Small and medium enterprises (SMEs) form the backbone of Southeast Asia’s economy, contributing over 40% of GDPand accounting for more than 70% of employment in countries like Indonesia, Malaysia, the Philippines, Thailand, and Vietnam. Yet, despite their economic significance, many SMEs have historically relied on cash transactions, limiting their ability to access credit, automate operations, and scale efficiently.
The rapid adoption of digital wallets, projected to facilitate transactions worth $320 billion in Southeast Asia by 2025(Google, Temasek & Bain e-Conomy SEA report), is transforming this landscape. Wallets are not just enabling digital payments—they are serving as a launchpad for SME growth, offering financial access, automation, and enhanced customer engagement.
The Wallet Revolution in Southeast Asia
Digital wallets have gained significant traction due to high smartphone penetration, increasing digital literacy, and government-led financial inclusion initiatives. Players such as GrabPay, GoPay, OVO, ShopeePay, MoMo, TrueMoney, and GCash have seen widespread adoption, with Southeast Asia now home to over 500 million digital wallet users(Bain & Co, 2023).
For SMEs, the impact of wallets extends beyond convenience, driving meaningful improvements in financial access, transaction efficiency, and business automation.
1. Unlocking Financial Access for SMEs
Lack of access to formal credit remains a major hurdle for SMEs, with 51% of micro and small enterprises in the region unable to secure traditional bank loans (World Bank). Digital wallets are addressing this gap by:
- Leveraging transaction data for alternative credit scoring, allowing previously unbanked SMEs to access microloans and BNPL financing.
- Enabling embedded finance solutions, such as working capital loans and revenue-based financing, directly within wallet ecosystems.
- Partnering with financial institutions to offer instant credit lines, helping businesses manage cash flow challenges.
For instance, GCash in the Philippines has launched GCredit, a lending feature that has disbursed over ₱50 billion (nearly $900 million) in loans to SMEs and individuals who previously lacked access to traditional banking services.
2. Enabling Faster and More Efficient Transactions
In a region where cash still accounts for over 50% of transactions (Visa Consumer Payment Attitudes Study, 2023), digital wallets are helping SMEs shift to cashless payments. QR code-based payments have:
- Reduced checkout times by 40%, improving customer experience.
- Lowered operational costs by eliminating cash-handling risks and reconciliation errors.
- Enabled real-time transactions, boosting cash flow management.
Indonesia’s QRIS (Quick Response Code Indonesian Standard), which allows interoperability between multiple wallets and banks, has facilitated over $15 billion in transactions as of 2023, benefiting SMEs by simplifying digital payment acceptance.
3. Integrating with Business and Loyalty Tools
Modern wallets are evolving into business enablement platforms, offering SMEs access to:
- Loyalty and rewards programs, helping businesses increase repeat transactions by up to 25% (McKinsey, 2023).
- Automated invoicing and settlements, reducing human errors and administrative workload.
- E-commerce integrations, allowing businesses to accept seamless in-app payments on platforms like Shopee and Lazada.
A great example is ShopeePay, which provides instant cashback campaigns and in-app merchant promotions that drive both sales and brand loyalty for SMEs.
4. Driving Operational Automation
Many digital wallets now include built-in automation tools that help SMEs streamline operations:
- Payroll disbursement tools, reducing manual payout times by 60%.
- Supplier payment automation, ensuring on-time settlements with minimal intervention.
- AI-powered financial insights, helping SMEs optimize expenses and inventory.
For instance, GrabPay’s merchant dashboard allows businesses to track sales trends, monitor cash flow, and manage multiple revenue streams—all within a single platform.
5. Expanding Market Reach
Cross-border e-commerce in Southeast Asia is growing at 30% YoY (Google, Temasek & Bain, 2023), and wallets are playing a crucial role in enabling SMEs to:
- Accept payments from international customers without the complexities of FX conversion.
- Leverage super apps (e.g., Grab, GoTo) to list products and reach millions of users within an integrated ecosystem.
- Tap into government-backed digitalization programs that encourage cross-border trade.
Thailand’s PromptPay and Singapore’s PayNow, which recently integrated, allow SMEs to transact seamlessly across borders, reducing remittance costs and increasing transaction speed.
The Future of Wallets and SME Growth in Southeast Asia
As digital wallets continue to evolve, we can expect advancements in:
- Embedded finance: More sophisticated credit models and SME insurance products.
- AI-driven analytics: Predictive insights for personalized financing and marketing.
- Blockchain-powered security: Enhancing fraud prevention and transaction transparency.
Governments and fintech players must collaborate to extend wallet adoption to underserved rural areas, ensuring financial inclusion at scale. The Philippines, Indonesia, and Vietnam still have over 50 million unbanked SMEs, representing a massive opportunity for wallet-driven solutions.
A Special Focus on Taiwan
While my work has primarily focused on the Southeast Asian fintech landscape, Taiwan holds a special place in my heart due to my family connections and deep affinity for the market. Taiwan’s digital economy has been growing rapidly, and its SMEs are undergoing a similar transformation as those in Southeast Asia.
Taiwan is home to over 1.5 million SMEs, which account for 98% of all businesses and contribute significantly to employment. The government has actively promoted digitalization, with initiatives like the Digital Transformation Plan for SMEs and the “Taiwan Pay” ecosystem, fostering greater adoption of e-payments.
Unlike some Southeast Asian markets, where digital wallets are primarily driven by super apps, Taiwan’s digital wallet landscape is more diversified, with key players like JKOPay, LINE Pay, and PX Pay leading the market. As of 2023, Taiwan’s mobile payments penetration rate reached nearly 60%, showing strong adoption among both consumers and businesses.
For SMEs in Taiwan, digital wallets offer key advantages:
- Faster access to credit: Platforms like JKOPay offer microloans and BNPL solutions to help SMEs manage cash flow.
- Integration with supply chain financing: Helping merchants streamline B2B transactions.
- Government-backed digital incentives: Programs such as Triple Stimulus Vouchers, which encouraged digital spending, played a major role in shifting consumer behavior toward e-wallets.
Given my personal connection to Taiwan, I see a tremendous opportunity for digital wallets to further accelerate SME digitalization, particularly in cross-border e-commerce, as Taiwan-based businesses increasingly engage with Southeast Asian markets.
Summary:
The digital wallet revolution in Southeast Asia and Taiwan is not just about payments—it’s about enabling SMEs to automate operations, access credit, and expand their market reach. The intersection of wallets, AI, and embedded finance will define the next phase of SME digitalization, creating a more inclusive, efficient, and growth-orientedfinancial ecosystem.
Given my deep professional and personal interest in these markets, I am keen to see how digital wallets will continue to evolve and shape the future of SMEs.