Buy Now, Pay Later (BNPL) schemes in Indonesia are becoming increasingly popular, leading to a rise in consumer debt. In March 2024, consumer debt incurred through BNPL schemes reached 6.13 trillion rupiah, showing a 23.9% increase compared to the previous year. This surge is attributed to the ease of access for BNPL services in comparison to traditional credit cards, making it simpler for consumers to access credit without the need for upfront payments.
BNPL offers consumers an alternative to traditional payment methods by allowing them to make purchases and defer payments, acting as a short-term financing option for specific transactions. The growing popularity of BNPL is not limited to Indonesia, as the Southeast Asian market is projected to reach US$33.6 billion by 2027. The combination of a large unbanked population and increasing internet accessibility in the region is creating a fertile ground for BNPL players.
While BNPL is gaining traction, concerns regarding consumer debt are also on the rise. Unregulated BNPL services could lead consumers to accrue debt beyond their means, as seen in Malaysia. The trend is particularly popular among younger generations, such as Gen Zs and millennials, with millennials constituting over 52% of BNPL users in Indonesia, followed by Gen Zs at 35%.
To address these concerns, Indonesia’s OJK is exploring regulatory frameworks tailored to BNPL services to ensure sustainable growth and consumer protection. OJK’s deputy commissioner emphasized the need for balanced regulation that supports industry growth while safeguarding public interests. The President Director of the Indonesian Banking Development Institute stressed the importance of prudent regulation to mitigate potential risks to society.
Despite concerns over financing risks, OJK anticipates continued growth in the use of BNPL as more consumers adopt the service. BNPL financing companies are expected to see an increase in total receivables as technology continues to make online shopping transactions more accessible. Major banks in Indonesia, such as BCA, Mandiri, BNI, CIMB Niaga, and Allo Bank, have already integrated BNPL services into their offerings, showcasing the sector’s resilience and commitment to the model.
