Southeast Asia’s SME economy is often discussed as if it were a single market with a single set of digital needs. It is not. A retailer grappling with refunds in Jakarta does not need the same payments stack as a restaurant managing dine-in, delivery, and click-and-collect in Bangkok, or a services business in Singapore trying to automate recurring billing.
That is one of the clearest takeaways from How Southeast Asia Buys and Pays 2026: Unlocking SMEs’ Potential by IDC and 2C2P. The study argues, implicitly but unmistakably, that generic payment products are increasingly out of sync with how Southeast Asia’s SMEs actually operate. If the region’s next wave of fintech growth is to come from SMEs, it will likely come from more vertical-specific infrastructure, not broader one-size-fits-all checkout tools.
Also Read: Why Southeast Asia’s SMEs are falling out of love with bank-led payments
The numbers back that up. Retail, food and beverage, and services SMEs are all digitising, but under very different operational constraints.
Retail’s problem is not just collecting payments
Retail SMEs in Southeast Asia contribute an average of 13 per cent of total GDP, according to the study, and they sit in the most visibly digitised part of the SME economy. E-commerce platforms, social commerce, marketplaces, and plug-and-play storefront tools have lowered the barrier to entry. But they have also created a new payment mess.
The report shows that 81 per cent of retail SMEs use e-commerce platforms, plugins, or add-ons for online sales. That sounds like a healthy adoption. But the convenience comes with trade-offs. Among retail SMEs, 64 per cent cite limited payment options as a challenge when accepting payments through those platforms, 59 per cent point to security or fraud concerns, and 56 per cent cite high fees or costs.
That is a striking trio of complaints. The very tools that help SMEs get online quickly may also be the ones that constrain conversion and margins once those businesses start scaling.
Then there is the refund problem. Across Southeast Asia, 31 per cent of retail SMEs say returns and refunds affect their payment operations. The pain is especially acute in Indonesia and Malaysia, where the figure rises to 48 per cent and 44 per cent, respectively. In Singapore, it is 37 per cent.
That matters because returns are not a side process in e-commerce. They are part of the customer experience, the cash-flow cycle, and the back-office workload. Yet many SME payment setups are still designed mainly for the initial transaction, not what happens when a sale goes wrong.
Fraud is the other operational tax. Across the region, 55 per cent of retail SMEs say 1 per cent to 5 per cent of transactions turn into fraud or chargeback cases. In Singapore, the proportion reporting that level of incidence rises to 67 per cent. Those are not trivial leakages. They are margin erosion disguised as operating friction.
Retail does not need payment acceptance. It needs payment systems that are built for post-transaction chaos.
F&B lives or dies by channel complexity
Food and beverage SMEs face a completely different set of pressures. The sector contributes around 6 per cent of Southeast Asia’s total GDP and employs an estimated 15 million people, but its digital challenge is less about fraud or refunds than about handling fragmented consumer journeys.
Also Read: Southeast Asia’s digital payments boom has a dirty secret: SMEs still love cash
The report paints a picture of a sector trying to manage dine-in, takeaway, delivery, self-service kiosks, and online order-and-collect flows all at once. That creates an omnichannel payments challenge that many generic providers are poorly equipped to solve.
Across Southeast Asia, 43 per cent of food and beverage SMEs already support online payment and collect at the store through a website or app. At the physical counter, 39 per cent support card payments and 27 per cent support QR code payments. At the table, 31 per cent support card payments and 26 per cent support QR code payments. Even self-service kiosks are generating their own payment mix, with 26 per cent supporting cards and 25 per cent supporting QR payments.
This is not just about offering more ways to pay. It is about reconciling multiple channels, hardware formats, and workflows without adding headcount or operational confusion.
The future demand signals are even more telling. In Malaysia, 56 per cent of food and beverage SMEs want to support online payment and collect at the store in future. In Vietnam and Thailand, that figure is 48 per cent. In Singapore, 47 per cent want better support for card payments at the counter, while 35 per cent want QR code payments at the counter.
The obvious reading is that food and beverage SMEs are not simply digitising payments. They are redesigning the service journey. And when labour shortages and delivery platform competition are already squeezing margins, clunky payment infrastructure becomes a direct drag on resilience.
What this vertical needs is not another generic payment gateway. It needs orchestration across the full stack: in-store, at-table, kiosk, app, and delivery-linked flows.
Services SMEs are still under-automated
If retail is about post-transaction complexity and food and beverage is about channel complexity, services SMEs face automation complexity.
The services segment accounts for around 12 per cent of Southeast Asia’s total GDP, and the report suggests it remains the most under-digitised of the three verticals studied. Many businesses still rely on manual or outdated systems for accounting, governance, customer management, tax, and payments.
Recurring billing is the clearest example. Across the region, only 47 per cent of services SMEs use recurring payment solutions. Usage is higher in Indonesia at 57 per cent, Vietnam at 55 per cent, and Malaysia at 52 per cent, but much lower in Singapore at 38 per cent and Thailand at 39 per cent.
That is surprising, because recurring payments are one of the most obvious ways for service businesses to reduce churn, improve cash-flow predictability, and cut administrative labour. Yet in many cases, SMEs still appear to be processing repeat transactions manually.
The integration data is just as revealing. Across Southeast Asia, only 37 per cent of services SMEs have integrated bookings with their payment technology. The figures fall further for returns at 26 per cent, cancellations at 24 per cent, and refunds at just 14 per cent.
That last number is especially telling. Refunds are often where operational pain becomes most visible to customers, yet they remain the least integrated payment process in the services segment.
The broader issue is that many service businesses are using payments as a bolt-on, not as part of an integrated operational system. That creates inefficiency on both sides of the transaction: more manual work for the business and more friction for the customer.
The next fintech winners will likely look more vertical
The report does not say this outright, but it points strongly in one direction: the horizontal fintech pitch is weakening.
For years, the standard approach was to sell SMEs generic payment acceptance with some localisation layered on top. But as sectors digitise differently, the gaps are becoming more visible. Retail needs better refund and dispute flows. Food and beverage needs channel unification. Services needs recurring billing and process integration.
Also Read: SEA’s SMEs are global in ambition but stuck at checkout
That does not mean horizontal providers disappear. It means the winning products will increasingly be those that feel vertical even if the underlying rails remain horizontal.
For startups, this is less a warning than an opportunity. Southeast Asia’s SME market is huge, but it is not uniform. Founders who keep treating it as a single broad payments category may find adoption and retention harder than expected.
The smarter bet is that the next meaningful gains will come from solving the exact operational pain of a specific segment, then building outward from there.
In Southeast Asia, generic fintech is starting to hit the limits of generic thinking.
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