Across Southeast Asia, digital payments have evolved from a convenience to a necessity. Yet, for all the progress, it’s hard to ignore that the region’s payments landscape still feels fragmented. Each market has its own ecosystem, distinct QR systems, settlement rails, and regulatory frameworks that don’t always talk to one another. The result is that while consumers are becoming more digital, businesses, particularly SMEs, continue to face unnecessary friction.
This fragmentation isn’t due to a lack of innovation. In fact, the region is teeming with fintech creativity. Rather, the problem lies in interoperability, or rather, the lack of it. A payment experience that works seamlessly in Singapore may feel clunky in Indonesia or Thailand. A small merchant might accept e-wallet payments locally but struggle to receive or reconcile payments from a neighboring country. For a region that prides itself on connectivity, the irony is that money still doesn’t move as freely as people or goods do.
Closing the gaps that slow down growth
One of the biggest casualties of this fragmentation is time. SMEs, which make up over 90 per cent of all businesses in ASEAN, often juggle multiple payment providers, each with different settlement times, currencies, and fee structures. For them, delayed or incomplete reconciliations don’t just cause operational headaches; they impact cash flow, confidence, and the ability to grow sustainably.
While cards remain a popular acceptance method, they’re also among the most expensive, and in Southeast Asia, where credit card penetration is still relatively low, this limits reach. True growth will require payment options that are not only fast and secure but also affordable and accessible to the majority of consumers.
This is where fintechs, regulators, and financial institutions need to work in closer sync. Payment infrastructure should not be a patchwork of competing systems but a foundation for growth. We’ve already seen encouraging examples: cross-border QR linkages between Singapore and Malaysia, Thailand and Indonesia, and the broader ASEAN Payment Connectivity initiative. These efforts prove that collaboration, not competition, is the real accelerator. But progress must be consistent; SMEs don’t benefit if the system works beautifully in one corridor but breaks down in the next.
Making AI work for people, not headlines
It’s impossible to talk about payments without touching on artificial intelligence. AI has become the buzzword of the decade, but we’ve reached a point where the conversation needs to mature. The immediate real value of AI in fintech isn’t about building futuristic systems; it’s about making existing ones smarter, safer, and faster for business owners and end consumers.
For example, AI can help detect anomalies long before they become fraud losses, automate reconciliation for small businesses that can’t afford finance teams, and predict cash flow trends that help merchants make better decisions. It can make KYC easier in areas with low literacy and reach. These are not flashy use cases; they’re practical, people-centric ones. When applied responsibly, AI can reduce the manual burden that slows SMEs down and build confidence in digital transactions. It can help level the playing fields for the smaller players.
That confidence is critical because digital trust remains the currency of growth. We take, for example, the Unified Payments Interface (UPI) in India, where the digital payments ecosystem has matured into one of the most successful in the world. What made this possible wasn’t just technology, but a foundation of trust built over time through reliability, speed, and transparency. The collaboration between government, banks, and payment providers created a seamless, inclusive system that gave both consumers and merchants the confidence to move away from cash.
UPI’s journey demonstrates how trust, when combined with innovation and accessibility, can transform an entire economy’s relationship with digital payments. I believe Southeast Asia can draw on those lessons while shaping its own model, one that respects the region’s diversity but moves towards shared standards.
The promise of alternative payment methods
Another piece of the puzzle lies in alternative payment methods, or APMs, from QR codes and e-wallets to emerging account-to-account solutions. These tools have democratized access to digital finance by giving consumers and small merchants affordable, digital-first options. But beyond convenience, APMs are reshaping the very idea of trust in payments.
When customers pay through an e-wallet or QR linked to their bank account, and the transaction clears instantly, it reinforces the idea that digital payments work. For SMEs, this trust translates into loyalty, repeat purchases, and healthier cash flow. When money comes in faster, operations run smoother, and business growth becomes more predictable. Yet for APMs to reach their full potential, we need continued investment in improving their experience, drive standardization and education, ensuring merchants understand not just how to accept digital payments, but also gain the tools and know-how to use them confidently for simplified, sustainable growth.
Building a region that moves together
The future of payments in Southeast Asia doesn’t hinge on any single innovation. It depends on whether we can align the systems, policies, and mindsets that shape how money moves. The goal isn’t simply to digitize transactions; it’s to make digital payments so intuitive, reliable, and inclusive that they become invisible to end consumers.
That means strengthening infrastructure, investing in cybersecurity, and ensuring AI and data are used ethically and transparently. It also means making it easier for SMEs, the backbone of this region, to plug into the digital economy without friction.
The last few years have shown us what’s possible when collaboration replaces silos. The next step is to build on that momentum, creating a payments landscape that reflects not just Southeast Asia’s innovation, but its interconnectedness.
Because when payments move seamlessly, so do ideas, opportunities, and growth.
Angad Dhindsa is Head of Southeast Asia, Razorpay Singapore.
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Featured image: Phillip Flores on Unsplash
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