Buy Now, Pay Later Adoption Takes off in Indonesia

Buy Now, Pay Later Adoption Takes off in Indonesia

by October 13, 2021
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Buy now, pay later (BNPL), also referred to as paylater, has become one of the most popular payment options in Indonesia. After digital money (82.2%), it’s the second most used fintech product in the country, recording a penetration rate of 72.5%, according to a 2020 DSInnovate survey.

The findings were shared in a newly released report titled Indonesia Paylater Ecosystem Report 2021. Produced by local tech information platform DailySocial.id, the report dives into the BNPL industry in Indonesia, sharing key metrics and revealing the industry players engaged in the space.

Most used fintech products in Indonesia, Source: DSInnovation survey, via Indonesia Paylater Ecosystem Report 2021

Most used fintech products in Indonesia, Source: DSInnovation survey, via Indonesia Paylater Ecosystem Report 2021

According to the report, BNPL will continue growing in the years to come at a compound annual growth rate (CAGR) of 27.4% until 2028. The gross merchandise value (GMV) in Indonesia is expected to increase from US$889.7 million in 2020 to reach US$8.5 billion by 2028.

Paylater payment in Indonesia growth forecast, Source: DSInnovation survey, via Indonesia Paylater Ecosystem Report 2021

Paylater payment in Indonesia growth forecast, Source: DSInnovation survey, via Indonesia Paylater Ecosystem Report 2021

Separate research by BNPL player Kredivo and Katadata Insight Center found that paylater is gaining particular traction for online purchases where 27% of Indonesian consumers indicated having used a BNPL option in e-commerce over the past year.



Digital payment method used on e-commerce in the past year, Source: 2021 Indonesian E-Commerce Consumer Behavior Report, Kredivo, Katadata Insight Center

Digital payment method used on e-commerce in the past year, Source: 2021 Indonesian E-Commerce Consumer Behavior Report, Kredivo, Katadata Insight Center

Overall, BNPL users showed satisfaction in these payment arrangements, citing a seamless transaction experience, fewer application requirements and fast approval process as the top benefits. 50% of BNPL users indicated plans to use these arrangements more frequently.

PayLater assessment, Source: 2021 Indonesian E-Commerce Consumer Behavior Report, Kredivo, Katadata Insight Center

PayLater assessment, Source: 2021 Indonesian E-Commerce Consumer Behavior Report, Kredivo, Katadata Insight Center

Booming usage of BNPL in Indonesia comes on the back of accelerated digital adoption of e-commerce and digital payment method during the pandemic. Consulting firm Redseer estimates that the number of online shoppers in Indonesia grew from 75 million pre-COVID-19 to 85 million during the health crisis.

55% of BNPL users surveyed by Kredivo indicated having started using these solutions during COVID-19.

Indonesia’s first BNPL unicorn

Rising BNPL activity in Indonesia has led to the emergence of a dynamic ecosystem that now includes a startup unicorn, the report notes.

Kredivo, a platform owned and operated by FinAccel, has grown to become the largest BNPL player in Indonesia with a presence across eight of the top ten e-commerce merchants in the country and a client base of nearly four million approved customers.

The platform provides a consumer-facing app that gives shoppers between IDR 1 million (US$70) and IDR 30 million (US$2,100) in loan facility that they have to pay off in a predetermined number of installments over a period of 1, 3, 6 or 12 months. After an interest free period of 30 days, a 2.6% monthly interest rate is applied.

In addition to instant credit financing for e-commerce and offline purchases, the platform also provides personal loans based on artificial intelligence (AI)-enabled real-time decisioning.

In August 2021, Kredivo announced plans to take on the Vietnamese market, forming the Kredivo Vietnam joint venture with Vietnam-based family office Phoenix Holding. Kredivo’s paylater business in Vietnam will be launched in stages, starting with bill payments for daily needs and personal loan, to be followed by e-commerce BNPL in Q4 2021. There are also plans to expand to Thailand in the near future, the company said.

Parent company FinAccel is based in Singapore and will be going public through a merger with special purpose acquisition company (SPAC) VPC Impact Acquisition Holdings II, the company said in August 2021. The deal would value it at about US$2.5 billion.

Are you interested to learn more about Fintech in Indonesia? Download Market Report: Indonesia Business Opportunities In Fintech here

Market report indonesia business opportunities

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