SINGAPORE - Southeast Asia's e-commerce market is projected to become the world's second fastest-growing market by 2029, fueled by rising digital payment adoption and stronger participation from small and medium enterprises (SMEs), according to a study commissioned by 2C2P by Antom.
Growth Projections
The study conducted by market intelligence firm IDC showed that Southeast Asia's e-commerce sector is expected to grow at a compound annual growth rate (CAGR) of 13.2 percent from 2024 to 2029, trailing only India. IDC projected the region's e-commerce market to expand by 85.4 percent to US$289.8 billion by 2029 as digital payments continue to dominate online transactions.
Digital Payment Dominance
The report, titled "How Southeast Asia Buys and Pays 2026: Unlocking SMEs' Potential," said digital payments are expected to account for 97 percent of total e-commerce transactions by 2029, up from 89 percent in 2024. Domestic payment systems, including real-time payments and local bank-based schemes, are expected to post the strongest growth, rising 104 percent to US$92 billion by 2029 from US$45.1 billion in 2024. Mobile wallet transactions are also projected to climb 107 percent to US$79 billion from US$38.2 billion during the same period. Buy now, pay later (BNPL) transactions are likewise forecast to surge 174 percent to US$18.9 billion by 2029 from US$6.9 billion in 2024.
Impact on Unbanked Population
The report noted that digital payment growth is helping address structural gaps in the region, where 56 percent of the population remains unbanked, according to World Bank data.
Role of SMEs
IDC also highlighted the growing role of SMEs in the region's digital economy. The study surveyed 600 SMEs across Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, and found that 66 percent of SMEs now sell online. However, the study said one-third of SMEs still rely heavily on cash transactions due to barriers such as integration complexity, fraud concerns, high fees, and infrastructure limitations.
In the Philippines, SMEs identified reducing costs, strengthening supply chains, and building brand awareness as their top priorities. The report also cited transaction errors, data integration issues, and slow settlements as among the biggest challenges faced by local SMEs.
Cross-Border Opportunities
IDC estimated that broader SME participation in cross-border e-commerce could unlock an additional US$20.8 billion in regional sales by 2029, equivalent to a 7.1-percent increase in Southeast Asia's e-commerce value.
Industry Perspective
Worachat Luxkanalode, group chief executive officer of 2C2P by Antom, said businesses in Southeast Asia continue to face challenges in navigating the region's fragmented payments landscape despite rapid e-commerce growth. "As payment ecosystems evolve rapidly across different markets, businesses of all sizes need solutions that can simplify operations, support diverse local payment preferences, and enable them to scale across borders," Luxkanalode said.
