Digital transformation in Vietnam: cashless payment adoption in informal family‑run and traditional market businesses

This study examines the adoption of cashless payment systems among informal family-run businesses and traditional market vendors in Vietnam, focusing on adoption readiness, organizational inertia, switching costs, and entrenched cash-based practices and their effects on businesses’ intention to adopt cashless payments. Survey data were collected from 969 valid responses from businesses in Ho Chi Minh City, and analyzed using Structural Equation Modeling. The results indicate that adoption readiness has a significant positive impact on the intention to adopt cashless payments, while organizational inertia – particularly high switching costs and strong reliance on traditional payment habits – negatively influences this intention. Switching costs and habitual use of cash are identified as the main barriers preventing small businesses from transitioning to digital payment systems. In contrast, businesses with higher readiness levels are better able to overcome inertia and successfully implement cashless payments. The study provides practical implications for policymakers and financial institutions, emphasizing the importance of reducing switching costs, improving digital payment infrastructure, and offering training and incentives to encourage adoption. Overall, the research contributes to the literature on digital payment adoption in small enterprises in developing economies and offers valuable insights for promoting financial inclusion and digital transformation in Vietnam’s informal sector. This study contributes by identifying key barriers and success factors in small businesses’ digital transformation toward cashless payments and by offering actionable recommendations to support sustainable adoption within the digital economy.