The evolving payment landscape in Southeast Asia

June 23, 2022


Filippo Giachi

SVP – Asia Pacific

Southeast Asia’s Internet economy is forecast to grow to US$360 billion by 2025, according to a study by Alphabet’s Google, Temasek, and Bain. However, of the 670 million people in the region, only 27% of the population have bank accounts. This sizable gap in traditional banking penetration has resulted in at least 438 million unbanked individuals with no bank account, credit or debit card, or access to lines of credit in the Southeast Asian region. It is no surprise that the region has become a hotspot for digital payments and financial services —making it an ideal region for payment companies to double down.

As a result of changing consumer and retail trends and more inclusive payment options, IDC, in its 2021 report, foresees e-commerce spending to rise by 162% to reach US$179.8 billion by 2025 across the region, with digital payments accounting for 91% of transactions. The report also highlighted that the e-commerce market will become more accessible, with 188.6 million new users by 2025. The largest markets for e-commerce payments are forecast to be Indonesia (US$83 billion), Vietnam (US$29 billion), and Thailand (US$4 billion). From 2020 to 2025, mobile wallets and BNPL in the region are expected to grow by 30% and 58%, respectively. Indonesia is predicted to welcome over 100 million new mobile wallet users by 2025. Regional players like Grab and GoJek have been aggressively offering buy now pay later services since 2019. Lending had, however, come under pressure during the pandemic with the increased risk of defaults.

Earlier this month, Stripe announced that Stripe Terminal is live in Singapore. Stripe Terminal is an omnichannel payments solution that combines APIs, SDKs, and card readers for merchants to build custom checkout experiences, both in-person and online, at scale.

And Ant Group has just announced the launch of Alipay+ Unified Payment. This primary product upgrade provides a unified, scalable technical solution to help online and brick-and-mortar merchants collect money through all digital payment methods supported by Alipay+ more conveniently and effectively. Brick-and-mortar merchants integrate Alipay+ Unified Payment by adopting a unified QR code scheme and scan-to-pay services, which can accept all digital payment methods enabled by Alipay+.

Indonesia’s Xendit, which bills itself as Southeast Asia’s alternative to payments processing platform Stripe, has raised US$300 million in preparation for regional expansion. Xendit had processed US$15 billion in revenues across Indonesia and the Philippines over 2021, up from US$6.5 billion the year before. Xendit is now expected to launch in Thailand and Vietnam.

Mobile wallet payments for eCommerce transactions will rise from 19% in 2020 to 27% by 2025, making this payment method a significant force shaping the future payment landscape in the region. Mobile wallets are crucial in facilitating online and offline purchases for SEA consumers in the absence of cards and point-of-sale devices at brick-and-mortar outlets. Mobile wallets are still bound mainly by smaller transaction limits, unlike online banking payments, making them unsuitable for large ticket purchases. Several local and international players offer mobile wallet platforms, many of which are tied to larger digital ecosystems such as eCommerce or ride-hailing platforms.


The rapid customer shift to new and emerging payment methods and the speed at which new payment types are being introduced make it challenging for merchants to adapt. Confounding this is the need to offer a range of payment options to diverse market segments – from the unbanked to the highly banked – to expand potential market coverage and customer base. Adding to the complexity are differing payment interfaces, such as online merchant stores, marketplaces, and social commerce platforms.

Merchants will need to be flexible and agile with how they support payments to optimize their payment strategy to gain a competitive advantage and seek a payment partner that can help shape their payment acceptance strategy. An IDC 2021 Asia Pacific survey found merchants could expect an average 10% increase in sales when adding a single new popular payment method. Hence, providing a range of payment types that are in tune with customer needs can help boost the bottom line. Merchants, however, will need to address security, transaction speed, and reliability issues in the payment experience.

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