diff --git a/README.md b/README.md
index 3db6ca3..58c4852 100644
--- a/README.md
+++ b/README.md
@@ -18,8 +18,7 @@ mechanism.
 ### By mounting a volume
 
 Clone the repository, mount its directory as a volume into
-`/docker-entrypoint-initdb.d` and declare database names separated by commas in
-`POSTGRES_MULTIPLE_DATABASES` environment variable as follows
+`/docker-entrypoint-initdb.d` and declare database names separated by commas and each entry with database, user and password separated by double colon in `POSTGRES_MULTIPLE_DATABASES` environment variable as follows
 (`docker-compose` syntax):
 
     myapp-postgresql:
@@ -27,9 +26,10 @@ Clone the repository, mount its directory as a volume into
         volumes:
             - ../docker-postgresql-multiple-databases:/docker-entrypoint-initdb.d
         environment:
-            - POSTGRES_MULTIPLE_DATABASES=db1,db2
+            - POSTGRES_MULTIPLE_DATABASES=db1:user:pwd,db2:user:pwd
             - POSTGRES_USER=myapp
             - POSTGRES_PASSWORD=
+            - POSTGRES_DB=db
 
 ### By building a custom image
 
@@ -48,10 +48,11 @@ to the container:
             - POSTGRES_MULTIPLE_DATABASES=db1,db2
             - POSTGRES_USER=myapp
             - POSTGRES_PASSWORD=
+            - POSTGRES_DB=db
 
 ### Non-standard database names
 
 If you need to use non-standard database names (hyphens, uppercase letters etc), quote them in `POSTGRES_MULTIPLE_DATABASES`:
 
         environment:
-            - POSTGRES_MULTIPLE_DATABASES="test-db-1","test-db-2"
+            - POSTGRES_MULTIPLE_DATABASES="test-db-1:user:pwd","test-db-2:user:pwd"
diff --git a/create-multiple-postgresql-databases.sh b/create-multiple-postgresql-databases.sh
index aa665fa..b582883 100755
--- a/create-multiple-postgresql-databases.sh
+++ b/create-multiple-postgresql-databases.sh
@@ -4,12 +4,15 @@ set -e
 set -u
 
 function create_user_and_database() {
-	local database=$1
-	echo "  Creating user and database '$database'"
-	psql -v ON_ERROR_STOP=1 --username "$POSTGRES_USER" <<-EOSQL
-	    CREATE USER $database;
-	    CREATE DATABASE $database;
-	    GRANT ALL PRIVILEGES ON DATABASE $database TO $database;
+    local dbinfo=$1
+    IFS=":" read -r database user password <<< "$dbinfo"
+
+    echo "Creating database '$database' with user '$user' and password '$password'"
+    psql -v ON_ERROR_STOP=1 --username "$POSTGRES_USER" <<-EOSQL
+      CREATE USER $user;
+      ALTER USER $user WITH ENCRYPTED PASSWORD '$password';
+      CREATE DATABASE $database;
+      GRANT ALL PRIVILEGES ON DATABASE $database TO $user;
 EOSQL
 }