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Abstract
Abstract
This research aims to determine the effect of digital payment on the financial performance of MSMEs in Tembalang with financial literacy as a mediating variable using the Structural Modeling-Partial Least Square (SEM-PLS) method with a sample of 91 respondents. Financial literacy is divided into two dimensions in this study: financial management capability and technology knowledge. The result of the study indicate that digital payment has a significant effect on the financial performance of MSMEs, and financial literacy is able to mediate the relationship between digital payment and financial performance. This study provides implications that high financial literacy can improve the financial performance of MSMEs with digital payments, and provides recommendations for MSME actors to improve financial literacy and adoption of digital payments.