THE RISE OF ILLEGAL P2P LENDERS
The rapid growth of the P2P industry in Indonesia does not go hand in hand with financial literacy, leaving many borrowers exposed, experts told CNA.
“When access grows faster than understanding, consumers become vulnerable,” Etikah warned.
“Many borrowers don’t fully understand interest rates, penalties or the long-term consequences of repeated borrowing.”
These borrowers may underestimate how quickly small loans can snowball – especially when credit limits are automatically raised after each on-time repayment.
“The screening is much faster, sometimes too fast,” said Eko from INDEF.
“It reaches very young users and often doesn’t properly assess whether the borrower has the capacity to repay.”
Beyond the regulated platforms, illegal digital lenders also pose a serious problem despite repeated crackdowns by authorities.
Once a borrower’s repayment record deteriorates and is flagged in the OJK’s credit database, access to regulated platforms can be closed off, pushing some users toward illegal alternatives.
“These (illegal) platforms exist because there is demand,” Eko said.
“People who are desperate and already blacklisted still need money.”
Illegal operators often rely on harassment, threats and public shaming to ensure repayment. Experts say these aggressive tactics help keep them profitable despite high default risks.
“They use debt collectors. And they usually also hold private data of the borrower which they can use to intimidate or threaten the borrower (to expose them if no payment is made),” said Eko.
Dimbon encountered this when he unknowingly borrowed from illegal lenders, whom he came across on his social media feeds.
“One loan of 2.5 million rupiah paid out only 1.8 million,” he said. “After four days, they threatened to spread my personal data if I didn’t pay.”
When he hesitated, his photo and personal details were sent to contacts stored on his phone, labelled as a loan defaulter.
“I paid immediately,” he said. “I was scared (of the shame).”
Dimbon eventually cleared his debts in early 2024, settling nearly 100 million rupiah after months of financial strain.
His repayment delays mean he can no longer access legitimate digital lending platforms, a consequence he says he has come to accept.
“Maybe it’s a blessing,” he said. “The door is closed now.”
Authorities have blocked thousands of illegal lending apps and websites in recent years, but new ones continue to emerge, often rebranded or hosted overseas.
Andry Yoga, not his real name, is a 35-year-old freelance online driver in Jakarta.
He also has negative experiences with both legal and illegal peer-to-peer lending applications, but this has not stopped him from reaching out to them as a stop-gap measure for his monetary woes.
Andry began using them after being abruptly let go from a state-owned enterprise in 2019, leaving him without income. While looking for new employment, he started doing odd jobs, earning about 1.5 million rupiah a month.
But he needs at least 4 million rupiah to get by, he told CNA. Thus, Andry decided to borrow money from P2P platforms and, to this day, remains reliant on them.
“The problem is that once I fail to pay on time, there is an interest. The amount of money I need to repay keeps growing, and it becomes a vicious cycle.
“I struggle to repay all the loans and so am now dependent on them.”
https://www.channelnewsasia.com/asia/indonesia-p2p-lending-platforms-digital-economy-business-5929511
