The Buy Now, Pay Later (BNPL) sector in Indonesia is on a meteoric rise. Forecasts suggest that by 2030, the market could reach a staggering USD $13.59 billion, growing at a steady pace of 9.6% annually.  

This growth is fueled by Indonesia’s rapidly expanding e-commerce landscape, a surge in mobile-first consumers, and strategic partnerships between fintech firms and online marketplaces.  

With leading BNPL players like Kredivo and Akulaku deeply embedded into platforms such as Tokopedia and Shopee, access to instant credit has never been easier for the average Indonesian shopper.  

The trend reflects a broader global movement towards financial inclusion, where digital credit solutions fill the gap left by traditional banking services.  

Many Indonesians, particularly those without access to credit cards or bank loans, now have an alternative means of financing their purchases.  

However, while the expansion of BNPL in Indonesia is often framed as a success story, there is another side to this seemingly promising development—one that raises serious concerns about rising consumer debt, especially among the younger population.  

More Debt, More Problems  

As of January 2025, it is reported that pay-later transactions in Indonesia, conducted through banks and financing companies, saw an almost 50% jump from just a month earlier in December 2024.

More concerning is the broader trend in which Paylater transactions facilitated by financing companies rose 41.9% year-on-year, while transactions through banks grew by 46.45% within the same period. 

Non-performing financing (NPF) rates in the BNPL sector are also on the rise, increasing from 2.99% in December 2024 to 3.37% in January 2025. 

The Financial Services Authority (OJK) has revealed that debt accumulated through BNPL systems across banks and financing companies reached USD $1.8 billion.  

The sheer scale of this increase signals that while BNPL offers convenience and flexibility, it is also driving a culture of borrowing that could spiral out of control if left unchecked. The numbers alone don’t tell the full story, though.  

A significant majority—over 70%—of BNPL users in Indonesia fall within the 18 to 35-year-old demographic. Many of these young consumers, still in the early stages of their careers or even still studying, are taking on debt without fully understanding its long-term consequences.  

Financial experts have pointed out that BNPL services often encourage impulsive spending, exacerbated by social pressures such as Fear of Missing Out (FOMO) and the ever-present “You Only Live Once” (YOLO) mentality.  

Studies indicate that a large proportion of young Indonesians spend simply to keep up with friends or online trends, leading to financial instability down the line.  

While these figures may just be numbers to some, they indicate an increasing number of consumers struggling to meet their repayment obligations. Left unchecked, this could have a ripple effect across Indonesia’s financial system, affecting both borrowers and lenders.  

Regulations Are Coming, But Will They Solve the Problem?  

Recognising the risks associated with unchecked BNPL growth, the Indonesian government and the OJK have taken action. New regulations set to take effect in 2027 will restrict BNPL credit to individuals aged 18 and above who earn at least USD $185 per month.  

Such a move aims to ensure that consumers who take on BNPL debt in Indonesia have at least some financial stability and the ability to repay their loans.  

While these regulations are a step in the right direction, critics argue that they may not be enough.  

Digital economy experts warn that BNPL platforms still allow borrowers to accumulate credit well beyond their repayment capacities. In many cases, individuals with relatively low incomes are being offered high credit limits, further enabling a cycle of spending that could lead to severe financial distress.  

Some have even suggested raising the minimum age for BNPL access to 24 or 25, given the YOLO spending behaviours of younger users.  

Another major concern is the long-term impact of BNPL debt on financial well-being. Reports suggest that an increasing number of young Indonesians are being denied home loans and other forms of credit due to poor repayment records with BNPL services.  

The integration of BNPL repayment data into Indonesia’s financial reporting systems means that a single missed payment could negatively affect a consumer’s ability to secure financing in the future.  

Just Don’t Turn It Into Buy Now, Worry Later  

At its core, BNPL is neither inherently good nor bad—it’s a tool, and like any financial tool, its effects depend on how it’s used. And I have stressed that in my previous article on BNPL debts in Malaysia. 

When used responsibly, BNPL can provide a valuable lifeline to those who lack access to traditional credit, allowing them to make necessary purchases while managing their cash flow. However, when misused, it has the potential to entrap consumers in a cycle of debt that they struggle to escape.  

Indonesia’s case highlights a crucial lesson: rapid financial innovation must be balanced with responsible consumer education and regulation.  

While fintech firms and e-commerce giants continue to push for increased BNPL adoption, it is equally important to ensure that consumers—especially younger and naive ones—are equipped with the knowledge and financial literacy needed to make informed decisions.  

Again, don’t paint me as a BNPL hater. I don’t hate it. I just want to make sure that it won’t bite us back at the end of the day.  

So for those residing in Indonesia, please use BNPL wisely as you don’t want to be swimming in a pool of debt, or even worse, bankruptcy.

Featured image credit: Edited from Freepik