Rapid Growth in BNPL Financing Distribution in Indonesia, OJK Reports

The Financial Services Authority (OJK) has reported a significant increase in the distribution of finance companies (PP) for buy now pay later (BNPL/paylater) services in Indonesia. As of May 2024, the value of PP BNPL financing receivables has surged by 33.64 percent year-on-year to reach Rp6.81 trillion.

OJK Chief Executive Supervisory of Financing Institutions, Agusman, highlighted the potential of paylater financing in Indonesia, especially in the digital economy era. The growth in BNPL financing is reflected in the gross Non-Performing Financing (NPF) ratio and the BNPL net NPF, which stand at 3.22 percent and 0.84 percent, respectively.

Agusman also mentioned ongoing discussions on regulations related to paylater activities, including finance company requirements, information system ownership, and personal data protection. Other aspects being reviewed include audit track records, security systems, data access, cooperation with third parties, and risk management.

In addition to paylater financing, Islamic financing has also shown positive development, with the outstanding value increasing by 27.49 percent year-on-year to Rp26.5 trillion in May 2024. The NPF ratios for problematic sharia financing remain under control at 1.9 percent gross NPF and 0.62 percent net NPF.

Furthermore, motor vehicle financing receivables have increased by 12.62 percent year-on-year to IDR 400.57 trillion as of May 2024, indicating continued growth in the sector despite a decline in vehicle sales. Agusman projected a 9-11 percent growth opportunity for vehicle financing by the end of 2024.

OJK is committed to enhancing Islamic financial literacy and encouraging innovation and product diversification in sharia financing to further develop the financing sector. The positive trends in BNPL, Islamic financing, and motor vehicle financing reflect a promising outlook for the Indonesian financial services industry.