At the heart of Cambodia's e-commerce success story lies the rapid adoption of digital payments. The country has witnessed a significant shift in consumer behavior, moving away from a cash-based economy towards a more digital-first approach. This transition has been facilitated by a number of factors, including a young, tech-savvy population, rising smartphone penetration, and strong government support for the digital economy.
The National Bank of Cambodia (NBC) has been a key player in this transformation, actively promoting financial inclusion and the use of the local currency, the Khmer riel, through innovative digital solutions. The numbers speak for themselves: in 2023, there were 19.7 million registered e-wallet accounts in Cambodia, and the value of digital payment transactions reached a staggering US$75.8 billion, equivalent to 2.4 times the country's GDP. This indicates a strong and growing appetite for digital financial services that complement the burgeoning e-commerce sector.
A cornerstone of Cambodia's digital payment infrastructure is the Bakong system, a blockchain-based, real-time digital payment platform introduced by the NBC. Bakong has revolutionized the way Cambodians transact, enabling seamless and secure fund transfers between different banks and financial institutions. By the first half of 2024, the Bakong system had already processed an impressive 175.3 million transactions, totaling US$54.8 billion.
The Bakong system has not only facilitated domestic transactions but has also expanded its reach across borders. The NBC has forged partnerships with international players like Alipay+, Malaysia's Maybank, and South Korea's JB Financial Group, strengthening cross-border payment capabilities. This has been further bolstered by the integration of Bakong with payment systems in neighboring countries like Thailand, Laos, and Vietnam, allowing for convenient QR code-based payments for tourists and businesses alike.
Another key innovation driving e-commerce growth is the introduction of KHQR, Cambodia's standardized QR code payment system. KHQR has gained widespread public trust and adoption, with over 3.3 million merchants accepting payments through this system. In 2023 alone, KHQR recorded 601.3 million transactions, with a total value of US$75.8 billion, a testament to its popularity and convenience.
The beauty of KHQR lies in its simplicity. It allows users to make payments by scanning a single QR code, regardless of which bank or financial institution they use. This interoperability has been a game-changer, making it easier than ever for both consumers and merchants to embrace digital payments.
The impact of this digital payment revolution on Cambodia's e-commerce market has been nothing short of transformative. According to a recent report by Profitence, a corporate finance firm, Cambodia's e-commerce market grew at a compound annual growth rate (CAGR) of approximately 13% between 2020 and 2024, reaching a value of US$1.51 billion in 2024. The report projects that this growth will continue, with the market expected to reach US$1.81 billion by 2029.
This growth is not only driven by the ease of digital payments but also by a thriving ecosystem of e-commerce platforms. From government-backed initiatives like Cambodia Trade, which promotes locally-made products, to popular online marketplaces like Khmer24 and Facebook Marketplace, Cambodian consumers have a wide range of options to choose from. Furthermore, global e-commerce giants are also entering the market, with Alibaba's Taobao platform set to launch direct delivery to Cambodia in November 2024, further expanding the options for local consumers.
Despite the impressive progress, Cambodia's e-commerce sector still faces some challenges. These include underdeveloped logistics and delivery networks, particularly in rural areas, and the need to further enhance digital literacy among all segments of the population. However, the government and the private sector are actively working to address these issues, with initiatives aimed at improving infrastructure, strengthening regulations, and promoting digital education.
The future of e-commerce in Cambodia looks incredibly bright. The continued development of digital payment systems, coupled with a young and dynamic population and a supportive government, is creating a fertile ground for innovation and growth. As the Kingdom continues on its path of digital transformation, we can expect to see the e-commerce sector play an increasingly important role in driving economic development and creating new opportunities for businesses and consumers alike.