In the digital era, the ease of accessing financial services has made transactions increasingly practical, from online shopping to Paylater features that can be used in just a few clicks. However, behind this convenience lies potential risks that can trap users, especially younger generations, if not balanced with proper financial understanding and management.
A banking, finance, and investment observer, as well as a lecturer in the Management Study Program at FEB UGM, I Wayan Nuka Lantara, Ph.D., shared that data from the Otoritas Jasa Keuangan (OJK) shows that 40 percent of Paylater users are from Gen Z. Meanwhile, 56 percent of Gen Z use Paylater for consumptive needs.
This condition indicates that Gen Z tends to engage in impulsive spending behavior when using Paylater. Such impulsive behavior focuses more on present satisfaction while ignoring future consequences.
“From a behavioral finance perspective, Paylater encourages people to make less rational decisions. This is what providers capitalize on to attract users,” he explained in the FEB UGM Podcast titled “Paylater & Credit Score: Convenience or Financial Trap for Gen Z?”
Wayan explained that Paylater is one of the most attractive financial services. Besides being practical, it offers easier requirements and often comes with tempting promotions. Typically, Paylater offers 0% interest in the first month and allows small initial limits, creating the illusion of affordability.
“Sometimes, small nominal amounts are perceived as safe. In fact, these amounts accumulate, and interest grows over time. With tenors usually under 12 months, users often get trapped,” he elaborated.
Wayan also highlighted the serious long-term impacts of Paylater. SLIK, short for the Financial Information Service System, is a database that records the names of all Paylater users. Similar to credit cards, all debt history is documented. If there is a default, it will carry long-term consequences.
The first consequence is difficulty in applying for future loans. A poor repayment record reduces financial credibility in the eyes of banks and other financial institutions. Additionally, defaulting on Paylater can also affect career prospects.
“Many HR departments check credit scores before recruiting employees. A bad record can become a consideration for recruiters,” he added.
However, Paylater is not entirely negative. In certain situations, it can be a useful financial alternative that provides liquidity, meaning it can be used when someone can pay but lacks immediate funds.
“The essence of Paylater is not inherently wrong, as it helps address temporary liquidity issues,” he said.
Wayan also shared tips for young people, including students, to avoid falling into the Paylater trap. He emphasized the importance of proper financial allocation.
“There are three financial posts: consumption, savings, and investment. Manage your spending patterns and distinguish between needs and wants,” Wayan advised.
To avoid impulsive purchases, he suggested delaying buying decisions to ensure more rational thinking. Additionally, one’s debt-to-income ratio should not exceed 30% so that income can still cover essential needs.
“Most importantly, never pay Paylater with another Paylater to avoid falling into a deeper trap,” he concluded.
The full video of the FEB UGM Podcast “Paylater & Credit Score: Convenience or Financial Trap for Gen Z?” can be accessed at:
http://ugm.id/HindariJebakanPaylater
Report: Najwa Anggi Namira
Editor: Kurnia Ekaptiningrum
Sustainable Development Goals
