
Sample selection and data collection
The study sample consisted of managers, store in
charge, finance staff, customers, retail SEMs and any small retail business who
are planning to adopt the banking payments. A purposive sampling strategy was
used to identify individuals who fit the inclusion criteria. A total of 384
individuals were chosen according to statistically determined sample size criteria.
The data collection process included securing informed consent and thereafter
distributing a self-constructed questionnaire.
3.6
Inclusion and Exclusion Criteria
Inclusion Criteria:
· Indian retail SMEs that fall under the MSME (micro, small, or medium enterprises) classification.
· Organizations that currently employ or have previously employed a minimum of one digital payment mechanism (such as a payment gateway, mobile wallet, POS, UPI, etc.).
· Proprietors, managers, or supervisors with a minimum of six months' experience running a retail small business
Exclusion Criteria:
·
Businesses
that don't operate in retail, including MSMEs in manufacturing, agriculture,
hospitality, or services.
·
Retail
locations that only accept cash payments or don't employ any kind of digital
payment system.
·
Respondents
who lack decision-making authority in the company, are unwilling to
participate, or give insufficient information.
3.7
Measures
Data has been gathered with a standardised
questionnaire. A questionnaire using a 5-point Likert scale has been created to
solicit respondents' thoughts on different research subjects being examined.
The questionnaire has a collection of both open-ended and closed-ended questions.
Questions have been meticulously designed to elicit significant information on
specified study factors. The details of the variables and the corresponding
measurement items used for the analysis are presented below.
|
S.No. |
Constructs |
Statements |
|
1 |
Digital Payment Adoption |
6 |
|
2 |
Business Performance |
6 |
|
3 |
Operational Efficiency |
6 |
|
4 |
Digital Financial Literacy |
5 |
·
Digital Payment Adoption: Digital payment options include mobile payment systems,
e-wallet payment systems, e-payment systems, and QR code payment systems. They
can be categorized into two categories. These categories encompass mobile
payment systems and systems that improve the use of web services on computers.
QR Code systems have become popular owing to increased readability and storage capacity
by comparison with Bar Code systems. “E-payment” represents electronic transfer
of funds from entities, and these entities include but are not limited to banks
or individuals acquiring services (Susanto et al., 2022).
·
Business Performance: Opportunities
in marketplaces exist based on the nature of the marketplace, which allows the
entrepreneur to foresee prospective opportunities. Alertness to entrepreneurial
opportunities involves scanning the environment because of marketplace
failures.
·
Operational Efficiency: Operational
efficiency is a process where managers use inputs to produce products and
services in an efficient way to maximize output and at a minimal rate. The
effective implementation of an efficient process maximizes an organization's
value (Keya, 2021).
·
Digital Financial Literacy: Financial literacy (FL) is considered essential for
improving financial inclusion and general financial well-being. The aim of
conducting the research is to determine people’s requirements regarding more
effective financial planning and educational interventions through financial
counselling sessions.
4
RESULTS
4.1
Introduction
The results obtained from how crucial it is to do a
thorough statistical analysis of the uptake of digital payments and retail SME
business performance and include the mediating variables of efficiency and
financial literacy. Several tests for reliability and validity were conducted
for the results of this study and ensuring the results were valid and reliable
for analysis. This study provides results with the importance of establishing
the fit determination of the measuring model's validity and the establishment
of connections for hypothesis testing. The study's findings provide reliable
empirical support for the strategic roles played by digital technology and
financial literacy for enhanced performance for retail SMEs.
