<![CDATA[The development of digital technology is driving the transformation of payment systems toward more efficient methods, requiring small and medium enterprises (SMEs) as the backbone of the national economy to adapt in order to maintain competitiveness and financial management efficiency. This study examines the role of payment digitalization and payment system innovation in the financial management of SME Dapur Gizi Keripik Lumba-Lumba in Malang City, which previously relied on manual bookkeeping and cash transactions. Based on Rogers' (2003) diffusion of innovation theory, this study aims to describe the implementation of payment digitalization, identify the forms of payment system innovation applied, and analyze their role in the effectiveness of SME internal financial management. A descriptive qualitative approach with a constructivist paradigm was employed, through in-depth interviews, observation, and documentation during the period of January–February 2026, involving four informants selected through purposive and snowball sampling techniques. Data analysis followed the Miles and Huberman model, accompanied by source and method triangulation. The findings reveal that this SME has adopted QRIS and mobile banking since July 2025, with the proportion of digital transactions reaching 60–65% of total daily transactions. These innovations have had a positive impact on transaction recording accuracy, real-time cash flow monitoring, and the reduction of cash loss risks. However, financial management remains semi-manual and is constrained by internet network instability as well as the absence of a separation between business and personal bank accounts. The study concludes that payment digitalization plays a positive role in improving the quality of SME financial management, although strengthening technological infrastructure and digital literacy is still needed to fully optimize its benefits.]]>
