Digital banks in Indonesia have emerged as leaders in distributing Buy Now Pay Later (BNPL) credit, also known as PayLater. According to data reported by Bisnis.com based on Pefindo Biro Kredit (IdScore), the total portfolio for PayLater loans reached Rp35.14 trillion by November 2024. This marked a 24.53% increase compared to the same period in the previous year.

“Digital banks are the largest contributors to this product,” stated Tan Glant Saputrahadi, President Director of IdScore, during a media gathering in Jakarta on January 16, 2025. Their contribution amounted to Rp11.66 trillion, with an 8.24% year-on-year growth.

Traditional banks followed, contributing Rp8.48 trillion, with an impressive 67.24% growth. Online lending platforms, known locally as pinjol, and leasing companies accounted for Rp7.35 trillion and Rp7.08 trillion, respectively. Both sectors experienced significant growth, highlighting the increasing popularity of PayLater among consumers.

One striking finding from IdScore’s report is that BNPL facilities have grown threefold compared to credit cards. By October 2024, BNPL accounted for 48.4 million facilities, dwarfing credit cards at 13.9 million. This trend is attributed to BNPL’s flexibility, ease of use, and strong integration with e-commerce platforms, making it particularly appealing to younger consumers.

“BNPL is preferred for its convenience, attractive promotions, and intuitive UI/UX tailored for younger users. Its direct integration with online merchants adds to its appeal,” Glant added.

In contrast, credit card growth remained subdued at 3.22% year-on-year, largely due to operational cost constraints faced by many banks. Glant pointed out that most banks, especially smaller ones, focus on maintaining efficient cost-to-income ratios, which may limit their ability to expand credit card offerings.

The competitive advantage of PayLater lies in its alignment with modern shopping trends and its ability to address the evolving needs of digital-savvy customers. Its appeal is further amplified by promotional offers and a seamless checkout experience that traditional credit products struggle to replicate.

As PayLater continues to grow, it reshapes the financial landscape, presenting challenges and opportunities for traditional lenders, fintech platforms, and e-commerce operators alike.

PHOTO: MNCMEDIA