Payday loans have exploded over the last two decades, with lenders across the world offering cash-strapped consumers the opportunity to have money in their bank accounts in a matter of hours.

Designed to fill a gap in the market for those wanting to borrow smaller amounts of money over a shorter period of time, these high-cost short-term loans mainly advertise themselves as the solution for emergency expenses, such as cars repairs or a new boiler. In reality, as one leading payday loans broker in the UK discovered, it’s not just unexpected expenses that make people take out payday loans, with ‘pay bills’ and ‘home improvement’ repeatedly given as the motivation behind applying for this type of finance. 

Despite the often bad press than payday lenders receive, they still remain a popular choice for those who need cash, quickly. But where are the top 5 markets for payday loan companies?

1. USA

Despite the fact that loans are not legal in all US states, the USA is still the world’s biggest payday lending market. Indeed, the “father of payday lending”, Allan Jones, who founded Check Into Cash, came from the US. 

Legislation on what is and isn’t legal may vary from state to state, but this doesn’t dent the US’ number 1 spot.

2. Canada

According to research released in 2016, the use of payday loans doubled in Canada, with 4% of Canadian households reportedly taking out a loan. Again, the regulations vary between provinces. Recently, provinces across the country have tightened the rules governing payday loans, but Canada still remains one of the top payday loan markets in the world.

3. United Kingdom

The payday loan industry exploded in the UK slightly more recently than across the pond – around the mid-2000s. Regulations are relatively tight here, with the Financial Conduct Authority’s caps on interest and fees meaning that consumers should never have to repay more than twice the amount that they borrowed.

The recent collapse of payday giant Wonga, was described by one UK newspaper as clearing the decks for US payday loans companies in the UK market. It is estimated that the payday loans industry is worth £228 million in the UK.

4. Netherlands

Regulations are extremely tight in the Netherlands and lenders that don’t stick to them have faced hefty fines. However, this doesn’t stop the Netherlands being one of the top markets for payday loan companies.

5. Australia

Last but not least, the Australian payday loan industry saw growth in popularity in line with many other countries worldwide. In June 2014, the small loans market, of which payday loans form a part, was valued at around $400 million a year. The industry, which was previously relatively unregulated, is now regulated through the National Credit Code (NCC). However, there are still reportedly loopholes which lenders do exploit to avoid the UCCC.

Payday loans markets around the world

Payday loans companies across the world are generally much more tightly regulated than they were in the mid 1990s or early 2000s. Although this has inevitably changed how payday loan firms are run, while consumer demand for this type of financial product continues, it seems that the payday loan industry is here to stay.