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Buy Now Pay Later, Traveloka’s solution to democratizing travel for all
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n 2018, Traveloka launched its Buy Now Pay Later (BNPL) service (the Traveloka PayLater), making it the first platform in Indonesia to offer an alternative payment method primarily for underbanked individuals. Traveloka PayLater is a product of PT Caturnusa Sejahtera Finance (CSF), a financing company that is part of Traveloka Group. Now 6 years later, the service has evolved into a core component of Traveloka’s value proposition. It has experienced an average annual growth rate of more than 30%, with a 20% increase in its BNPL user base this past year alone.
The service enables Traveloka customers to purchase goods or services, such as booking flights and hotels, in installments with customizable increments, ranging from one-time to 12 months. This reduces their financial burden and makes travel more affordable for anyone in the country.
As the new year begins, Traveloka is optimistic, especially after the full-blown reemergence of the travel industry in 2023. To discuss their upcoming plans and reflect upon the impact of their BNPL service, The Jakarta Post got the opportunity to sit down with Doan Lingga, President Director of PT Caturnusa Sejahtera Finance, the financial branch of Traveloka group responsible for their BNPL services.
Having been with Traveloka for over 6 years, Doan has seen the birth of Traveloka's BNPL product and scale Traveloka's financial service further.
“Since 2018, we have seen a tremendous adoption and growth rate. We see that our service addresses our customers’ needs, aligning with our initial goal of giving travelers flexibility and accessibility to travel products.” Doan explains.
From the get-go, Traveloka determined to create a seamless, integrated service into their existing platform. Now, their BNPL service is deeply rooted in their customer journey, with over 6x increase in their BNPL user base since 2018, indicating its widespread adoption. Moreover, Traveloka’s BNPL has branched into other uses outside of travel products, with it being made available to facilitate online shopping transactions in 2021 and in-store transactions in 2022.
Doan also emphasized that the core principle of establishing BNPL is to assist the underbanked individuals in Indonesia.
“Underbanked individuals are people who do not have access to financial services offered by traditional banks, and we want to help these individuals gain access to travel.”
According to a study from Bain & Company, around 80% of the Indonesian population falls under the underbanked umbrella. Traveloka believes that by focusing on this segment and offering transparent prices that do not carry revolving hidden printing or added fees, they can enable a wide range of people to access travel, creating a positive ripple effect on the broader travel industry.
Doan also believes their existing user base is a key differentiator of Traveloka’s BNPL against traditional banks and other competing lending providers.
“We are building our BNPL service on top of our Traveloka platform, which has been the market leader in Indonesia’s travel landscape. So with that, we have a solid user base and a massive amount of data, making it much faster for us to assess credit risk and enable users to start utilizing BNPL.” He added.
Moreover, because of the information they have accumulated from its platform, Traveloka is able to chart trends and consumer habits. This allows them to customize the optimal BNPL offering for their users, creating personalized experiences that are flexible to each user’s needs.
Aside from this, Doan also highlighted the impact that BNPL has had on the financial literacy of their users and how their vision, alongside recent initiatives, aligns with the Indonesian Financial Services Authority (OJK).
“We have this program called Bimbingan Pelajar on our social media platforms, and it is meant to help our user base understand what BNPL is and the responsibilities that come along with using this service. We want to help our users manage their spending and teach them what good credit behavior is.”
Doan also explains that while their user base that uses BNPL is quite high, their non-performing loan is healthy compared to typical industry numbers that OJK published. This indicates that their users have a firm understanding of how these types of financial services work.
Moving forward, Doan believes that BNPL will continue to be one of Traveloka’s core operations pillars. With the industry being predicted to grow by around 20-30% in the next 5 years, Traveloka is confident that more users will embrace this service and that more collaboration will happen between industry players and the government to create proper regulation that protects said users.
“It’s a growing business that democratizes travel through flexibility. Now we just have to make sure that the industry and the regulatory can align better to help the nation further.” Doan closes.
This article was published in collaboration with Traveloka
