Southeast Asia (SEA) is rapidly cementing its position as a global leader in digital commerce, with its e-commerce market projected to skyrocket to $325 billion by 2028.
This surge is largely driven by the explosive adoption of digital payments and increasing regional interoperability, paving the way for unprecedented growth in cross-border trade.
The latest IDC InfoBrief, How Southeast Asia Buys and Pays, commissioned by 2C2P and Antom, highlights the evolving payment landscape across six major SEA markets – Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam – and provides crucial insights into how businesses can position themselves to capitalise on this digital revolution.
By 2028, digital transactions will account for 94% of all e-commerce payments in SEA, with mobile wallets and domestic payment methods leading the charge.
This shift is fuelled by increasing smartphone penetration, government-backed real-time payment (RTP) initiatives, and growing consumer preference for seamless, cashless transactions.
Key Trends Driving Digital Payment Growth:
Mobile Wallets Dominate: Mobile wallets are now the preferred payment method in Indonesia, Malaysia and Vietnam. Even in Singapore and the Philippines, where traditional banking infrastructure is stronger, mobile wallets rank as the second most accepted form of payment.
Domestic Payments Take Over: In markets like Singapore and Thailand, domestic RTPs are outpacing credit cards, offering businesses lower transaction costs and real-time fund transfers. By 2028, 97.9% of SEA’s domestic payments will be digitised.
Real-Time Payments on the Rise: RTPs are expected to surpass $11 trillion in transaction value by 2028, with countries like Singapore leading adoption. Merchants that integrate RTP solutions can tap into instant, low-cost transactions, giving them a competitive edge in customer retention.
Cross-Border Commerce: The Next Frontier
Beyond domestic growth, cross-border e-commerce is emerging as a critical driver of SEA’s digital economy.
IDC projects that intra-SEA cross-border commerce will reach $14.6 billion by 2028, a 2.8x increase from 2023.
Why Cross-Border Commerce is a Game Changer:
Bigger Transactions: On average, cross-border transactions in SEA are 21% higher in value than domestic transactions, with markets like Thailand and Singapore seeing particularly high cross-border spend per customer.
Regional Payment Connectivity (RPC) Gains Traction: The RPC initiative, which includes all six major SEA economies, is streamlining cross-border transactions through interoperability agreements. This means businesses can offer seamless payment experiences across multiple SEA markets with lower fees and improved efficiency.
Merchants Unlock Higher Profits: According to the IDC report, 62% of SEA merchants engaged in cross-border sales report higher returns than domestic-only businesses. Those who optimize payment flows and address local market preferences will be best positioned to thrive.
Challenges and Strategies for Businesses Entering SEA
Despite the lucrative opportunities, entering SEA’s fast-evolving payments landscape is not without hurdles.
Some of the top challenges reported by merchants include:
Payment Integration Complexity: With each SEA market relying on different preferred payment methods, businesses must implement solutions that support multiple digital payment options across borders.
Regulatory Compliance: While regulatory frameworks like SEA’s RPC initiative and the EU’s digital payment regulations are paving the way for harmonisation, businesses must stay ahead of compliance requirements to avoid transaction delays or penalties.
Cross-Border Transaction Costs: Foreign exchange fees, payment processing costs, and varying interchange rates across SEA markets can eat into profit margins. Optimising transaction flows and working with payment providers that offer competitive cross-border rates is essential.
The acceleration of digital payments and cross-border commerce in Southeast Asia is more than a trend – it’s a fundamental shift in how businesses operate.
As mobile wallets, RTPs, and regional payment integration initiatives continue to grow, companies that embrace agility, adaptability and strategic payment optimisation will be best positioned to capture the full potential of SEA’s $325 billion e-commerce market.
For businesses looking to expand into SEA or scale their existing operations, the time to invest in digital payment infrastructure is now.
The rapid transformation of the region’s payments ecosystem presents a rare opportunity for merchants, fintech firms and global brands to establish a strong foothold in one of the world’s fastest-growing digital economies.
The post Digital payments in Asia: $325 billion in e-commerce by 2028 appeared first on Payments Cards & Mobile.