Table 1 Demographic variables
|
Demographic
|
Groups |
Frequency |
Percent |
|
Type of Retail Business |
Grocery / Supermarket |
116 |
30.2 |
|
Clothing & Apparel |
80 |
20.8 |
|
|
Electronics & Mobile Stores |
96 |
25.0 |
|
|
Pharmacy / Medical Shops |
60 |
15.6 |
|
|
General & Other Retail Outlets |
32 |
8.3 |
|
|
Total |
384 |
100.0 |
|
|
Business Experience |
Less than 2 years |
172 |
44.8 |
|
2 – 5 years |
90 |
23.4 |
|
|
5 – 10 years |
62 |
16.1 |
|
|
Above 10 years |
60 |
15.6 |
|
|
Total |
384 |
100.0 |
|
|
Number of Employees |
1 – 5 employees |
84 |
21.9 |
|
6 – 10 employees |
156 |
40.6 |
|
|
11 – 20 employees |
119 |
31.0 |
|
|
More than 20 employees |
25 |
6.5 |
|
|
Total |
384 |
100.0 |
|
|
Monthly Sales Turnover |
Below ₹1,00,000 |
181 |
47.1 |
|
1,00,000 – 5,00,000 |
124 |
32.3 |
|
|
5,00,000 – 10,00,000 |
51 |
13.3 |
|
|
Above 10,00,000 |
28 |
7.3 |
|
|
Total |
384 |
100.0 |
|
|
Experience with Digital Payment Usage |
Less than 1 year |
224 |
58.3 |
|
1 – 3 years |
68 |
17.7 |
|
|
3 – 5 years |
46 |
12.0 |
|
|
More than 5 years |
46 |
12.0 |
|
|
Total |
384 |
100.0 |
The demographic composition of the respondents indicates a varied
representation of retail SMEs. Grocery and supermarket stores occupied the
highest share of 30.2%, followed by electronics and mobile stores of 25.0%,
clothes and apparel stores of 20.8%, pharmacy and medical stores of 15.6%, and
general and other types of stores of 8.3% of the sample population. A
considerable number of businesses were relatively young, and among these, 44.8%
have been in operation for less than two years, 23.4% 16.1% for a duration of
five to ten years, 15.6% for a period beyond ten years, and a range of two to
five years existence in the market. There was diversity regarding company size,
and among these, businesses employing 6 to 10 persons constituted the highest
of 40.6%, followed by 11 to 20 persons of 31.0%, 1 to 5 persons of 21.9%, and
more than 20 persons of 6.5%. In terms of business performance, more than half
of all businesses or 47.1% had sales turnover of less than ₹1,00,000,
32.3% had ₹1,00,000 to ₹5,00,000, 13.3% had ₹5,00,000 to
₹10,00,000, and 7.3% had more than ₹10,00,000. The exposure to
digital payment systems varied considerably, with 58.3% of enterprises having
implemented such systems 17.7% 12.0% for durations under one year, 12.0% for
three to five years, 12.0% for more than five years, and 12.0% for one to three
years. The demographic distribution indicates that the sample mostly consists
of young, small-to-medium-sized retail companies exhibiting diverse levels of
digital payment expertise and financial success.
Figure 2 CFA model
The measurement model of Digital Payment Adoption, Business Performance,
Operational Efficiency, and Digital Financial Literacy shows good psychometric
qualities in the confirmatory factor analysis. Every observed indicator has
standardised factor loadings more than 0.60, demonstrating convergent validity
and verifying that every item is a reliable and significant representation of
the corresponding latent construct. Increased usage of digital payments is
connected with enhanced corporate performance, more operational efficiency, and
elevated digital financial literacy, as shown by the evident and favourable
correlations across the latent constructs and the four latent variables and
their indicators. Furthermore, the overall model fit indices are within the generally
recognised ranges for a well-fitting model, suggesting that the suggested
measurement structure well reflects the underlying connections between the
constructs. These findings taken together demonstrate that the measurement
model is valid, dependable, and appropriate for further structural equation
modelling and hypothesis testing.
