The Illusion of Prosperity Behind "Pay Later"

“Buy now, pay later.” This phrase sounds like a solution. However, for many people, especially the younger generation, it is slowly turning into a trap.

In recent years, Buy Now, Pay Later (BNPL) services have emerged as one of the most popular financial products in Indonesia. Platforms like Shopee PayLater, Kredivo, and Akulaku offer unprecedented convenience: instant credit access without complicated processes, without credit cards, and even without human interaction. Just a few clicks, and the transaction is complete.

On the surface, this is a symbol of progress. Financial inclusion is increasing, public access to financing is broadening, and domestic consumption is being stimulated. However, behind this euphoria, we need to ask more deeply: does BNPL truly enhance people’s financial well-being, or does it merely create an illusion of prosperity?

Data shows that this trend is no small phenomenon. Reports from the Financial Services Authority (OJK) record significant growth in paylater-based financing in recent years, with dominance among young age groups. Meanwhile, Bank Indonesia also highlights the rapid development of the digital economy, which further drives the use of instant credit services.

However, growth figures do not always equate to quality of well-being. BNPL essentially changes how we define “affordability.” If previously the ability to buy was determined by current available funds, now that boundary has become blurred. A person can buy goods not because they have the money, but because they have access to debt.

This is what, from a behavioural finance perspective, is called present bias—the human tendency to value immediate gratification more than future consequences. BNPL systematically exploits this bias. With small instalments, no interest at the start, and an instant process, the debt burden feels light, even almost unnoticeable.

The problem is that the accumulation of these small instalments often becomes a ticking time bomb. For the younger generation, especially students, this risk is more serious. They are at the early stage of financial independence, yet they do not yet have adequate financial literacy. When access to credit is so easy and self-control is not yet strongly formed, impulsive consumption becomes almost inevitable.

This phenomenon leads to a paradoxical situation. On one hand, individuals feel more prosperous because they can fulfil various consumption desires. On the other hand, their financial condition objectively becomes more vulnerable. Perceived financial well-being increases, but actual well-being may decline.

This is where BNPL creates the illusion. Of course, it is unfair to blame the entire fault on the fintech industry. Financial technology innovation fundamentally brings great benefits, especially in enhancing financial inclusion. For some people, BNPL can even be a tool to help manage short-term cash flow.

However, the issue lies in the absence of balance between ease of access and user readiness. Current regulations tend to focus on industry aspects, such as data protection and system stability.

Meanwhile, the user behaviour aspect, which is the core of the problem, has not received adequate attention. Financial literacy often remains just a slogan, not a systematic and sustainable movement.

Yet, without strong literacy, financial inclusion can turn into risk inclusion. Therefore, there are three things that need collective attention.

First, strengthening contextual financial literacy. Education is not enough to just explain what interest or instalments are, but it must also touch on behavioural aspects: how to control impulses, understand cognitive biases, and distinguish between needs and wants.

Second, more responsible product design. BNPL platforms need to be encouraged not only to maximise transaction ease but also to provide clearer warnings about debt risks. Total transparency of obligations must become a standard, not an option.

Third, the role of educational institutions. Universities can no longer just teach financial management theory, but must also equip students with practical skills in managing personal finances in the digital era.

In the end, we need to realise that convenience does not always mean goodness. In many cases, it is convenience that blurs the line between needs and wants.

If not anticipated seriously, BNPL has the potential to produce a generation that appears prosperous on the surface but is financially fragile inside. And when that happens, “pay later” will no longer be just a payment method, but a problem that we have all postponed together.