Mobile Payment Innovation and Performance of Micro and Small Enterprises in Kwale County, Kenya

Mobile payment innovation has emerged as an important tool for improving the performance of micro and small enterprises (MSEs) by streamlining transactions, record keeping, customer interactions, and time management. However, its specific contribution is often overlooked because it is commonly studied as part of the broader mobile money ecosystem. This study isolated mobile payment innovation and examined its effect on MSE performance in Kwale County, Kenya, a semi-rural coastal county with the country’s lowest business survival rate and uneven adoption of digital payment technologies. Guided by the Technology Acceptance Model and the Resource-Based View, the study proposed that mobile payment innovation enhances enterprise performance when it is perceived as useful, easy to use, secure, and reliable. Using a positivist philosophy and an explanatory cross-sectional design, data were collected through structured questionnaires from 401 MSE operators selected across Kwale County’s five sub-counties, achieving a 97.8% response rate. The results indicated a strong positive perception of mobile payment innovation (mean = 4.35, SD = 0.49) and a strong positive correlation with MSE performance (r = .836, p < .001). Regression analysis further showed that mobile payment innovation significantly and positively influences MSE performance (B = .764, β = .836, p < .001), explaining 69.8% of performance variation (R² = .698). Consequently, the null hypothesis was rejected. The study concludes that mobile payment innovation is more than a convenient transaction method; it enhances performance by reducing cash-handling risks, improving operational efficiency, increasing customer satisfaction, and supporting business growth. The study recommends strengthening digital payment literacy and expanding merchant-focused payment infrastructure, especially in the coastal counties, in Kenya.