Cambodia’s national blockchain-based payment system, Bakong, has witnessed a significant surge in usage, with payment volumes increasing three-fold over the past year. Recent data reveals that the platform’s transaction volumes in 2024 accounted for approximately 330% of Cambodia’s gross domestic product (GDP), reflecting substantial growth from previous years. This increase follows the release of an annual report by the National Bank of Cambodia (NBC), highlighting Bakong’s expanding role in the financial ecosystem.
Initially launched in 2019, Bakong has progressively integrated into the country’s financial system. While often likened to a central bank digital currency (CBDC), the NBC describes it as a tokenized deposit platform since all balances are backed by funds held in traditional bank accounts.
User Metrics and Merchant Adoption
According to the NBC report, there are currently 30 million Bakong wallets in circulation. However, this figure has raised some concerns as it nearly doubles Cambodia’s population. The central bank clarified that payment providers can manage multiple wallets under a single bank account, often supporting thousands of wallets. Therefore, NBC considers the number of active Bakong accounts, which stands at 642,500, to be a more accurate representation of the platform’s growth.
Merchant adoption has also experienced a notable uptick. Over 4.5 million merchants in Cambodia now accept Bakong payments, driven by several strategic initiatives. Lower transaction fees compared to conventional payment systems, rapid settlement times, and enhanced interoperability have contributed to this widespread adoption. Additionally, the implementation of a standardized QR code has further simplified Bakong’s payment processes for merchants and consumers alike.
Transaction Growth and Cross-Border Usage
In 2024, Bakong processed transactions valued at approximately $104.81 billion across 608 million transactions. This represents a 95% increase in transaction volume compared to 2023. Notably, cross-border payments and tourist-related transactions have shown considerable growth, indicating Bakong’s rising prominence beyond domestic use.
Initiatives to Drive Adoption
NBC has introduced various initiatives to further promote Bakong adoption. One significant effort is the introduction of a mobile payment system for tourists, launched in mid-2024. This system has contributed to the platform’s growing user base and increased transaction volumes.
Additionally, Bakong is being utilized as a tool to counter the dollarization of Cambodia’s economy. NBC encourages cross-border transactions and tourist payments to be conducted in the Cambodian riel rather than the U.S. dollar. The central bank believes that fostering the use of local currency through Bakong will strengthen the country’s monetary sovereignty and national identity.
Global Digital Payment Market Forecast
Meanwhile, a recent report from Astute Analytica predicts that the global digital payments market will reach a value of $712 billion by 2033. The industry is expected to grow at a compound annual growth rate (CAGR) of 21.80%, up from its current valuation of $122.32 billion.
Factors contributing to this growth include increasing mobile phone penetration in densely populated regions and a surge in internet adoption. The number of internet users worldwide reached 5.30 billion in the past year, supporting the proliferation of digital payment platforms.
Financial inclusion initiatives in emerging markets are also driving digital payment adoption. Between 2014 and 2021, the percentage of adults using digital payments in developing economies increased from 35% to 57%.
E-Commerce and BFSI Sector Impact
The growing adoption of e-commerce continues to be a major factor driving the digital payments market. Developed countries are leading the trend, while emerging markets are also experiencing steady growth in online transactions.
By 2033, the Banking, Financial Services, and Insurance (BFSI) sector is projected to dominate the digital payments landscape, holding a 23.1% market share. Bank cards are expected to remain the most widely used payment method, followed by account-to-account transfers and blockchain-based payment solutions.
Mobile wallets and biometric authentication are anticipated to gain traction, with advancements in artificial intelligence (AI) and machine learning enhancing anti-money laundering (AML) measures and user personalization.
Regional Growth and Challenges
North America and the U.S. are forecasted to maintain a significant lead in market share. However, the highest growth rates are expected to emerge from Asia and Latin America, driven by increasing financial inclusion and digital innovation.
Despite the optimistic projections, challenges remain for the industry. Lack of consumer trust remains a significant barrier to financial technology adoption. Blockchain solutions are viewed as a potential remedy to address transparency and security concerns. Additionally, limited financial literacy in some regions hinders the widespread adoption of digital payments. Governments are responding by allocating funds for educational initiatives, often in conjunction with the rollout of CBDCs and other digital payment systems.
With the continued expansion of platforms like Bakong and the anticipated global growth of digital payments, the financial landscape is poised for a transformative shift in the coming years.
