“Buy now, pay later” (BNPL) is one of the most popular types of fintech products in Indonesia right now. As its name suggests, BNPL allows customers to commit to a purchase and make partial payments over time until the balance is settled. BNPL has found fanfare in Indonesia over the past two years as part of the maturing e-commerce and fintech sectors. Major players in this sector include Kredivo, Akulaku, Traveloka PayLater, GoPay, Ovo, and ShopeePay.
Last year, 55% of new e-commerce users chose to use BNPL options when they made purchases on e-commerce platforms, according to a survey by Kredivo and the Katadata Insights Center. The survey was based on 10 million transactions on six e-commerce platforms made between January and December 2020. In all, 41% of consumers said they use BNPL to keep their monthly cash flow under control.
Not to be outdone, various conventional financial institutions are entering this segment by partnering with fintech and BNPL providers. For example, Traveloka was tapped by state-owned lenders BRI and Mandiri in 2019 and 2020, respectively, for their BNPL offerings.
Meanwhile, BNI has partnered with both Traveloka and Shopee PayLater. In September, BNI and Traveloka launched a “virtual card number” that allows Traveloka PayLater users to perform transactions on e-commerce platforms beyond the travel bookings platform’s ecosystem.
Several banks are developing their own BNPL products. Bank Mandiri reportedly plans to launch its BNPL product in the fourth quarter of 2021, with a balance limit of up to IDR 5 million (USD 350). CIMB Niaga’s comparable service is expected to be launched next year, while BCA is reportedly reviewing the possibility of creating a similar product.
“This is a natural progression of the tech industry. As tech and market adoption mature, incumbents will start to follow and create their own products,” Kenneth Li, partner at MDI Ventures, told KrASIA.
BNPL is not a new concept. It is similar to existing installment financing products. However, BNPL has garnered popularity because of the convenience brought on by app-based integration with e-commerce platforms.