More than ever there is a global concern to entrench financial deepening and access to previously ignored areas considered economically unviable where majority of the micro and small enterprises operate through provision of technology based financial products and services. Financial literacy has been appreciated as a means to an end by offering skills and knowledge to change attitude and attract more potential users of agent banking. The objective of this paper was to investigate the impact of financial literacy in equipping micro and small enterprises with skills and knowledge to make informed financial decisions .The methodology of study was experimental design which randomly assigned trainees to either treatment group and control groups. Data was collected using structured questionnaire and interview schedules. The findings of this study indicated that despite intense penetration of agent banking services in the rural areas its usage is still low. Other important findings were that the majority of MSEs don’t trust the operation of this agents. The findings also indicated that financial institutions are still not serving the very poor in the society. The significance of the study finding imply that the uptake of agent banking in Kenya has not been well appreciated by the target beneficiaries who include among others the micro and small enterprises in the rural areas in Kenya who were expected to benefit from it and therefore will slow down the achievement of the millennium development goals where the country is expected to be technology based in offering goods and services to its citizenry.