Walk through any traditional local market in Bangkok, Jakarta or Manila and you will feel the undeniable pulse of Southeast Asia’s economy. It’s a vibrant, chaotic and deeply human ecosystem of commerce, a testament to the resilience and ingenuity of millions — and it’s largely driven by small and medium-sized enterprises (SMEs). For decades, SMEs have been the invisible backbone of the economy in our region, accounting for over 95% of all businesses and, according to the Asian Development Bank, employing the vast majority of our workforce. They are the engines of community life and the primary ladder for upward mobility.
Today, the physical marketplaces that have existed for centuries in these countries have a digital counterpart, in which SMEs market their goods through the endless scroll of social media feeds and the constant ping of chat notifications. Millions of these entrepreneurs have migrated their hustle online, creating a thriving “chat commerce” economy that now represents a significant, if under-measured, portion of our region’s estimated $300 billion digital economy.
Yet while they are digitally active, these SMEs remain economically underserved. They are operating in a digital canyon — the vast gap that exists between their entrepreneurial energy and the formal financial tools that could unleash their true potential.
The Limitations of the ‘Infrastructure of Hope’
This is the central, and most urgent, challenge for economic inclusion in Southeast Asia today. The problem is not a lack of digital literacy or a resistance to technology: These entrepreneurs are masters of mobile-first engagement, building communities and driving sales with a sophistication that would impress any Silicon Valley growth hacker. The problem is a lack of the right infrastructure. They are building modern businesses on a foundation of informal agreements and personal trust, a system that is both their greatest strength and their most significant vulnerability.
This “infrastructure of hope” leaves them perpetually exposed. Every transaction is a quiet prayer. A seller sends their bank details and hopes the buyer is legitimate. A buyer sends a payment and prays the seller will actually ship the product. This is not a hypothetical risk. A recent study on payment fraud highlighted that almost 80% of organizations globally have been victims of payment scams. A single fake screenshot “documenting” a failed transaction can draw SME owners into scams that can wipe out a week’s profit — a devastating blow for a business operating on razor-thin margins.
Beyond the risk of fraud, there is the crushing weight of inefficiency. SMEs engaged in e-commerce manage basically everything across multiple apps: Orders come in from a marketplace app or other online channel, then are confirmed using a messaging app; payments are often requested separately to avoid high marketplace fees, then payment is made using a different app, while invoicing, reconciliation and shipping are performed manually. As a result, time that could be spent on growth — sourcing new products, marketing the business or talking to customers — is instead lost to the administrative chaos of manually tracking orders across multiple apps. This is the “juggle tax” of the informal economy, a heavy burden on the most precious resource any entrepreneur has: their time.
Most critically, this informal activity leaves no official data trail, as payment confirmations for purchases made via marketplace apps are often made using screenshots from unrelated payment apps, while tracking details for shipment are sent via messaging apps. In contrast to the process in many developed markets, where payment and shipping are handled directly on the same app where the product was purchased, this process leaves many thriving businesses all but invisible to the formal banking sector. Their consistent revenue and loyal customer base don’t fit into the rigid credit-scoring models of traditional finance. As a result, they are locked out. The World Bank consistently finds that over 70% of Southeast Asia’s SMEs lack access to credit, a staggering figure that represents trillions of dollars in untapped economic potential and millions of stifled dreams.
The Trouble with Conventional (Western) Tech Solutions
Further complicating things, the conventional tech solutions proposed to solve this problem often miss the mark because they fail to respect the entrepreneur’s existing reality.
The first commonly explored solution — the large marketplace model — offers a path to formalization, but it is a Faustian bargain. These marketplaces include the likes of Shopee, Lazada and similar platforms which are incredibly popular across Southeast Asia. However, these platforms demand that sellers conform to a rigid structure, often stripping them of their direct customer relationships and charging commissions that can cut deeply into their margins. Entrepreneurs who trade the risks of the informal economy for the certainty of dependency on large marketplaces risk becoming tenants on a platform they do not control.