Table 2 Descriptive Statistics, Reliability, and Inter-Variable
Correlations
|
|
Mean |
Cronbach's
Alpha |
Digital
Payment Adoption |
Business
Performance |
Operational
Efficiency |
Digital
Financial Literacy |
|
Digital
Payment Adoption |
3.7031 |
.897 |
|
|
|
|
|
Business
Performance |
3.7344 |
.873 |
.678 |
|
|
|
|
Operational
Efficiency |
3.6107 |
.861 |
.601 |
.691 |
|
|
|
Digital
Financial Literacy |
3.4648 |
.827 |
.414 |
.457 |
.565 |
|
|
**. Correlation is significant at the 0.01 level
(2-tailed). |
||||||
The reliability, inter-variable correlations, and descriptive statistics
show that all constructs are seen favourably overall, and the scales utilised
have a high degree of internal consistency. The mean scores for Operational
Efficiency (3.61), Business Performance (3.73), Digital Payment Adoption
(3.70), and Digital Financial Literacy (3.46) are all above the midpoint of the
scale, indicating that respondents moderately to strongly agree that these
outcomes and practices exist in their companies. High reliability for all four
constructs is shown by Cronbach's alpha values, which fall ranging from 0.827
to 0.897. This indicates that the items on each scale reliably evaluate the
same fundamental concept. A strong positive correlation exists in the correlation
matrix for Digital Payment Adoption and Business Performance, which is 0.678,
and Business Performance and Operational Efficiency, which is 0.691. These two
correlations signify that digital payment adoption affects business performance
in a strongly positive manner. Additionally, the correlation coefficient for
Operational Efficiency and Digital Payment Adoption is 0.601, which signifies
that this relationship is strongly positive. Digital payment adoption, business
performance, and operational efficiency have a moderately positive relationship
with digital financial literacy, which is 0.414, 0.457, and 0.565,
respectively. These signify that high financial literacy results in positive
results in both operational efficiency and business performance but results in
neither operational efficiency nor digital payment adoption. All of the above
findings in combination signify that positive results in operational efficiency
and business performance are strongly related to positive digital payment adoption
influenced by financial literacy.
Table 3 Multicolinearity Diagnostics
|
Model |
Collinearity
Statistics |
||
|
Tolerance |
VIF |
||
|
|
Digital Payment Adoption |
.631 |
1.586 |
|
|
Operational Efficiency |
.519 |
1.929 |
|
|
Digital Financial Literacy |
.672 |
1.487 |
|
a. Dependent Variable: Business Performance |
|||
The Multicolinearity diagnostics reveal that the independent variables Digital
Payment Adoption, Operational Efficiency, and Digital Financial Literacy do not
represent any Multicolinearity danger to the regression model predicting
Business Performance. All tolerance values vary between 0.519 and 0.672, which
are significantly over the frequently recognised minimum criterion of 0.10,
showing that each predictor has a large amount of unique variation and is not
unduly reliant on the others. Similarly, all Variance Inflation Factor values
range between 1.487 and 1.929, much below the crucial benchmark of 5 (and even
the more cautious criterion of 3), demonstrating that inflation in the
regression coefficient estimates due to intercorrelation across predictors is
minor. Together, these statistics demonstrate that Digital Payment Adoption,
Operational Efficiency, and Digital Financial Literacy can be simultaneously
included in the regression model without concern for Multicolinearity, ensuring
stable and reliable estimation of their individual contributions to Business
Performance.
Table 4 KMO and Bartlett's Test
|
Kaiser-Meyer-Olkin Measure of
Sampling Adequacy. |
.940 |
|
|
Bartlett's Test of Sphericity |
Approx. Chi-Square |
5247.231 |
|
df |
253 |
|
|
Sig. |
.000 |
|
The KMO and Bartlett's Test findings show that the dataset is
appropriate for factor analysis. By significantly above the suggested minimal
threshold of 0.60, the Kaiser–Meyer–Olkin (KMO) score of 0.940 signifies an
exceptional degree of sampling adequacy and validates that the correlations
between variables are adequately constrained to provide distinct and reliable
outcomes factors. Furthermore, Bartlett's Test of Sphericity is very
significant (χ² = 5247.231, df = 253, p < .001), indicating robust
correlations across the variables and confirming the correlation matrix is not
a matrix of identities. When evaluated together, these studies indicate that
the dataset is suitable for component extraction and that factor analysis may
be carried out with assurance to uncover the fundamental aspects of the
research topics.
