Youth debt risks rise with BNPL and digital loan usage

The rise of digital financing, specifically online loans and Buy Now Pay Later (BNPL) services, is creating significant financial risks for young people in Southeast Asia. In Indonesia, the Financial Services Authority (OJK) has highlighted the need for increased financial literacy among the youth to prevent debt cycles driven by consumerist lifestyles and social media influence. Experts warn that the ease of digital transactions can lead to debt accumulation and credit defaults if not managed properly.

In Malaysia, data from the Ministry of Finance reveals that BNPL outstanding balances among youth aged 30 and below reached RM2.4 billion as of June 30, 2026. During the first half of 2026, young users accounted for 65.9 million transactions valued at RM5.4 billion, representing approximately 37.9 percent of total BNPL usage in the country. While the total outstanding amount is high, the ministry noted that unpaid balances among youth remain controlled at RM96.8 million, or 4 percent of the total balance. To mitigate risks, BNPL providers are required to conduct creditworthiness and debt capacity assessments before offering credit.