Abstract:
Small and medium-sized enterprises (SMEs) are critical to Kenya’s economy, representing 98% of all businesses and
contributing 33.8% to GDP. Despite this, many rural SMEs face persistent challenges, including limited market access,
inadequate financing, and slow adoption of digital technologies. This study examined the determinants of adopting multiple
digital payment methods among SMEs in Kisii and Nyamira Counties, with a focus on digital transformation strategies and e-
commerce awareness. A mixed-methods exploratory design was employed. In the qualitative phase, interviews and focus group
discussions were conducted to inform the development of a digital platform prototype. In the quantitative phase, survey data
were collected from 104 SMEs, and chi-square tests and logistic regression analyses were applied to identify factors
influencing digital payment adoption. The findings revealed that type of business, business location, and e-commerce
awareness were significantly associated with adoption of multiple digital payment systems, with e-commerce awareness
emerging as the strongest predictor (p < 0.001). Demographic characteristics such as age, gender, and capital base were not
statistically significant. The results highlight that SMEs with higher e-commerce awareness are more likely to embrace
diversified payment methods, suggesting that digital market knowledge is a key enabler of broader technological adoption. The
study concludes that targeted e-commerce literacy training, improved digital infrastructure, and affordable technology solutions
are necessary to strengthen SME digital transformation in rural settings. These interventions can enhance financial inclusion,
expand market opportunities, and contribute to sustainable SME growth. The findings provide insights for policymakers,
development partners, and SME support organizations seeking to promote inclusive digital economies in Kenya and similar
emerging market contexts.
