Bridging the Last-Mile Digital Payment Gap: Literacy, Connectivity, and MSME Adoption in Rural Leyte, Philippines

Philippine digital payments have expanded rapidly, yet business-made payments remain less digitalized than person- and government-made transactions. This study examined digital payment adoption and its associated factors among 330 micro, small, and medium enterprise (MSME) owners and managers in Hilongos and Bato, Leyte. A quantitative descriptive-correlational design was used. A bilingual, expert-reviewed questionnaire measured financial literacy, digital literacy, perceived security-risk concern, transaction-fee concern, internet connectivity, and adoption. Descriptive statistics, Pearson correlation, and one-way analysis of variance were applied. Digital payment adoption was moderate (M = 3.246, SD = 0.798). Financial literacy was high (M = 3.421, SD = 0.956), whereas digital literacy, security-risk concern, fee concern, and internet connectivity were moderate. Adoption was most strongly associated with digital literacy (r = .677, p < .001) and internet connectivity (r = .670, p < .001). Financial literacy (r = .590), perceived security-risk concern (r = .604), and transaction-fee concern (r = .605) were also significantly associated with adoption. Mean scores differed significantly across the reported business categories, with personal-service enterprises recording the highest descriptive means. The findings identify a local last-mile gap: foundational financial knowledge and willingness are present, but practical digital capability and dependable connectivity have not yet produced full operational integration. Coordinated merchant training, reliable connectivity, transparent pricing, cybersecurity education, and responsive transaction support are recommended.

digital payment adoption; MSMEs; digital literacy; financial literacy; internet connectivity; rural Philippines

1. Acopiado, I. M. A., Sarmiento, J. M. P., Romo, G. D. A., Acuña, T. R., Traje, A. M., & Wahing, G. D. (2022). Digital payment adoption during the COVID-19 pandemic in the Philippines. Philippine Journal of Science, 151(3), 1185-1196. https://doi.org/10.56899/151.03.31 [Google Scholar] [Crossref]

2. Aguilar, A., Frost, J., Guerra, R., Kamin, S., & Tombini, A. (2024). Digital payments, informality and economic growth (BIS Working Papers No. 1196). Bank for International Settlements. https://www.bis.org/publ/work1196.htm [Google Scholar] [Crossref]

3. Asian Development Bank. (2023). Measuring progress on women's financial inclusion and entrepreneurship in the Philippines: Results from a micro, small, and medium-sized enterprise survey. https://doi.org/10.22617/TCS230388-2 [Google Scholar] [Crossref]

4. Bangko Sentral ng Pilipinas. (2025). From surge to stability: Digital payments driving a steady transition - 2024 status of digital payments in the Philippines. https://www.bsp.gov.ph/PaymentAndSettlement/2024_Report_on_E-payments_Measurement.pdf [Google Scholar] [Crossref]

5. Debuque-Gonzales, M., & Corpus, J. P. P. (2024). Understanding financial inclusion in the Philippines. Philippine Journal of Development, 48(1a). https://doi.org/10.62986/pjd2024.48.1a [Google Scholar] [Crossref]

6. Demirgüç-Kunt, A., Klapper, L., Singer, D., & Ansar, S. (2022). The Global Findex Database 2021: Financial inclusion, digital payments, and resilience in the age of COVID-19. World Bank. https://doi.org/10.1596/978-1-4648-1897-4 [Google Scholar] [Crossref]

7. Department of Trade and Industry. (2025). 2024 Philippine MSME statistics. https://www.dti.gov.ph/dti-knowledge-hub/dti-statistics/ [Google Scholar] [Crossref]

8. Diepeveen, S., Long, C., Deshmukh, S., Lowe, C., Lacroix, A., & Morgan, R. (2024). Digital payments and the economic empowerment and inclusion of micro and small enterprises. ODI Global Advisory. https://odi.org/en/publications/digital-payments-and-the-economic-empowerment-and-inclusion-of-micro-and-small-enterprises/ [Google Scholar] [Crossref]

9. International Telecommunication Union. (2024). Measuring digital development: Facts and Figures 2024. https://www.itu.int/itu-d/reports/statistics/facts-figures-2024/ [Google Scholar] [Crossref]

10. OECD. (2025). Supporting informed and safe use of digital payments through digital financial literacy. OECD Publishing. https://doi.org/10.1787/21de47d1-en [Google Scholar] [Crossref]

11. OECD. (2026). Digital financial literacy core competency framework for adults in ASEAN. OECD Publishing. https://doi.org/10.1787/be938ace-en [Google Scholar] [Crossref]

12. Pesa, N. C., Agner, M. G. R., & Lacaza, R. M. (2026). Digital financial platform engagement and financial inclusion in the Philippines: Insights on AI deployment and policy implications (Discussion Paper No. 2026-03). Philippine Institute for Development Studies. https://doi.org/10.62986/dp2026.03 [Google Scholar] [Crossref]

13. Pleno, A. B. (2024). E-payment system readiness of micro business owners. Journal of Social Entrepreneurship Theory and Practice, 3(2), 59-73. https://doi.org/10.31098/jsetp.v3i2.2800 [Google Scholar] [Crossref]

14. Sy, C. M. G., & Latoja, M. A. D. (2025). Readiness of MSEs for mobile cashless payment: An emerging market city in the Philippines. DMMMSU Research and Extension Journal, 9(1), 44-62. https://doi.org/10.62960/dmmmsu.v9i1.63 [Google Scholar] [Crossref]

15. Vieira, K. M., Matheis, T. K., Lehnhart, E. R., & Tavares, F. O. (2024). Digital Financial Knowledge Scale (DFKS): Insights from a developing economy. International Journal of Financial Studies, 12(4), 120. https://doi.org/10.3390/ijfs12040120 [Google Scholar] [Crossref]

• The Indirect Effect of Liquidity and Activity on Company Value with Profitability as an Intervening Variable
• Effect of Financial Skills, Knowledge, and Attitude on The Financial Behaviour of Clergy
• A Decade of Review: Trends in Budget Execution and Financial Performance of Development Projects in Tanzania (2014/15-2023/24)
• The Influence of Pre-Project Planning on the Budget Absorption Rate of Public Funded Infrastructure Projects in Kenya a Comparative Case Study of Narok, Migori, and Kisii County Government Projects
• Assessment of Factors Influencing Digital Transformation in Hotels’ Facility Management in Abuja Metropolis, Nigeria