Table 5 Reliability Validity Test
|
Variables |
AVE |
CR |
|
Digital Payment Adoption |
0.7705 |
0.884 |
|
Business Performance |
0.75216667 |
0.87973994 |
|
Operational Efficiency |
0.76666667 |
0.88372195 |
|
Digital Financial Literacy |
0.7424 |
0.8522138 |
All four conceptions have good convergent validity and internal
consistency, according to the reliability and validity findings based on
Average Variance Extracted (AVE) and Composite Reliability (CR). AVE values for
Digital Payment Adoption (AVE = 0.7705, CR = 0.884), Business Performance (AVE
≈ 0.7522, CR ≈ 0.880), Operational Efficiency (AVE ≈ 0.7667,
CR ≈ 0.884), and Digital Financial Literacy (AVE ≈ 0.7424, CR ≈
0.8522) are significantly higher than the suggested threshold of 0.50. In a
similar vein, every CR score is higher than the generally recognised standard
of 0.70, demonstrating a significant degree of internal consistency among the
items evaluating each concept. When taken as a whole, these data provide
compelling proof of the measurement model's validity and dependability as well
as the accuracy and coherence of the constructs tested in the research for
further structural analysis.
Table 6 Proposed Hypothesis
|
S.No |
Hypothesis |
Co-efficient Value |
P-value |
Results |
|
1 |
Digital payments positively influenced
the commercial performance of retail SMEs. |
.692 |
.000 |
Hypothesis Accepted |
|
2 |
Operational efficiency mediates the |
|
|
|
|
|
Operational Efficiency <--- Digital Payment Adoption |
.601 |
.000 |
Hypothesis Accepted |
|
|
Business Performance <---
Operational Efficiency |
.443 |
.000 |
|
|
|
Business Performance <---
Digital Payment Adoption |
.412 |
.000 |
|
|
3 |
Digital financial literacy influences
the correlation between digital payment uptake and company
success. |
|||
|
|
ZBusiness Performance <--- ZDigital
Payment Adoption |
.632 |
.000 |
Hypothesis Accepted |
|
|
ZBusiness Performance <--- ZDigital Financial Literacy |
.229 |
.000 |
|
|
|
ZBusiness Performance <--- Interaction(Zscore(Digital
Financial Literacy* ZDigital Payment Adoption)) |
.080 |
.000 |
|
The use of digital payments positively influences retail SMEs' company
success, according to Hypothesis 1. A standardised a coefficient of 0.692 and a
p-value of 0.000, indicating a very significant result and considerable
positive connection, provide strong support for this hypothesis. According to
this, retail SMEs who use digital payments are more likely to have better
company outcomes, most likely as a result of quicker transactions, more
convenient customer service, and better record-keeping, and better cash flow
management. Digital payments are strategically important in today's retail
business contexts, as shown by the fact that SMEs who aggressively embrace and
integrate digital payment systems often have better performance results than
those that depend less on such technology.
Hypothesis 2 postulated that there was a correlation between digital
payment use and the commercial efficacy of retail SMEs that was
facilitated/mediated by operational efficiency. The data confirms hypothesis 2.
Therefore, due to the use of digital payments, there is greater efficiency in
operations. The relationship between operational efficiency and company
performance increases by a multiple of an increase in operational efficiency
(β = 0.443, p = 0.000); therefore, better company performance is achieved
due to greater efficiency. Notably, the use of digital payments correlates
favourably with corporate performance and significantly correlated, even when
operational efficiency is taken into account (β = 0.412, p = 0.000).
Partial mediation is shown by this pattern, indicating the use of digital
payments improves operational efficiency and, indirectly, corporate performance.
