Indonesia Introduces A Dedicated BNPL Regulatory Framework

The Indonesian Financial Services Authority (Otoritas Jasa Keuangan or "OJK") has issued OJK Regulation No. 32 of 2025 on the Organization of Buy Now Pay Later ("OJK Reg. 32/2025"), establishing a dedicated regulatory framework for Buy Now Pay Later ("BNPL") in Indonesia. Previously, BNPL operated under general financing regulations, without a standalone regime.

Clear Definition of BNPL

As BNPL has grown from a mere payment option into a significant part of the financial services sector, regulatory clarity became increasingly necessary. Prior to OJK Reg. 32/2025, BNPL lacked a formal definition and was often conflated with peer-to-peer lending or credit cards, particularly under OJK Regulation No. 10/POJK.05/2022 of 2022 regarding Information Technology-Based Co-Funding Services.

OJK Reg. 32/2025 now expressly defines BNPL as a financing facility provided by financial services institutions through an electronic system for the purchase of goods and/or services, clearly distinguishing it from other financing products.

Eligible BNPL Providers

OJK Reg. 32/2025 raises compliance for existing BNPL providers. The previous regime only stipulated that providers of technology-based fund-lending services could be in the form of a limited liability company or cooperative, and a specific approval to operate BNPL was not required. Under the new regulation, only commercial banks and financing companies are eligible to provide BNPL services ("BNPL Providers"), subject to applicable laws and regulations. Financing companies must obtain prior approval from the OJK before implementing BNPL, with such obtainment to be further regulated by the OJK.

Existing financing agreements entered into by eligible BNPL Providers before OJK Reg. 32/2025 will remain valid after the regulation comes into force.

Key Features of BNPL Services

OJK Reg. 32/2025 introduces six cumulative characteristics that define BNPL services. Existing BNPL Providers must comply with these characteristics no later than six months from the date of issuance of OJK Reg. 32/2025, i.e., by June 15, 2026:

• BNPL is intended to finance the purchase of goods and/or services on a non-cash basis for customers or debtors;
• no collateral is required;
• BNPL is subject to a specified financing limit (ceiling);
• repayment is made through instalments, as agreed by the parties, of principal and/or interest, margin, profit-sharing, or ujrah;
• customer approval may be conducted electronically, either face-to-face or non-face-to-face; and
• BNPL services must be delivered through an electronic system.

BNPL may be implemented on either a conventional or Sharia-compliant basis.

Core Compliance Obligations for BNPL Providers

BNPL Providers are subject to three key compliance obligations:

• prudential principles;
• consumer protection; and
• personal data protection.

Importantly, OJK Reg. 32/2025 expressly stipulates that the implementation of consumer protection principles also applies to BNPL collection practices.

While imposing these obligations, OJK Reg. 32/2025 still allows BNPL Providers flexibility to establish their own feasibility assessment policies for BNPL financing, provided they are developed in the form of guidelines.

Transparency, Reporting and Sanctions

BNPL Providers must comply with information transparency obligations. In this regard, all necessary information must be disclosed to prospective consumers or debtors, including information on:

• the source of financing (where joint financing, channeling, and/or transfers are involved);
• instalment amounts and frequency; and/or
• other information determined by the OJK.

Failure to comply may result in administrative sanctions, ranging from written reprimands to revocation of business license.

BNPL Providers are also required to submit periodic reports on the implementation of BNPL services to the OJK, in line with the prevailing laws and regulations on reporting for BNPL Providers.

BNPL operations may be terminated either voluntarily or on the order of the OJK based on certain factors as determined by the OJK, including in cases of the violation of statutory provisions, an increase in the risk profile that cannot be adequately mitigated by the BNPL Provider, or an increase in the number of unresolved customer complaints.

Conclusion

OJK Reg. 32/2025 introduces a specific regulatory framework for the BNPL industry, signaling the OJK's intention to formally recognize and support the business model while strengthening consumer protection and risk management standards. By clearly defining BNPL, limiting eligible providers to commercial banks and financing companies, and introducing characteristics and core compliance obligations, the regulation removes regulatory ambiguity and distinguishes BNPL from other financing products.

Going forward, BNPL Providers must carefully assess their operational readiness, internal policies, and compliance frameworks. Existing BNPL Providers must also ensure compliance with the six-month transition period to align with the newly introduced characteristics of BNPL under OJK Reg. 32/2025 and mitigate the risk of regulatory sanctions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.