Shopping Nears Almost 100% Cashless Era with Digital Payments Driving ASEAN E-commerce to Second Fastest Growth Globally

Southeast Asia is emerging as an “e-commerce hub” according to a report. The report titled How Southeast Asia Buys and Pays 2026: Unlocking SMEs’ Potential. IDC and 2c2p state that the ASEAN region has become the world's second fastest-growing e-commerce market, second only to India.

The region's e-commerce market is expected to grow from $156.3 billion in 2024 to $289.8 billion, or over 9.45 trillion baht, by 2029, representing an average annual growth rate of 13.2%, which is very high compared to other regions.

The report also notes that nearly all e-commerce transactions in Southeast Asia, about 97%, will transition to digital payment systems by 2029, causing cash on delivery (COD) payments to steadily decline in importance.

Focusing on Thailand, the growing e-commerce market is driven by Digital Payment methods, digital wallets, and Buy Now Pay Later (BNPL) services, with notable figures in these areas as follows.

• Thailand's e-commerce market value. is $18.4 billion, or over 600 billion baht, in 2024, with more than 52% coming from SME sales. It is expected to rise to $23 billion, about 828 billion baht, in 2026, and expand to $33 billion, roughly 1.18 trillion baht, by 2029.
• Domestic payment systems. such as PromptPay, are expected to increase their share from 25% in 2024 to 29% in 2029, matching the anticipated 29% share for Mobile Wallets, reflecting growth in daily digital payments.
• Credit and debit card payments will see a slight increase from 24% to 25%, while other payment methods.
  • such as cash or cash on delivery (COD), will decline from 19% to 12% by 2029.
  • Buy Now Pay Later (BNPL) services will account for 5% of the market.

Looking at Southeast Asia overall,

• nearly all e-commerce transactions, about 97%, will shift to digital payments by 2029, causing a continuous decline in the role of cash on delivery (COD) payments.
• Domestic payment systems are projected to grow by 104%, overtaking credit and debit cards to become the highest-value digital payment channel in the region.
• Buy Now Pay Later (BNPL) services are expected to be the fastest-growing segment in the market, with a growth rate of up to 174% by 2029.

However, despite faster e-commerce growth from digital payments, many SMEs—which form a major part of the market—still face bottlenecks and struggle to adapt, with several factors noted in the report.

• More than one-third of SME operators still rely primarily on cash. Although over 66% of SMEs have increased selling goods and services through online channels.
• 63% of SMEs believe current payment systems do not meet their needs and require improvements to accommodate changing consumer behaviors.
• For Thailand, SME operators identified high fees as the biggest obstacle, accounting for 36%, followed by concerns about fraud risk, at 28%, and system integration complexity also at 28%.

Although only 49% of Thai SMEs currently engage in cross-border trade, over three-quarters plan to expand internationally within the next two years, indicating that access to digital payment systems and cross-border infrastructure will be crucial for SME growth going forward.

Ultimately, IDC estimates that if regional SMEs gain greater access to cross-border e-commerce markets, they could generate an additional $21 billion in sales by 2029.

Source:IDC

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