Southeast Asia’s (SEA) e-commerce market is projected to grow 85.4% to $289.8 billion by 2029, making it the world’s second fastest-growing e-commerce region after India, according to a study commissioned by 2C2P by Antom and conducted by market intelligence firm IDC.
The report, “How Southeast Asia Buys and Pays 2026: Unlocking SMEs’ Potential,” said the region’s e-commerce industry is expected to post a 13.2% compound annual growth rate (CAGR) from 2024 to 2029, driven largely by digital payments and the growing participation of small and medium enterprises (SMEs).
Digital payments are expected to account for 97% of all e-commerce transactions in SEA by 2029, up from 89% in 2024.
“Businesses of all sizes need solutions that can simplify operations, support diverse local payment preferences, and enable them to scale across borders,” said Worachat Luxkanalode, Group CEO of 2C2P by Antom.
Among the fastest-growing payment methods are domestic payment systems such as real-time bank transfers and local payment schemes, which are projected to grow 104% to $92 billion by 2029 from $45.1 billion in 2024. IDC said these payment options are expected to overtake cards as the region’s largest digital payment category.
Mobile wallets are also projected to increase 107% to $79 billion by 2029 from $38.2 billion in 2024. Their share of the e-commerce market is expected to grow to 27% from 24%. Buy now, pay later (BNPL) services are forecast to post the fastest growth at 174%, reaching $18.9 billion by 2029 from $6.9 billion in 2024.
The report said the adoption of digital payments addresses long-standing financial access gaps in SEA, where 56% of the population remains uncarded, citing data from the World Bank. The study also highlighted the growing role of SMEs in the region’s digital economy. SMEs are projected to contribute 58% of SEA’s e-commerce market by 2029.
IDC surveyed 600 SMEs across Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. The survey found that 66% of SMEs now sell online, although many still face challenges in adopting digital payment systems. One-third of respondents continue to rely heavily on cash transactions because of concerns involving integration complexity, fraud risks, high transaction fees, and infrastructure limitations.
In the Philippines and Indonesia, infrastructure and connectivity remain major barriers, while businesses in Singapore and Vietnam cited security and integration concerns. Malaysian and Thai SMEs pointed to cost pressures and regulatory requirements.
The study found that 63% of SMEs believe their payment systems need upgrades to support newer payment technologies and customer demands. Cross-border commerce also remains a major growth opportunity. While only 49% of SMEs currently sell internationally, 75% said they plan to expand abroad within the next two years.
IDC estimates that broader SME participation in cross-border e-commerce could add $20.8 billion in regional online sales by 2029.
Luxkanalode said SMEs remain critical to SEA’s economy, contributing more than half of GDP in major markets and employing 64.6% of the workforce across the region.