Unveiling the Nexus of Cryptocurrency as a Mode of Payment in the SME Sector in Sri Lanka

Abstract

State-of-the-art technology has changed virtually every aspect of global operations, prompting individuals to switch to a contemporary platform rather than traditional business processes. The evolution of payment methods has shifted more towards virtual payments than ever before, and the global spread of cryptocurrency adoption is remarkable. This study aimed to analyze the influencing factors and degree of readiness of SMEs to embrace cryptocurrency as a form of payment, with a particular focus on SMEs in Sri Lanka. The study employed a quantitative survey approach and gathered 240 responses from SMEs registered with the Chamber of Commerce and the Ministry of Industries in Sri Lanka. A self-administered questionnaire method was used to collect primary data, which were then analyzed using descriptive and inferential statistics. According to the findings, respondents were enthusiastic about using cryptocurrencies as a payment method. The study revealed that the SME sector in Sri Lanka is a breeding ground for new payment technologies, particularly among male-owned service-sector SMEs. This study further revealed that social influence and Trust go hand in hand, and that Trust has a significant impact on the adoption of cryptocurrencies, particularly in contexts where distrust in SMEs is a greater challenge and perceptions of the rule of law are strongest. The findings implied that transaction openness and more accessible information on the opaque legal issues around cryptocurrencies, particularly the distinct roles of the many regulatory authorities and platform security, should be reinforced. Regular security audits, disclosing vulnerabilities and solutions, and responding to users' complaints and inquiries must all be managed in a well-organized manner within the unorganized sector.