Navigating Regulatory and Liquidity Challenges in Cambodia's Digital Payment Sector: Risks for Investors

Cambodia's digital payment sector has emerged as a focal point of innovation in Southeast Asia, driven by ambitious national policies and rapid technological adoption. However, beneath the surface of this growth lie significant regulatory and liquidity challenges that pose risks for investors. As the National Bank of Cambodia (NBC) seeks to balance financial inclusion with stability, stakeholders must grapple with a complex interplay of policy delays, dollar dependency, and uneven infrastructure development.

Regulatory Hurdles: Innovation vs. Bureaucratic Delays

The NBC's Financial Technology Development Policy 2023–2028 aims to position Cambodia as a regional leader in digital finance, promoting tools like the KHQR code standard and the Bakong blockchain-based platform. These initiatives have enabled real-time, cross-border transactions and expanded access to financial services. Yet, regulatory inertia persists. For instance, Google Wallet secured approval in 2023, but as of mid-2025, no bank had launched its services due to protracted project-specific approvals. Such delays highlight a systemic bottleneck: while the NBC fosters innovation, its bureaucratic processes struggle to keep pace with market demands.

Rural-urban disparities further complicate the regulatory landscape. While urban centers benefit from robust digital infrastructure, rural areas lag in both connectivity and financial literacy. This uneven adoption risks excluding a significant portion of the population from the digital economy, undermining the long-term viability of investments in fintech.

Liquidity Risks: Dollar Dependency and Active User Gaps

Cambodia's digital payment ecosystem, anchored by the Bakong platform, has achieved impressive scale. By 2024, it processed 600 million transactions across 34 million accounts, with a total value of $147 billion. However, these metrics mask critical vulnerabilities. Only 2% of issued wallets remain actively used, suggesting a gap between nominal adoption and meaningful engagement. This low retention rate could strain liquidity, particularly as the sector relies heavily on the U.S. dollar-70% of transaction value is denominated in USD.

The dollar dependency, while historically a stabilizing factor, now introduces risks. Global monetary tightening and reduced cross-border liquidity have heightened exposure for Cambodian banks. The NBC's 2023 reduction of USD reserve requirements aimed to mitigate this, but non-performing loans have risen to 8% as of Q2 2025, signaling potential fragility in credit quality. For investors, this underscores the need to monitor how dollar-centric models adapt to shifting global conditions.

Strategic Moves and Unanswered Questions

The NBC has taken steps to address these challenges. Its participation in the Regional Payment Connectivity initiative, announced in Q3 2025, seeks to enhance cross-border interoperability with neighboring countries. This aligns with broader ASEAN integration goals and could bolster Bakong's role in tourism and e-commerce. Domestically, the KHQR standard aims to reduce reliance on foreign platforms and promote the Khmer Riel. Yet, the success of these measures hinges on resolving the active user gap and rural infrastructure deficits.

For investors, the key risks lie in regulatory unpredictability and liquidity mismatches. A sudden policy shift-such as stricter capital controls or de-dollarization mandates-could disrupt existing business models. Similarly, the scalability of Bakong depends on improving financial literacy and infrastructure, which remain underdeveloped in critical markets.

Conclusion: A High-Reward, High-Risk Proposition

Cambodia's digital payment sector offers tantalizing opportunities, underpinned by government ambition and technological progress. However, investors must weigh these against the risks of regulatory delays, dollar dependency, and uneven adoption. The NBC's efforts to modernize the sector are commendable, but their effectiveness will depend on addressing systemic bottlenecks. For now, the sector remains a high-reward, high-risk bet-ideal for those with the patience and agility to navigate its evolving landscape.