Southeast Asia's E-Commerce Set to Hit $400 Billion by 2031
Southeast Asia's e-commerce market is projected to nearly double, reaching $400 billion by 2031, as payment preferences shift across the region.
A recent report by Xendit and Cube has highlighted that Southeast Asia's e-commerce sector is on track to approach $400 billion by the year 2031.
With a remarkable market value of $197 billion in 2025, it is anticipated to double in size within just six years. This rapid growth is underscored in the Xendit Ecommerce Payments Momentum Report for 2026.
Growth of Major E-Commerce Platforms
The region's top three e-commerce platforms—Shopee, Lazada, and TikTok Shop—reported a substantial year-on-year growth of 33% in the first quarter of 2026. They saw an increase in their quarterly net merchandise value, rising from $29 billion to $39 billion.
Shift from Cash to Digital Payments
Traditionally, cash-on-delivery comprised around half of e-commerce transactions in 2019; however, this has recently decreased to less than a third. Data reveals that between 27% to 45% of consumers are now opting for alternative payment methods, reflecting a notable decline in reliance on cash.
Experts predict that by 2027, cash-on-delivery will fall below 25% of e-commerce transactions in the region. Nazim Ali, President of Xendit, remarked, "Southeast Asia is growing exponentially. Cash is no longer the dominant transaction method, and the replacements differ by market, which adds complexity to payment processes across the board. Businesses that appreciate the role of payments as a growth catalyst will reap the benefits as the market expands towards $400 billion."
Distinct Payment Preferences by Country
Across Southeast Asia, payment preferences vary significantly from one country to another. Singapore leads in cross-border e-commerce, with 19% of online sales directed toward international sellers, surpassing Thailand (15%) and Vietnam (14%).
The report observes that consumers in the region collectively spend approximately $23 billion to $24 billion annually on overseas purchases, accounting for 10% of all online sales. This figure is expected to grow at an annual rate of 11% to 19% through 2030, contingent on regulatory developments.
In Singapore, credit cards comprise around 60% of online transactions. Meanwhile, e-wallets and bank transfers are gaining traction, accounting for 33% and 35% respectively.
Barriers to a Seamless Checkout Experience
However, payment behaviors differ beyond Singapore. In Indonesia, e-wallets are favored by 70% of consumers for a majority of their online shopping, while Thai shoppers similarly prefer account-to-account transfers. Malaysia showcases the highest digital adoption rate in the region, exceeding 80%, with GCash notable in the Philippines.
Interestingly, Vietnam's payment platform, VietQR, is emerging quickly, with its transaction value growing by 151% in 2025. Yet, checkout challenges vary by location, with Singaporeans often deterred by an excessive number of steps at checkout, whereas Indonesian shoppers frequently abandon carts because their preferred payment methods are unavailable.
Business Readiness and Future Trends
A significant 92% of surveyed business leaders echoed that having a diverse range of payment options is critical for growth; however, only 12% believe their current payment infrastructure is prepared for the upcoming decade. A mere 68% ranked high acceptance costs as a leading concern, while others highlighted the slow launch of local payment methods as a barrier to entry in new markets.
Additionally, fraud is becoming a rising concern. While only 8% currently prioritize this issue, the number jumps to 48% when looking five years ahead, highlighting a need for vigilance.
Generative AI in E-Commerce
Looking ahead, over half of Southeast Asian consumers are already utilizing generative AI for product discovery tasks, with 78% employing it for research and comparisons, positioning it ahead of traditional search engines and review platforms. By 2027, the report anticipates that AI will start completing purchases on behalf of consumers, marking a new frontier in online shopping.
In summary, as Southeast Asia forges ahead in its e-commerce journey, the shift towards digital payment methods and innovations like generative AI stands poised to transform the consumer experience dramatically.
