Digital Payment Shifting in Micro and Small Business: Economic Opportunities and Market Impacts

Abstract

This study investigates the ongoing shift toward digital payment systems among micro and small businesses (MSBs), focusing on its implications for economic growth and market transformation. As MSBs increasingly adopt digital tools for transactions, the research explores how this trend enhances operational efficiency, broadens customer engagement, and fosters integration into formal financial systems. The urgency of this research stems from the broader national and global push toward digitalisation and inclusive finance. With digital payments playing a central role in financial access and market transparency, understanding their adoption among MSBs is vital to unlocking grassroots economic potential and reducing dependency on informal cash-based systems. Focusing specifically on micro and small enterprises operating in urban and peri-urban areas of Indonesia, the study does not include medium or large businesses, nor does it provide a technical assessment of platform infrastructure. Instead, it seeks to answer two key questions: How does the adoption of digital payments influence the growth and competitiveness of micro and small businesses? And what are the wider market-level effects of digital payment integration among this segment? Employing a qualitative methodology through secondary data set, the research draws from in-depth literature review, transaction data analysis, and reports analysis of fintech service providers. It examines behavioural trends, economic outcomes, and enabling factors such as digital literacy, infrastructure access, and regulatory context. The findings reveal that digital payment adoption can increase revenue, strengthen customer trust, and improve financial accessibility. However, successful integration is contingent on affordability, user confidence, and supportive policy environments. The study concludes by recommending enhanced financial education and targeted support mechanisms to accelerate adoption among underserved groups. Future research should explore the role of gender, rural MSB participation, and long-term sustainability of digital financial behaviour in supporting innovation within the microbusiness sector