Therefore, digital payments not only improve performance on their own, but also
increase the efficiency of internal procedures.
The connection between using digital payments and corporate performance
is moderated by digital financial literacy, according to hypothesis 3. In
support of this notion is the moderation analysis. Z-standardized digital
payment use has a significant beneficial impact on standardised company
performance (β = 0.632, p = 0.000), according to the standardised
findings. Digital financial literacy also has a favourable independent
contribution (β = 0.229, p = 0.000). Importantly, standardised digital
financial literacy and standardised digital payment uptake have an interaction
term that is both positive and statistically significant (β = 0.080, p
< 0.001). This indicates that the use of digital payments has a greater substantial
beneficial effect on corporate performance compared to traditional financial
methods literacy rises. Stated differently, SMEs possessing greater levels of
digital financial literacy are more equipped to use digital payment systems
efficiently, minimise mistakes or hazards, and convert digital adoption into
measurable performance improvements. This demonstrates that the association
between digital payments and performance is strengthened (enhanced) by digital
financial literacy.
DISCUSSION
The results of the study, entitled "Digital Payment Adoption and
Business Performance of Retail SMEs," strongly support the theories
postulated and underpin the key role technologies, particularly digital
payments, play in enhancing retail businesses. It is further evident that the
results validate the idea that the adoption of cashless transactions helps to
manage better cash flow, speed up services, increase competitiveness, and
benefit consumers because it clearly states that the implementation of digital
payments positively influences company performance in retail SMEs. It has also
been revealed that operational efficiency acts as the mediating variable
because digital payments complement overall businesses by improving rapid
cycles, minimal handling, and smooth internal procedures apart from enhancing
performance outcomes themselves. Finally, the moderating effect revealed in the
study clearly identifies that the use of digital payments advantages SMEs
possessing elevated digital financial literacy because those businesses or
organizations possess higher levels of awareness to effectively use digital
payment systems efficiently, minimize errors, and take informed financial
decisions.
Overall, the discussion reflects that, indeed, digital payment modes
function well with advanced operations and sound financial awareness; digital
preparedness is a prime factor to continue successful outcome performance in
retail industry SMEs.
CONCLUSION
This study provides ample empirical evidence for proving the validity
and truth for the three hypotheses proposed for conducting this study. With a
highly significant standardised coefficient value of .692 and a p-value of
0.000 confirms the validity of the first hypothesis, leading to the conclusion
that adopting digital payments positively affects the performance of
businesses. This is adequate enough to prove that digital payments system is
highly effective for enhancing retail SMEs' performance. According to the
second hypothesis, the adoption of digital payments is facilitated and explained
by operational effectiveness achieving business success, is also proved
correct. This is because the direct connection between company success and the
use of digital payments is still strong and highly positive even after the
inclusion of the variables for mediation and is still positively influenced by
the adoption of digital payments (.412), with a p-value of .000), but operating
effectiveness is highly and significantly affected by adopting digital payments
(.601), with a p-value of .000), and the operating effectiveness is highly and
significantly affected by the performance of businesses (.443), with a p-value
of .000), thereby indicating this partial mediation is also valid and correct.
Finally, the third hypothesis is also proved correct by getting highly strong
and significant values for the interaction effect variables .080 and highly
significant and strongly positive independent values for adopting the digital
payments system (.632), with a p-value of .000), and financial literacy for
digital payments system .229), with a p-value .000), and proving that financial
literacy for the digital payments system is a strong and highly significant
moderating factor for the effective adoption and usage of digital payments and
thereby still indirectly and positively influencing the performance of
businesses. Essentially, what is proved by this study is that the operating
effectiveness is increased due to the usage and acceptance of electronic
payments and the enhancement of operational efficiency as the financial
literacy about the digital payments system may greatly enhance its efficacy and
positively impacting and affecting the performance of businesses and that
retail SMEs can still relate the beneficial factor of digital capability for
the success and advancement of retail SMEs even within the highly competitive
retail market.
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