Xendit and e-commerce intelligence firm Cube have published a report forecasting that Southeast Asia’s e-commerce market will approach US$400 billion by 2031.
The report finds that as cash-on-delivery declines, payment preferences differ across markets, leaving merchants to manage different checkout requirements across the region.
Southeast Asia’s online market reached US$197 billion in 2025, meaning it would roughly double in six years, according to the Xendit Ecommerce Payments Momentum Report 2026.
Shopee, Lazada and TikTok Shop, the region’s three largest e-commerce platforms, grew a combined 33% year on year in the first quarter of 2026 after a slower 2024 and early 2025. Their quarterly net merchandise value rose to US$39 billion from US$29 billion.
About a quarter of all retail spending in Southeast Asia now takes place online, compared with about 35% in China and 10% in India.
Cash-on-delivery gives way to local payment methods
Cash-on-delivery made up about half of e-commerce transactions in 2019 and now accounts for well under a third. Between 27% and 45% of shoppers in each market say they use it much less than they did a year ago.
The report expects cash-on-delivery to fall below 25% of regional e-commerce value in 2027.
“Southeast Asia is growing exponentially, and cash no longer dominates consumer transactions. But what replaces it looks different in every market, each market has its own payments acceptance landscape, and that makes payments harder to get right just as they matter more to growth,”
said Nazim Ali, President of Xendit.
“As Southeast Asia’s ecommerce market heads towards US$400 billion, the gains will go to businesses that recognize payments as a business enabler,”
he added.
Singapore leads on cards and cross-border e-commerce
Singapore has the highest cross-border e-commerce share of the six markets at 19%, ahead of Thailand (15%), Vietnam (14%), Malaysia (12%), the Philippines (9%) and Indonesia (6%).
Across the region, consumers spend an estimated US$23 billion to US$24 billion a year with overseas sellers, about 10% of online sales.
Cube projects this to grow by 11% to 19% a year through 2030, depending on how regulation evolves.
One in three business leaders surveyed identified cross-border payments and regulatory complexity as a future concern, citing challenges such as reconciling multiple acquirers and keeping pace with changing regulations.
Singapore is also the region’s most card-reliant market, with cards used in an estimated 60% of online purchases.
The report puts e-wallets at 33% and bank transfers at 35% in Singapore, noting that both are growing but have yet to displace cards.
Payment preferences and checkout friction vary by market
Outside Singapore, preferences diverge. In Indonesia, 70% of shoppers rely on e-wallets for at least half of their online purchases, while in Thailand, 61% do the same with account-to-account transfers.
Malaysia leads the region in digital adoption at more than 80%, while GCash dominates in the Philippines.
In Vietnam, VietQR is the fastest-growing payment rail, with transaction value up 151% in 2025, according to the report.
Shoppers abandon purchases for different reasons in each market. Singapore is the only market where too many checkout steps is the top reason (26%).
In Indonesia, where four e-wallets split the market, the leading reason is an unavailable payment method (51%). This also ranks highest in the Philippines (41%) and Malaysia (31%).
Security concerns are the main reason in Vietnam (42%) and Thailand (33%).
The findings suggest that a checkout designed for one market could lead to lost sales in another.
Businesses report a payments readiness gap
Of the business leaders surveyed, 92% said offering a wide range of payment methods is important or critical to growth, yet only 12% believe their payment infrastructure is ready for the next decade.
Acceptance cost is their top concern today, ranked in the top two by 68% of respondents. Slow rollout of local payment methods when entering new markets also ranks among their top three concerns.
According to the report, a local QR or account-to-account payment often passes through a payment service provider and its acquirer before reaching the national scheme, with each step adding time and cost.
More businesses are now exploring connections that provide more direct access to local payment rails.
Fraud is also expected to become a bigger concern. Only 8% of respondents rank it among their top two concerns today, but that figure rises to 48% when they look five years ahead.
AI agents expected to start buying in 2027
More than half (53%) of Southeast Asian shoppers surveyed already use generative AI during product discovery, while 78% use it to research and compare products, ahead of search engines and review sites.
The report expects the region to see its first purchases completed by an AI agent on a shopper’s behalf in 2027.
Such transactions will require a control layer that verifies the agent and enforces the consumer’s instructions, including spending limits and restrictions on eligible merchants, before payments are processed.
Featured image credit: Edited by Fintech News Singapore, based on image by starmultikharisma via Magnific
