Your Card Has Been Declined: The Realignment of Southeast Asia’s Digital Finance Ecosystem | New Perspectives on Asia

In the wake of a volatile global economy, Southeast Asia is undergoing a major shift in its financial ecosystem. As consumers and businesses turn away from traditional card-based payments and toward digital systems like QR codes and mobile wallets, the region is embracing a new financial order. These shifts are not only working to transform domestic markets but also realigning global monetary networks. At the center of this reshuffling is China, which boasts a growing digital financial footprint across Southeast Asia with implications for U.S. economic and strategic influence in the region. 

The Rise of Digital Payments

Digital payments are redefining how money is exchanged in Southeast Asia. For many in the region, QR payments and mobile wallets are not only more accessible than traditional cards but are also becoming indispensable for daily transactions. Most of these systems, like PromptPay in Thailand and PayNow in Singapore, are locally developed with domestic users in mind, keeping operations and transaction costs low. Consumers and multi-national corporations alike are gravitating toward these systems for convenience and cost-efficiency. 

According to a survey conducted in 2022, nearly 60 percent of Southeast Asian respondents used QR payments, a figure that has only continued to rise. By 2028, non-digital payments are projected to account for only 6 percent of total ecommerce payments in Southeast Asia. National payment networks are becoming the default, outpacing the usage of traditional cards. 

With intraregional trade reaching nearly $40 billion in 2023, payment networks are also becoming essential for regional trade, creating cross-border financial interoperability that allows businesses and consumers to seamlessly enact transactions. The Association of Southeast Asian Nations (ASEAN) has further expanded its focus on digital finance as the region’s collective digital economy is set to reach $2 trillion by 2030. Negotiations on an ASEAN Digital Economy Framework Agreement (DEFA) launched in 2023 with the aim of creating the world’s first region-wide digital economy agreement with objectives to simplify customs procedures and build a multicurrency payment system. China is aligning itself with this vision, embedding its payment networks, currency, and financial standards into the infrastructure powering Southeast Asia’s digital economy.

China’s Growing Footprint

Beijing has accelerated its push toward transnational financial connectivity with initiatives to integrate payment systems and increase cross-border transactions. From 2020 to 2024, China significantly expanded its digital financial presence in Southeast Asia. UnionPay, China’s state-owned payment platform, is now linked with national payment systems in Vietnam (NAPAS), Indonesia (QRIS), Malaysia (DuitNow), and Cambodia (KHQR), among others, allowing for seamless cross-border transactions. For instance, a Thai tourist in Shanghai can pay in baht via PromptPay by scanning a UnionPay QR code while the merchant receives yuan. This expansive regional network has greatly curbed the need for currency conversions and financial intermediaries. 

Beyond convenience, these initiatives signal deeper strategic collaboration between the monetary authorities of China and Southeast Asia. UnionPay has also partnered with over 40 fintech companies in the region, embedding Chinese payment infrastructure into Southeast Asia’s financial arteries. Meanwhile, U.S. companies like Visa and Mastercard are losing ground, experiencing sluggish growth and dwindling market share as they get outcompeted. In 2023, UnionPay recorded 228 billion transactions globally—second only to Visa—with overall payment value surpassing both Visa and Mastercard. By 2024, the total value of mobile payments surpassed that of card-based transactions in every Southeast Asian country. In emerging markets, where unbanked and mobile-first consumers dominate, Visa and Mastercard’s business models, reliant on card issuance and transaction fees, are falling behind.

China’s Push for De-dollarization

These developments are occurring against the backdrop of broader global economic trends. With tariffs shifting global alliances and rising skepticism about the United States as a reliable trade partner, Southeast Asia is hedging its bets. 

China is pushing for de-dollarization and positioning the yuan as a secure alternative, although regional buy-in remains uneven. Indonesia, for instance, has expressed reluctance in adopting BRICS-led de-dollarization efforts in fear of U.S. retaliation amid ongoing tariff negotiations. Nevertheless, the push is accelerating. In early 2025, the central banks of Indonesia and China signed an agreement to expand settlements in local currency. That same quarter, Renminbi–denominated trade between China and Malaysia reached 102 billion RMB ($4 billion), an impressive 27 percent year-over-year increase. Similarly, Renminbi-denominated trade with Cambodia, a country that has long used the U.S. dollar as unofficial currency, rose 45 percent to 5 billion RMB ($686 million). Beijing is reinforcing these shifts through diplomatic courtships including state-level visits to Vietnam, Malaysia, and Cambodia, and the convening of the ASEAN-Gulf Cooperation Council-China Summit where UnionPay’s chairman, Dong Junfeng, was a key invitee. By streamlining cross-border transactions, Beijing is advancing the use of yuan and local currencies in regional trade, allowing the region to increasingly sidestep SWIFT-based settlements and U.S. dollar reserve holdings. 

U.S. Risks & Strategic Implications

With Southeast Asia undergoing rapid economic growth, being sidelined from its financial architecture could carry both commercial and strategic costs for the United States. Digital financial services in Southeast Asia generated $11 billion in 2022, with this figure expected to triple to $38 billion this year. U.S. trade with ASEAN also reached $476.8 billion in 2024, with $124.6 billion in U.S. exports, making the region one of the United States’ largest trading partners. The erosion of U.S. financial influence and reduced reliance on the dollar threatens to exclude Washington from the payment networks driving the region’s digital finance boom. This could diminish U.S. firms’ competitiveness, reduce dollar-denominated trade settlements, and weaken the strategic utility of the U.S. dollar in sanctions and global finance governance.

This realignment is not just about money but also about who controls how that money moves. China’s financial platforms are wielded as a form of soft power. UnionPay, with nearly 9 billion cards issued, currently accounts for 59 percent of all global cards in circulation with high concentrations in developing regions like Africa and Asia. Through these systems, Beijing has the chance to influence cross-national partnerships, monetary authority cooperation, and data governance standards. Beijing’s advocacy for internet sovereignty challenges the liberal, multi-stakeholder internet model prevalent within the U.S. tech landscape. Chinese legislation such as the Data Security Law institutionalizes state oversight over data flows, consolidating central authority over cyberspace.

In contrast, the United States’ absence from financial integration undermines its influence, impeding its ability to set standards on data privacy, digital trade, and trans-national cooperation. This, coupled with recent retrenchments in U.S. soft power, may undermine Washington’s ability to stay relevant in areas that will determine future geopolitical importance.

A Path Forward

Washington should not view Beijing’s growing role in Southeast Asia’s digital finance ecosystem merely as technological adaptation. There is a strategic recalibration of monetary power happening in the region. As Southeast Asia accelerates toward non-card digital payments and de-dollarization, there may be strategic measures that the United States can undertake to regain lost ground. These measures should include investing in digital finance initiatives that promote interoperability with Southeast Asian payment systems and incentivizing U.S. fintech companies to expand into Southeast Asia. However, these measures may not succeed without rebuilding global trust in the United States as an economic actor. A transparent and reliable trade policy, free of sudden changes hinging on U.S. domestic politics, is essential in reestablishing credibility for the United States. Absent these measures, the United States risks ceding both economic influence and strategic opportunity in Southeast Asia, a region that is increasingly becoming an economic pillar of the world. The next phase of global financial competition will not be fought over physical currency but over the transactions and protocols of digital money—and the United States is already falling behind.

Hpone Thit Htoo is a research intern with the Southeast Asia Program at the Center for Strategic and International Studies in Washington, D.C.