The role of financial literacy and digital financial literacy in non-cash payment usage: Evidence from MSMEs in Salatiga, Indonesia

The development of digital technology urges MSMEs (Micro, Small and Medium Enterprises) or merchants to implement it. The objective of this research is to study the effects of financial literacy, digital financial literacy, and the characteristics of MSME owners or merchants or attributes of their business on the usage of non-cash payment methods by MSMEs or merchants in Salatiga City. Besides investigating the two concepts, this study also analyzes the influence of the characteristics of MSME owners or merchants and business characteristics on non-cash payment methods. Data for this research are collected using a sample of 51 respondents through a survey conducted in Salatiga, Indonesia. The technique used to analyze data is binomial regression combined with the backward elimination method. This research finds that the knowledge dimension of financial literacy, the attitude dimension of digital financial literacy, and the education level of the respondents have a positive effect on the utilization of non-cash payment methods, while the behavior and attitude dimension of financial literacy, and other MSME characteristics (gender, age, the gross total income of the family of the respondents, number of dependance in the family, the respondent role on the financial decision making, business and product type) have insignificant effect on non-cash payment usage.