Sharia Paylater Amid Declining Financial Literacy
On 5 October 2026, the Financial Services Authority (OJK) reported that buy now, pay later (BNPL), or paylater, financing by finance companies had reached Rp13.61 trillion in August 2026, up 36.57 per cent year on year. In banking, outstanding balances stood at Rp31.41 trillion across around 34 million accounts.
Those figures will be tested again in the coming weeks. The 11.11 and 12.12 online shopping seasons are approaching, and paylater is becoming an increasingly familiar option beneath the payment button. Regulations have also opened the way for BNPL services based on Sharia principles.
The question is whether a Sharia label by itself guarantees that transactions are fair to users. The answer is: not necessarily. A valid contract may not be understood, and even a contract that is understood may not be affordable.
Understanding Does Not Necessarily Lead to Use, and Use Does Not Necessarily Mean Understanding
The 2026 National Survey of Financial Literacy and Inclusion (SNLIK), conducted jointly for the first time by OJK, the Deposit Insurance Corporation (LPS) and Statistics Indonesia (BPS), recorded a rise in the national financial literacy index to 69.57 per cent. However, the Sharia financial literacy index edged down from 43.42 per cent to 43.07 per cent, while the inclusion index fell from 13.41 per cent to 13.24 per cent.
BPS cited changes to the scope of the data as one factor affecting the results. The slight decline should therefore not be over-interpreted. The pattern is what merits attention.
In conventional finance, the inclusion index (93.53 per cent) is far higher than the literacy index (69.57 per cent). This means many people are already using financial products they do not yet fully understand. In Sharia finance, the pattern is reversed: literacy stands at 43.07 per cent, while inclusion is only 13.24 per cent.
Sharia paylater sits precisely at this intersection. It could become the fastest gateway into Sharia finance. But if growth outpaces understanding, Sharia finance will simply inherit an old pattern: use first, understand later.
Principles Rarely Discussed
A Sharia label cannot be achieved merely by changing terminology: interest becomes a margin, and a fee becomes ujrah. The Compilation of Sharia Economic Law (KHES), under Article 21 of Supreme Court Regulation No. 2 of 2008, sets out several principles governing contracts. Two are rarely discussed, despite being especially relevant to paylater: the principles of capacity and ease (taisir).
Under the principle of capacity, every contract must be made in accordance with the parties’ ability, so that it does not become an excessive burden for them. A paylater contract may meet all its essential and formal requirements, but if it encourages someone from the outset to borrow beyond their means, it is flawed at the level of principle, not merely as a business practice.
DSN-MUI Fatwa No. 17/2000 on sanctions for customers who are able to pay but delay payment draws a clear line. A sanction may be imposed only on customers who can pay but deliberately delay; customers who are unable to pay, or are temporarily unable to do so because of force majeure, must not be penalised. The sanction is ta’zir, intended to encourage discipline; its amount must be agreed when the contract is signed, and the funds must be allocated for social purposes.
Late-payment penalties, therefore, are not a source of income. A business model that relies on such penalties departs from the spirit of the fatwa, even if it is packaged under a Sharia name.
The same fatwa cites the hadith: “There should be neither harm to oneself nor harm to others” (reported by Ibn Majah, Ahmad and Malik), as well as the legal maxim that harm or undue hardship must be removed. The prohibition on harming oneself is relevant to consumers; the prohibition on harming others is relevant to providers. Prices may compete, but offers must not impose burdens beyond customers’ means.