JAKARTA – Ms Indie, a 28-year-old healthcare worker, was head over heels in debt.

“Every piece of clothing, from my head to my feet, I bought on instalments,” said Ms Indie, who wanted to be identified only by her nickname.

Recounting how she got herself into a debt spiral in 2025, she said she could not resist the discounts offered to customers who used buy now, pay later (BNPL) services on a popular online marketplace.

At first, the instalment payments were manageable, but she soon had to borrow from a peer-to-peer lending application to make payment on the original BNPL instalments. Then she borrowed from another app, and another, and another.

Within two months, she had accumulated 50 million rupiah (S$3,700) in loans – 10 times her monthly pay.

“I feel so stupid, because I didn’t think about the interest and fees accumulating,” she told The Straits Times.

Online peer-to-peer lending – commonly known in Indonesian as pinjol, short for pinjaman (loan) online – is a booming industry, but the ubiquity and ease of use of such services have sparked concerns about young Indonesians, including professionals, falling into debt.

Peer-to-peer lending companies are meant to be intermediaries between lenders and borrowers, and are not allowed to fund the loans themselves. When peer-to-peer lending first emerged in Indonesia, the business model of most start-ups focused on matching individual lenders to borrowers.

However, according to the Financial Services Authority (OJK)...