Digital Payment System Adoption among MSMEs in Kedah and Perlis: Evidence on the Moderating Role of Perceived Security

This study examines the determinants of digital payment adoption among micro, small, and medium enterprises (MSMEs) in Kedah and Perlis, Malaysia. Drawing on the Technology Acceptance Model (TAM) and Information Systems Success Model (ISSM), this research investigates the effects of perceived usefulness (PU), perceived ease of use (PEOU), information quality (IQ), system quality (SYSQ), and service quality (SSQ) on digital payment adoption, with perceived security (PS) examined as a moderating variable. Data were collected from MSME respondents in Kedah and Perlis using a structured questionnaire. A total of 200 valid responses were analysed using SPSS and partial least squares structural equation modelling (PLS-SEM). The findings reveal that PEOU significantly influences digital payment adoption (? = 0.272, p = 0.006), while PU, IQ, SYSQ, and SSQ do not demonstrate significant direct effects. PS also has a significant positive direct effect on digital payment adoption (? = 0.271, p = 0.037). Furthermore, PS significantly moderates the relationships between SYSQ and digital payment adoption (? = 0.456, p = 0.019) and between SSQ and digital payment adoption (? = ?0.330, p = 0.034). However, PS does not significantly moderate the relationships between PU, PEOU, and IQ and digital payment adoption. Overall, the findings highlight the importance of ease of use and perceived security in encouraging digital payment adoption among MSMEs.