The second proposed solution is to import complex, Western-style Software-as-a-Service tools like Shopify or Wix, which offer sellers a complete suite of services ranging from webstores and websites to catalogues, marketing stacks, integrated payments and more. But these often fail to account for the cash-flow realities and mobile-first workflows of solo entrepreneurs in countries like the Philippines, where their high monthly subscription fees present a psychological and financial barrier for a business that measures its success day by day.
If we are to truly foster inclusive growth, we must reject these one-size-fits-all approaches. We must instead meet these entrepreneurs where they are. The goal should not be to force them out of their native digital habitats, but to build bridges from their informal world to the formal economy. This requires a new class of technology tools that are empathetic, accessible — and designed to formalize SMEs’ operations without disrupting them. These entrepreneurs need technology that whispers, not technology that shouts.
Formalizing E-Commerce to Empower Digital-First SMEs
At Enstack, we are focused on building these bridges. We began by tackling the most fundamental point of friction: the transaction itself. Orders in Southeast Asia don’t happen in one click — they unfold across chats, social media and calls. Our smart checkout brings it all together: As part of each sale, a payment link is generated on Enstack, which sellers share with buyers via text message or QR code. Payment itself is powered by licensed third party providers, and there is a small transaction fee, which is charged to the seller. Combined with our in-app shipping options, this brings the essential elements of e-commerce transactions into a single process.
This consolidated approach isn’t just a tool; it’s the key to turning conversations into conversions, reducing lost opportunities and driving sustainable growth. This simple intervention does three things at once: It builds immediate trust with the buyer, demonstrating the seller’s professionalism. It protects the seller from fraud with real-time payment verification. And, most importantly, it begins to create a formal, digital record of the enterprise’s sales.
Each successful transaction becomes a digital breadcrumb. Each invoice sent, each payment confirmed and each delivery completed becomes a time-stamped, verifiable entry in a new kind of ledger. This collection of entries, over time, forms a dynamic, real-world picture of a healthy, growing business. This is the key that unlocks the door to the formal economy.
When a seller has a verifiable record of their revenue, they are no longer invisible to financial institutions. This trusted data trail becomes their credit history. It allows for the creation of tailored, embedded financial services — from right-sized working capital loans to purchase inventory before a busy season, to microinsurance to protect their goods, and financial planning tools to help them manage their growth. This is how we move from simply facilitating sales to fostering sustainable livelihoods. This is also how we solve the SME credit gap.
The ripple effects of this approach are profound. Empowering these businesses — a substantial percentage of which are run by women — creates economic agency where it is most needed. It transforms a household contributor into a recognized business owner with control over her own capital. When entrepreneurs can afford to hire their first employee, that is a direct contribution to economic development. When they have the capital to scale their production, they create opportunities for others in their supply chain. This is how GDP growth actually happens: from the ground up, one empowered entrepreneur at a time.
The task ahead for technologists, investors and policymakers in Southeast Asia is clear. We must stop looking at the informal digital economy as a problem to be fixed and start seeing it as a foundation to be built upon.
For investors, this means shifting focus from “winner-take-all” platforms like Shopee to “enabler-of-many” tools like Enstack that provide the picks and shovels for this digital gold rush.
For policymakers, it means championing “digital-first” registration processes for new SMEs, and creating new policy frameworks that recognize alternative data for credit scoring, allowing financial institutions to serve this segment responsibly.
And for fellow technologists, it means adopting a mindset of empathetic innovation. It means spending less time trying to change user behavior, and more time trying to understand it.
We must stop asking millions of entrepreneurs to cross a digital canyon on their own. It is our job to meet them in the middle. By building empathetic tools that work behind the scenes to formalize trust without disruption, we can help create more opportunities that allow them to enter into the formal economy with confidence, ready to claim their rightful place as the engines of our region’s future.
Macy Castillo is founder and CEO of Enstack.
Photo credit: Perawit Boonchu, via iStock Photo
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