Impact of Financial Literacy on Digital Payment Adoption and Investment Decision-Making Among Small-Scale Vendors: Evidence from Delhi-NCR

Abstract

This research investigates the multidimensional impact of financial literacy on digital payment adoption and investment decision-making among 450 small-scale vendors in Delhi-NCR using structural equation modeling (SEM). Over an 18-month period (January 2023–June 2024), data was systematically collected and analyzed using confirmatory factor analysis, path analysis, and multi-group moderation testing. The study reveals that financial literacy exerts a substantial direct effect on digital payment adoption (β = 0.68, p < 0.001), accounting for 32% of variance in adoption behaviour. Furthermore, digital financial inclusion serves as a critical mediating mechanism, accounting for 39% of the indirect effect of financial literacy on investment behaviour. The research identifies important demographic differences, particularly with female vendors (β = 0.75) and those with higher education (β = 0.72) demonstrating significantly greater sensitivity to financial literacy interventions compared to their counterparts. Model fit indices confirm excellent specification: CFI = 0.921, TLI = 0.912, RMSEA = 0.062, and SRMR = 0.058. These findings provide empirical validation for theoretical propositions regarding knowledge-behaviour pathways in financial inclusion while offering actionable insights for policymakers, financial institutions, and development organizations.