THE INFLUENCE OF DIGITAL PAYMENT ADOPTION AND FINANCIAL LITERACY ON CASH MANAGEMENT EFFECTIVENESS AMONG MSMES: AN EMPIRICAL INVESTIGATION IN MEDAN DELI DISTRICT
Abstract
Micro, Small, and Medium Enterprises (MSMEs) constitute the foundational engine of economic resilience in emerging markets, yet their sustainable growth is frequently constrained by informal financial practices and suboptimal cash management. This empirical study investigates the partial and simultaneous effects of digital payment adoption (Quick Response Code Indonesian Standard [QRIS], mobile banking, and e-wallets) and financial literacy on the effectiveness of cash management among MSME entrepreneurs in Medan Deli District, Medan City, North Sumatra, Indonesia. Employing an explanatory associative quantitative survey design, empirical data were gathered through structured 5-point Likert scale questionnaires administered to a representative sample of 100 MSME owners calibrated using the Slovin formula from a target population of 4,003 registered micro-enterprises across five sub-districts (Kota Bangun, Titipapan, Tanjung Mulia, Tanjung Mulia Hilir, and Mabar). Instrument testing confirmed robust construct validity across all 30 items via Pearson Product-Moment correlation (r-count ranging from 0.278 to 0.787, exceeding r-table = 0.196 at p < 0.05) and high internal consistency via Cronbach's Alpha (digital payment adoption α = 0.877; financial literacy α = 0.861; cash management effectiveness α = 0.903). Econometric diagnostics satisfied classical assumptions, demonstrating residual normality via the Kolmogorov-Smirnov test and bell-shaped histogram, absence of multicollinearity (Tolerance = 0.412 > 0.10; VIF = 2.430 < 10.00), and homoscedastic residual variance (Glejser p = 0.094 for digital payment; p = 0.182 for financial literacy). Multiple linear regression analysis generated the empirical model: Y = 3.453 + 0.432X₁ + 0.599X₂ + e. Partial hypothesis testing (t-test) revealed that digital payment adoption exerts a positive and statistically significant effect on cash management effectiveness (t-count = 4.539 > t-table = 1.984; p < 0.001; standardized β = 0.366), demonstrating that digitized transaction channels streamline cash inflow tracking, eliminate physical cash handling risks, and reduce transaction friction. Furthermore, financial literacy exerts a positive and statistically significant influence on cash management effectiveness (t-count = 6.775 > t-table = 1.984; p < 0.001; standardized β = 0.547), indicating that cognitive financial competence represents the dominant predictor governing budgeting discipline, cash flow forecasting, and working capital solvency. Simultaneously, the ANOVA F-test confirmed that digital payment adoption and financial literacy jointly exert a profound, statistically significant effect on cash management effectiveness (F-count = 138.115 > F-table = 3.090; p < 0.001). The coefficient of determination (R² = 0.740; Adjusted R² = 0.735; Pearson R = 0.860) indicates that 74.0% of the variance in MSME cash management effectiveness is directly explained by the combined predictors, leaving 26.0% governed by external factors such as enterprise age, access to formal bank credit, and market competition. In conclusion, digital payment technology and financial literacy operate synergistically to professionalize informal enterprise accounting. Consequently, municipal governments, banking institutions, and merchant fintech providers should coordinate targeted financial education workshops and QRIS merchant onboarding to enhance grassroots economic sustainability
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DOI: https://doi.org/10.46576/prosundhar.v6i0.627
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