Limiting Cash Payments by Government Will Boost Southeast Asia's Digital Economy: Report
The digital economy of Southeast Asia will surpass USD 300 billion by 2026, according to a new report commissioned by a major payments platform, 2C2P, and Merchant Risk Council (MRC), a non-profit global membership organization that offers eCommerce fraud prevention programs, risk management, and payments optimization.
Six ASEAN members, namely Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, were polled for the research "How Southeast Asia Buys and Pays: New Opportunities, Connectivity, and Risks." The goal of the study was to identify the developing possibilities, hazards, and vulnerabilities in the area.
By 2026, consumer payments in Southeast Asia are expected to account for 14% of the gross merchandise value (GMV) of the digital economy, an increase of 133% from 2021. Domestic payments will increase by 296%.
Card payments will dominate in 2026 with 93.9% of the market followed by domestic payments (89.5%) and mobile eWallets (88.3%). With alternative payments reaching 25%, the Buy Now Pay Later (BNPL) payment mechanism will be at 17%.
Several governments in Southeast Asian nations also support this potential by gradually cutting back on cash payments. As a result of restrictions on cash payments for specific government services in nations like Malaysia and Singapore, the use of cash is dropping across ASEAN.
To improve cross-border digital transactions, governments are working to connect their domestic real-time payment (RTP) rails. Major regional markets are also collaborating to build infrastructure that is future-proof for the interoperability of payment systems.
The payment options are also changing, and a few of them have become more common since the pandemic started. By 2026, there will be 426 million people using mobile wallets worldwide, or 62% of the world's population.
RTPs are becoming increasingly popular, and the most widely used platforms for these transactions are mobile banking apps. Once financial transactions are integrated over an intra-SEA (Southeast Asia) network, mobile wallets and RTPs might become even more valuable.
An alternative to cards, the BNPL payment mechanism is anticipated to grow more than three times, from USD 2.8 billion in 2021 to USD 12.6 billion in 2026. Furthermore, it is anticipated to account for 6% of online expenditure in important markets in 2026.
New laws are being put into place to protect consumers and to educate them about the dangers of using cutting-edge payment systems. They will contribute to the development of a thriving and healthy ecology for all.