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Cambodia – On the Brink of a Fintech Revolution

Cambodia is an attractive destination for Fintech and Paytech companies for multiple reasons.

With 5.5 million e-wallets already existing in Cambodia, not only is the kingdom's Fintech industry bustling, it is also on the brink of a revolution.

Make no mistake however; cash still rules in Cambodia. The majority of payments are still physical transactions. But with the increasing number of mobile wallets in the country, it is a question of when and not if the kingdom will eventually transition primarily to digital wallets.

Previously, Fintech companies approached customers by trying to lure them by offering exclusive discounts. This reduced the merchant’s profit margin (if funded by the merchants) or acted to the detriment of the firm itself.

Cambodia Fintech Association Delegates. Image Source: The National

The bulk of these standalone discounts were focused on single transaction, small ticket items such as a can of soda; resulting in active transactions without valuable multipliers. Companies saw that when the discounts stopped, the transactions soon followed.

Merchants were also forced to fund promotions in return for foot traffic that would eventually stop when the promotions ended. The merchant lost out on valuable profit, the customer didn’t gain anything meaningful and the economy lost cashflow since the discounts were consumed as ‘goods’ and less currency in circulation.

These low-ticket discounts did not make a difference in the user’s difference in value perception, nor did it retain them in the e-wallet ecosystem.

2020 saw a slow down in such discount-driven trials for digital payments. The pandemic probably drove a market correction in that regard.

And with the pandemic restricting movements and demanding physical distancing, the comfort level regarding ordering food and other items online increased among Cambodians. However, it is still restricted to those with a bank account or a digital wallet. Notably, this is the single most important factor that will determine the pace of adoption of fintech in Cambodia.

Be that as it may, an increasing number of young adults are entering the age group where they require formal banking relationships, and this gives good reason to expect a pacy and steady rise in the number of fintech wallet holders in the Kingdom.

Half a million young people are expected to enter the legal age every year and they will largely use their digital wallets to pay for food and beverages, utilities, transportation and entertainment. And the Fintech industry is bound to be boosted by patronage from these youngsters who would usually seek safe and convenient payment methods, with fintechs that emphasize trust, consumer confidence and ease-of-use likely to seize the initiative in driving the imminent digitalization of (the financial market in) Cambodia.

Cambodia In Focus:

Population: 16.486 million (Compared to South Africa's 59.6 million)

GDP: $27.089 billion (Compared to South Africa's $369.85 billion)

GDP Per Capita: $1,530 (Compared to South Africa's $6,193)