Financial Inclusion and Mobile Payment to Empower Small and Medium-Sized Enterprises: Post-COVID-19 Business Strategy

Financial Inclusion and Mobile Payment to Empower Small and Medium-Sized Enterprises: Post-COVID-19 Business Strategy

Mia Fithriyah, Masairol Masri, Mohammad Nabil Almunawar, Muhammad Anshari
Copyright: © 2022 |Pages: 10
DOI: 10.4018/978-1-7998-8447-7.ch004
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Abstract

Despite the increasing adoption of financial technology (FinTech) and the need for secure payment methods, mobile payments as a mode of settling daily business transactions have not received sufficient attention. To date, several business actors prefer to use conventional money payment modes. However, it is apparent that the need for a more effective payment method today is considered as a basic necessity, considering the current complexity of consumers and the negative effect of COVID-19. Moreover, the crisis raised a wave of apprehension over a large number of business actors, particularly small and medium-size enterprises (SMEs). The literature search indicated that the government should implement the correct policy to help create an acceptable environment for financial transactions for both the user and providers. It is also necessary to ensure that client security and privacy rights are protected during the mobile payment transactions.
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Literature Review

Financial Technology (FinTech) and Financial Inclusion

Financial Technology (FinTech) is an industry made up of companies employ technology in transforming financial systems by delivering various financial products and services (Coffie et al, 2020). It is a breakthrough to promise accessible, affordable, and secure financial products and services for individuals and businesses. FinTech’s existence in the financial service sector allows financial service providers to offer a wide range of new services that remove intermediaries and administrative layers to make transactions more effective and less prone to error (Cumming et al, 2018). Besides, FinTech is an online platform that differs from traditional funding channels. Most obvious is that there is a huge growth of mobile banking that allows customers to perform a wide range of transactions online. Furthermore, FinTech remarkably facilitates quicker network of access to financial services to the entire transaction services, from checking financial status, making payments, withdrawing, transferring funds, etc.

Financially, SMEs need an impactful breakthrough in payment transactions to survive during the pandemic. Several studies stated that FinTech resolves payment and settlement bottlenecks through collaboration with traditional financial institutions. The adoption of FinTech successfully mitigates the failures of traditional financial institutions. It significantly supports individuals and SMEs to access bank accounts and undertake various transactions remotely (Drasch et al, 2018). FinTech services delivered via mobile phones make up for the infrastructural deficiencies restricting the delivery of financial products and services mainly to rural communities (Demirgüç-Kunt et al, 2020).

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