Far East: Blockchain-Powered Bakong System Transforms Daily Transactions in Cambodia
Markus Spiske
Nowadays, digital payment has gained prevalence in rural communities in Cambodia, fueled by a QR payment framework overseen by the National Bank of Cambodia (NBC) and the introduction of the Bakong system. The Bakong system redefines mobile payment by combining e-wallets, mobile payments, online banking and financial applications within one easy-to-use interface for any preferred bank account, which serves as a potent example of how a digital payment system can help strengthen a local currency.
Becoming increasingly less reliant on US dollars, farmers, market vendors, and small businesses in Cambodia are now making transactions in Khmer Riel with greater speed and transparency.
KHQR, which is a standardized Quick Response (QR) code system created by the National Bank of Cambodia, greatly simplifies retail payments and remittances. Thanks to this system, basic financial record-keeping for micro-entrepreneurs has been improved, even for those without advanced accounting knowledge. For rural farmers, transaction histories in the banking apps allowed them to fastly track sales, manage cash flow, and demonstrate income.
By 2028, the transaction value of Cambodia’s digital payments is projected to reach approximately USD 9,358 million, growing at a compound annual growth rate of 11.78%. This expansion is also expected to enhance financial inclusion and support economic growth, as there is a growing number of individuals and businesses swiftly adopting digital payment methods.
Shift From Cash-Based to Digital Transactions
According to the National Bank of Cambodia (NBC), back in 2017, the payment instrument was mostly completed through checks, cards, ATM machines, the internet, and mobile banking. The shift from cash-based transactions to digital payments has proved remarkable, especially starting in 2023. The number of e-wallet account registrations increased to 19.7 million that year, and the number of transactions totaled 601.3 million. This figure also reflects a 28.7% increase from 2022. Additionally, in late 2023, 33 payment services institutions obtained licenses, and two new banking institutions were authorized to operate in Cambodia.
NBC estimated the digital users in Cambodia to reach 8.76 million by 2027, with a growth of 34.4% in digital investment.
Before, the Cambodian economy was heavily dollarized. According to the 2021 OECD report on Digitalization & Finance in Asia, people in Cambodia choose not to switch to domestic currency because of convenience, even though the currency shows low and steady inflation patterns. Therefore, the introduction of the Bakong System was introduced to contribute to wider use of the local currency.
The Bakong System
Launched by NBC in 2020, the Bakong System, a digital payment platform that effectively enhances transaction inclusivity and efficiency, received 27.6 million account registrations upon its release to the public.
The unique aspect of Bakong lies in its functionality. NBC developed the Bakong system along with the Japanese technology company Soramitsu, using the Hyperledger Iroha blockchain framework. Soramitsu is a Japanese fintech company specializing in blockchain-based solutions, while Hyperledger Iroha is a blockchain platform written in C++, aimed at helping businesses and financial institutions manage digital assets.
What is distinctive about using a blockchain framework in managing digital assets is how flexible the system is – NBC was able to create digital versions of the Khmer riel and the US dollar that are backed by real money. These digital currencies can be used both for large transactions between banks and for everyday payments by regular users.
A common example that is less flexible than blockchain-based digital payments is traditional bank transfers through systems like The Society for Worldwide Interbank Financial Telecommunication (SWIFT). The processing time takes usually one to three days, and is mainly designed for bank-to-bank transfers, not everyday retail payments like buying food or paying small merchants.
Furthermore, the Bakong is effective in protecting user privacy. The system stores records of all transactions in different locations, but it does not store users’ personal information. Instead, each bank or financial institution keeps the personal details of its own customers. Banks can only see the transactions that involve their own customers, and they are not able to see all the transactions in the system. Thus, this separation helps protect users’ privacy and enables NBC to better observe and understand economic trends and make better monetary policy decisions.
Potential Challenges
Despite the rapid adoption of digital technology in Cambodia, according to a 2024 report from ASEAN Foundation, only 30% of the Cambodian population possesses basic media and digital literacy skills. Out of 144 countries, Cambodia ranks 135th with a financial literacy rate of 18%. As these figures show, there is a significant digital literacy gap in the country, and a large proportion of the population struggles to get access to financial services.
Research in 2025 found that the majority of rural areas in Cambodia still face highly limited internet access and unstable connectivity. The poor infrastructure and slow internet speeds not only make it extremely difficult to conduct online financial transactions, but the issue of the rural infrastructure gap persisting in Cambodia is being overlooked.
According to the Organization for Economic Co‑operation and Development (OEDC), more than half of Cambodia’s population lives in rural areas, where broadband coverage and quality are much lower than in urban areas. In addition to the issue of financial literacy, infrastructure limitations pose a barrier to digital financial inclusion.
According to the 2025 National Financial Inclusion Strategy of Cambodia, improving financial literacy can encourage people to borrow and lend money more responsibly, which can substantially assist long-term economic growth. At the same time, financial literacy campaigns can help reduce inequality in Cambodia by reaching groups that have less access to financial education and services. In the end, addressing these two major barriers in digital literacy and infrastructure gaps will thus be crucial for ensuring that Cambodia’s digital financial system benefits the entire population, not just advancement through representations of numbers.