Cambodia’s national payment system, Bakong, has recorded impressive user metrics with volumes spiking three-fold over the last year.
According to a report, volumes on Bakong in 2024 make up 330% of Cambodia’s gross domestic product (GDP), a massive spike from previous years. The data follows the release of an annual report by the National Bank of Cambodia (NBC) detailing the steady rise of the Bakong platform.
Launched in 2019, the blockchain-based payment system has gained steady traction in Cambodia’s financial system. Widely described as a central bank digital currency (CBDC), NBC considers Bakong a tokenized deposit initiative since balances are backed by holdings in bank accounts.
Per the annual report, there are 30 million Bakong wallets in circulation. However, a closer look reveals that the figure is nearly double Cambodia’s population, sparking concerns over the available data.
The central bank clarified that one payment provider with a single bank account can support several thousand wallets. For the banking regulator, a proper metric to measure growth is the number of Bakong accounts, currently pegged at 642,500.
Another key growth metric for Bakong is the number of merchants accepting payments via the platform. The annual report disclosed that over 4.5 million Cambodian merchants accept Bakong payments, driven by several initiatives.
The biggest driver of merchant adoption is lower transaction fees compared with traditional payment alternatives. Bakong’s settlement times and interoperability with a raft of systems continue to attract more merchants to the payment platform, while a standard QR code for Bakong backs it.
The report noted a total volume of US$104.81 billion from 608 million transactions in 2024. The figure represents a staggering 95% increase in transactions from 2023 figures, with cross-border and tourist use cases spiking.
A raft of initiatives to promote Bakong
NBC has revealed a series of programs to boost Bakong adoption metrics for users, such as a mobile payment system for tourists launched in mid-2024, which is driving up user metrics for the CBDC-esque platform.
Aware of the dollarization of the local economy, NBC is turning to Bakong to promote riel use in the country. Cross-border transactions on the platform are processed in riels, while tourists are urged to transact in local currencies rather than the U.S. dollar.
“It is important that we encourage tourists to exchange for Khmer currency and use it directly, as it is easier,” said Khieu Thy, president of the Khmer Angkor Tourist Guide Association, in August last year. “This also helps reinforce our sovereignty, territorial integrity, and national identity.”
Digital payment market value set to surpass $712 billion by 2033
Meanwhile, a new report has tipped digital payments to hold a market value of $712 billion by 2033, rising by a double-digit compound annual growth rate (CAGR).
An Astute Analytica report says the global digital payments market value will reach the $712 billion mark in 2033. Currently, the industry’s market capitalization is pegged at $122.32 billion, with the projection touting a CAGR of 21.80%.
Several factors, including rising mobile phone penetration in population-dense regions, will drive the projected growth. Over the last year, mobile phone and internet usage metrics reached a new all-time high, with 5.30 billion individuals using the internet.
Another driver of industry growth is the avalanche of financial inclusion initiatives rolled out by emerging markets. In developing economies, the number of adults turning to digital payments grew from 35% to 57% from 2014 to 2021.
The rising adoption of e-commerce is another leading growth driver for the industry. Per the report, the e-commerce vertical is pushing growth rates across all economies, with first-world countries recording the biggest adoption rates.
According to the report, the Banking, Financial Services, and Insurance (BFSI) will be the industry leader by 2033, with a market share of 23.1%. Bank cards will be the largest use case in the industry, followed by Account-to-Account and blockchain-based payment systems.
For use cases, mobile wallet and biometric authentication will record impressive growth in the period under review. A rising trend in the ecosystem will be using AI and machine learning for anti-money laundering (AML) and user personalization use cases.
In terms of regional distribution, North America and the U.S. will hold a significant lead over the market. Both regions will record stalling growth metrics, but Asia and Latin America are expected to have the fastest-growing CAGR.
A boatload of challenges for the industry
The report highlighted a raft of challenges to achieve a $712 billion valuation by 2033. For starters, lack of trust hinders financial technology adoption, with blockchain systems providing a veritable solution.
The absence of financial literacy impedes the full adoption of digital payment solutions in 2024. Going forward, governments in developing regions are sinking funds on financial literacy initiatives with their CBDC offerings.
Watch: Micropayments are what are going to allow people to trust AI
title=”YouTube video player” frameborder=”0″ allow=”accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share” referrerpolicy=”strict-origin-when-cross-origin” allowfullscreen=””>
