In recent years, Buy Now, Pay Later (BNPL) services have gained immense popularity, particularly among young consumers. These services provide greater financial flexibility, enabling individuals to make purchases without needing upfront funds.

According to the Indonesian Financial Services Authority (OJK), the outstanding BNPL amount reached IDR 25.6 trillion by the first half of 2023, with 13 million users. This number surpasses the 6 million credit card users, highlighting the rapid adoption of BNPL.

However, this rapid growth brings significant threats. The OJK reported that the Non-Performing Loan (NPL) ratio for BNPL was 9.7% as of April 2023, exceeding the safe threshold of 5%.

This high NPL ratio indicates concerns about users’ ability to repay their BNPL obligations, potentially leading to broader financial instability.

The majority of BNPL users are millennials and Gen Z, who typically use BNPL for relatively small purchases, averaging between IDR 300,000 and 400,000.

While these amounts may seem minor individually, they can accumulate and impact users’ credit scores if not managed properly. However, many users find BNPL convenient and are increasingly adopting it for various transactions.

With the ease of use and immediate reward, BNPL could seem appealing, but it also underscores the need for responsible financial management and awareness of potential debt risks.