Indonesia: OJK Introduces Dedicated Regulatory Framework for Buy Now Pay Later (BNPL)

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

Clear Definition of BNPL

As BNPL has evolved from a mere payment option into a significant component of the financial services sector, regulatory clarity has become increasingly necessary. Prior to OJK Reg. 32/2025, BNPL lacked a formal legal definition and was often conflated with peer-to-peer lending or credit cards, particularly under OJK Regulation No. 10/POJK.05/2022 concerning 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, thereby clearly distinguishing BNPL from other financing products.

Eligible BNPL Providers

OJK Reg. 32/2025 raises the compliance threshold for BNPL providers. Under the previous regime, providers of technology-based fund-lending services were only required to be established as limited liability companies or cooperatives, and no specific approval to operate BNPL services was 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 services, with the approval process to be further regulated by the OJK.

Existing financing agreements entered into by eligible BNPL Providers prior to the entry into force of OJK Reg. 32/2025 will remain valid.

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 issuance of OJK Reg. 32/2025, namely by 15 June 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 core compliance obligations:

• prudential principles;

• consumer protection; and

• personal data protection.

Importantly, OJK Reg. 32/2025 expressly provides that consumer protection principles also apply to BNPL collection practices.

While imposing these obligations, the regulation allows BNPL Providers flexibility to establish their own feasibility assessment policies for BNPL financing, provided such policies are documented in the form of internal guidelines.

Transparency, Reporting and Sanctions

BNPL Providers must comply with information transparency obligations. All material information must be disclosed to prospective consumers or debtors, including:

• the source of financing (where joint financing, channelling, and/or transfers are involved);

• instalment amounts and repayment frequency; and/or

• other information as determined by the OJK.

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

BNPL Providers are also required to submit periodic reports on the implementation of BNPL services to the OJK, in accordance with the applicable reporting requirements.

BNPL operations may be terminated either voluntarily or at the direction of the OJK, based on factors determined by the OJK, including violations of statutory provisions, an increased risk profile that cannot be adequately mitigated, or a rise in unresolved customer complaints.

Conclusion

OJK Reg. 32/2025 introduces a dedicated regulatory framework for the BNPL industry, signalling the OJK’s intention to formally recognise and support the BNPL 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 specific characteristics and 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 within the six-month transition period to align with the newly introduced BNPL characteristics and mitigate the risk of regulatory sanctions.

By SSEK, Indonesia, a Transatlantic Law International Affiliated Firm. 

For further information or for any assistance please contact indonesia@transatlanticlaw.com

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