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Five factors to drive e-payments growth in Southeast Asia Listen with ReadSpeaker

Five factors to drive e-payments growth in Southeast Asia

The buzz is palpable. Expectations are intensifying. Contactless payment volumes are skyrocketing. Southeast Asia’s blossoming love affair with cashless transactions is evident everywhere. Store counters from Bangkok to Bandung and Penang to Phnom Penh present an array of branded QR code options. So do online marketplaces.

On sidewalks, trains and buses, colorful ads offer cash bonuses and brand partner promotions to entice mobile wallet application downloads. Even before the pandemic, a cashless future appeared to be unfolding across the region.

The statistics suggest this to be true. Forecasts differ but the general trajectory for cashless uptake is upward. For example:

  • Almost 70 percent of the 443 million people in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam will be digital consumers in 2020 (Bain & Co/Facebook)
  • 84 percent of Southeast Asia urban consumers are predicted to use e-wallets by 2025 (BCG)
  • Digital payments in the region are projected to reach USD 1 trillion by 2025 (Google/Temasek)

Behind the headline figures, however, a fierce battle is underway to build loyalty among cashless customers who frequently switch between payment formats. Consequently, the digital payments landscape is becoming increasingly dynamic.

Here are five emerging factors for businesses to consider as Southeast Asia propels itself towards cash-free living.

Digital payments have been gaining momentum across the region in recent years. Adoption rates vary among the ten different markets, but a notable driver has been the expansion of annual online shopping festivals.


Desirable, time-limited promotions enticed more people to try e-wallet buying and secure big discounts. Mobile group purchasing and social commerce apps also demonstrated the convenience and flexibility of non-cash settlement. These factors served to stimulate domestic e-payments and made it easier to order and pay for consumer products from markets like China, Japan and South Korea.


While consumers have become comfortable transacting digitally, in-store e-purchases were slower to catch up. However, the arrival of Chinese QR code apps like Alipay and WeChat Pay created a push factor. Initially, these two payment apps tracked Chinese travelers in airports and duty-free shopping outlets.


Before long, they extended into malls, brand stores and restaurants. They became more visible throughout the consumer journey as local e-wallet providers introduced an array of homegrown alternatives.



  • Alipay and WeChat Pay helped build scale for cross-border e-payments
  • Before the pandemic, both these QR code payment formats were expanding in Southeast Asia
  • Dominant Chinese mobile payments companies such as the Ant Group will likely be important players in the region

A clear shift to mobile shopping occurred during lockdowns enhanced by the ease and convenience of virtual payment. Groceries and food deliveries, health and beauty, mother and baby, and technology products were among the segments to benefit in recent months.


With sanitary standards foremost in our minds, buying without touching a physical currency or debit card feels cleaner and safer. In February 2020, as COVID-19 was starting to spread across Asia, the State Bank of Vietnam even advised people to switch to e-payments rather than use coins and notes, which it said may carry bacteria.


Mandated daily use of government health screening apps also helped to build QR code confidence. Becoming accustomed to quick-scan apps, especially among less digitally convinced mature consumers, has helped customers gain trust in virtual solutions.



  • Surveys show that businesses and consumers find e-payments easier and more efficient to manage
  • Consumers seem to be widely assured of the safety and security of mobile buying
  • The scale of consumer switching to mobile payments suggests the trend will endure beyond the pandemic

Southeast Asia is a diverse region comprising ten markets of over 650 million people. Economic and social disparities are clearly drawn. So are purchasing trends and behaviors, both within and across borders. In the largest markets such as Indonesia, Philippines, Thailand and Vietnam, banking services remain off-limits to tens of millions of people.


But a unifying factor is undeniable; the desire for a mobile-first lifestyle. From clothes shopping to ride-hailing, meal orders to fitness packages and video streaming to travel booking, the digital realm is starting to dominate in urban societies.


Governments are supporting the cashless transformation to improve financial literacy and broaden access to retail services. For example, Indonesian eCommerce firm Bukalapak has partnered with China’s Ant Group and Bank Mandiri to empower food stores nationwide to facilitate cashless payments for consumers who do not have a bank account.



  • Cashless payments assist businesses to reach more potential customers
  • Simultaneously, they empower unbanked and under-served consumers to participate in consumer spending
  • By making every transaction trackable, mobile payments provide vital data about the purchasing decisions of consumers across the wealth spectrum

In recent years, aggressive investor activities saw the number of digital wallets mushroom particularly in Vietnam, Malaysia, Thailand and Singapore. Formats vary from QR code payments to hybrid pre-paid digital cards.

This has resulted in a fragmented mobile cash ecosystem. Even small stores offer various e-payment options, with customers switching frequently depending on the special discount or bonus bundle offered on a particular day.


Although the pandemic has slowed e-wallet investments, it has catalyzed e-wallet payments by consumers. With eyes on the large market that is now developing, large digital brands will likely acquire smaller e-wallets. This will likely see a consolidated market dominated by large regional and multinational investors.



  • Southeast Asia’s e-payments landscape has become highly fragmented
  • Capricious user behavior makes it hard for smaller e-payment players to build market share
  • Consequently, margins are proving tight for digital wallet providers

The next phase is to transition from e-wallet apps to full-scale digital banking solutions. This will require new legislation to be enacted in each market. Licenses for specially created digital banks will be tendered by governments. Applicants for these digital bank licenses have so far ranged from telecoms providers, super apps and insurance companies to retail and investment banks.


Upon securing a license, digital banks will be able to offer a range of virtual payment, savings and investment services to consumers. For example, Malaysia’s central bank, which has approved over 45 e-wallets in recent years, planned to award its first five digital bank licenses in 2020. This process has been delayed by the pandemic.


Singapore has also delayed awarding its first five digital-only banking licenses. In July 2020, however, it launched a Digital Acceleration Grant to support small financial institutions and fintech firms to develop new digital solutions. In the Philippines, Tonik Digital Bank, the region’s first licensed digital bank, is expected to launch in late 2020.



  • Southeast Asia’s new digital banks intend to change the way people think about managing their daily finances
  • A range of digital-only financial solutions will include consumer payments, savings, loans and investment products
  • Applying for and using these digital finance products will be managed through a smartphone