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The future of PayLater after the COVID-19 pandemic in Indonesia
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Indonesian millennials know how to assess their financial capabilities, allowing them to obtain loans closest to the amount requested. (Shutterstock/Icatnews)
I
n the last two to three years online shopping has had a significant increase in transactions. The SEA e-Conomy report estimates the highest growth of e-commerce transactions is in Indonesia, which is projected at 22 percent and would reach US$59 billion this year.
As digital trade develops in ASEAN, various alternative payment methods have emerged. Digital payments are increasingly popular and are widely used, such as instant digital payments. The popularity of digital payment methods has accelerated since the pandemic first struck. These instant digital payments are e-wallets and pay-later options, popularly known as PayLater or Buy Now Pay Later (BNPL).
The rise of online shopping also contributes to the growth of instant digital payments, especially PayLater methods. Not only because of the COVID-19 pandemic, the growth of PayLater is also supported by the jump in internet users and the fact that credit card penetration is still considerably low in this country.
According to a survey of Indonesian e-commerce behavior by Kredivo and KataData, around 17 percent of consumers who conduct non-cash transactions use PayLater as their most frequently used payment method in 2022. PayLater became a payment option for online shopping because consumers could make purchases and pay for them at a later date without worrying about interest fees.
The ease of registration and requirements for the PayLater method makes it appealing to consumers. The process of paying for purchase transactions using PayLater in e-commerce is also very easy because this feature has been integrated into the checkout process. Consumers do not need to process payment by switching applications or filling in personal data.
Another advantage of PayLater is that there is no annual fee. For a longer credit option or higher transaction amount, PayLater can also act like a credit card, which provides a credit tenor of up to 12 months or up to 24 months for micro, small and medium enterprises (MSMEs).
The PayLater service offers zero interest rates and more agreeable approvals. The service can be accessed through a smartphone. In addition, PayLater is an option for those who do not have a credit card due to eligibility requirements. However, because the emergence of BNPL is relatively new compared with credit cards, the availability of services for BNPL is still limited.
