Paylater Is An Alternative When Purchasing Power Weakens

JAKARTA - Financial services buy now pay later (BNPL) or paylater are now considered an alternative financing in the midst of weakening people's purchasing power, so as to stimulate consumption levels.

"When people's purchasing power decreases, but needs tend to remain, people will seek financing to help meet these needs," said Digital Economy Director Celios Nailul Huda quoting Antara.

He said that there are three important roles of these financing services, namely overcoming limited funds for underbanked communities, helping people's finances with flexible systems and installments, and expanding people's financial access to enter the financial ecosystem.

"The fast and flexible credit limit distribution system, accompanied by a prudent credit scoring system, makes paylaters a relevant financial tool and a financial cushion for the community amidst economic uncertainty," he explained.

Even so, Nailul reminded that, just like other financial services, the use of paylaters also has a negative risk and impact if not used wisely.

When financing increases, he continued, of course there is the potential for an increase in non-performing financing (NPF). However, he considered that now the NPF paylater level is still within the safe limit below 5 percent, which is 2.6 percent as of September 2024.

He also emphasized the importance of paylater providers to prioritize risk management and consistently carry out credit scoring to minimize potential NPF improvements.

"I also underline the importance of understanding users regarding the benefits and risks of paylaters, which of course are also supported by education consistently. People need to understand the limits of their payability so that it does not have a negative impact on financing from anywhere, including from paylaters," he said.

As one of the paylater providers in Indonesia, SVP Marketing & Communications Kredivo Indina Andamari said that her party is committed to providing safe, flexible, and affordable credit access for more people.

One of them is organizing a financial education campaign for the community titled #AutoMikir, #AndaiAndauPadai, as well as the Djempolan Generation literacy program.

He said that his party also continues to prioritize the application of the principle of responsive lending to keep the company's NPF within the industry's average range with the help of an artificial intelligence (AI)-based risk management system as well as a routine evaluation of user credit scores.

"Although the paylater offers various conveniences and benefits, especially in the current economic conditions, we continue to educate users that the wisdom in its use is very important to avoid negative impacts from paylaters," he added.