Jakarta. More Indonesians now rely on “buy now, pay later” schemes for their shopping.

This debt financing allows people to immediately make purchases while postponing the payment until a future date.

According to the Financial Services Authority (OJK), pay-laters make up 0.34% of the total consumer credit. The outstanding balance for banking pay-later loans rose by 33.54% year-on-year (yoy) in June. It grew at a slower pace compared to the 37% yoy expansion seen the previous month. The overall consumer credit jumped 5.75% yoy as of June.

Indonesia's banking systems now has at least 32.77 million accounts dedicated for pay later, the OJK report shows. Each of this account has an average outstanding balance of Rp 940,000 (almost $53). There is also triple-digit growth in paylater credits among the so-called "KBMI 3" group, which covers the bigger-sized banks whose core capital reaches up to Rp 70 trillion or $3.9 billion.

“Paylater credits soared 134.01% yoy among the KBMI 3 banks, even though they accounted for just 12% of the total paylater loans. Followed by the KBMI 1 group [banks with core capital of no more than Rp 6 trillion or $337.6 million] at 70.10% yoy, but they made up 23% of the loans,” OJK senior official Dian Ediana Rae said. 

Banking pay-laters also kept the non-performing loan ratio in check at 2.36% as of June, down from 2.50% recorded in May. Dian attributed the buy-now-pay-later’s growing popularity to its convenient and speedy application process compared to that of credit cards. 

BCA and Bank Mandiri are some of the major lenders that are in the pay-later business. The state-owned mortgage bank BTN is eyeing to tap the industry later this year. Pay-later player Akulaku Finance has also recently clinched a Rp 500 billion or $28.1 million worth of financing from Bank Danamon Indonesia as it seeks to expand its footprint.

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