Online Payday Lending: UK Market Profile and Forecasts

• Publication date: November 2012
• Report size: 46 pages

Payday lending has emerged and grown into a major industry with customers measured in millions in just a few years. The industry is frequently in the news but is not well understood. Lenders are often criticised for charging high rates of interest which exploit low-income consumers. They are also frequently praised for offering credit to those who cannot obtain it from mainstream sources and giving them an alternative to illegal loan sharks. T...

Payday lending has emerged and grown into a major industry with customers measured in millions in just a few years.
The industry is frequently in the news but is not well understood. Lenders are often criticised for charging high rates of interest which exploit low-income consumers. They are also frequently praised for offering credit to those who cannot obtain it from mainstream sources and giving them an alternative to illegal loan sharks. This report aims to probe beneath these two statements, explore the factors which have driven the high rates of growth and provide a view on how likely it is to continue in the future.

In this market report we review the UK online payday lending industry. We quantify the market size, historical growth rates, segmentation patterns and levels of industry profitability while reviewing key factors behind these figures.

We also carry out an in-depth analysis of the relevant drivers of industry growth – in particular the macroeconomic environment and regulatory framework – setting out historical trends and available forecasts. Our forecast for industry growth is based on this analysis of historical trends and growth drivers.

We believe that, in order for those involved in the market to make the best decisions in this complex and changing environment, they need to have access to the best information. The aim of this report is to provide this.

It is intended for:

- Operators of payday lending businesses themselves
- Investors in these businesses
- Market regulators and policymakers
- Banks, analysts, consultants and other parties with interests in the sector

This report is based on:

- Interviews with senior-level contacts across the high-cost credit market
- Extensive research into published industry sources
- In-depth analysis of the macroeconomic environment and relevant market drivers
- Financial analysis of the accounts of companies in the industry.

Information from these sources has been synthesised and presented clearly and concisely with extensive use of charts and tables to illuminate points and support conclusions.

Market forecasts have been constructed using simple assumptions which are clearly stated. Supporting evidence is provided for our assumptions but readers can easily flex them to model alternative scenarios.

Credit And Loan Industry in the United Kingdom

Market overview
- Description
- Market characteristics and trends
- Value drivers
- Borrowing patterns and repeat lending
- Value drivers
- Regulation
- Alternatives to online payday loans
- US Market comparison
- Borrowing costs
- Customers

Market size and growth

Market drivers
- Discussion of market drivers
- Drivers and their impact:
- Macroeconomic indicators
- Access to banks
- International comparisons
- Consumer credit and lending

Competitive landscape
- Leading companies
- Wonga
- Cash America (QuickQuid)
- Dollar Financial (Payday Express, PaydayUK)
- Comparison

Forecasts
- Driver forecasts
- Real GDP and inflation
- Unemployment
- Household disposable income
- Customer and loan volumes
- Market forecast
- Risks to the forecast

Lender profiles
- Wonga
- Cash America
- Wage Day Advance
- Dollar Financial Global Corp.


Companies Mentioned

Wonga.Com .
Cash America International Inc.
Wage Day Advance .
DFC Global Corp.
MEM Consumer Finance
QuickQuid
PaydayUK
Payday Express

Loan in United Kingdom

United Kingdom Domestic Banking System, Client Loans, Us$mn

• $ 250
• Industry data
• February 2013

Yearly, From 2001 To 2016
By Business Monitor International
Source: Bank of England / BMI

• Industries : Banking
• Countries : United Kingdom

United Kingdom Domestic Banking System, Client Loans, % Change Y-o-y

• $ 250
• Industry data
• February 2013

Yearly, From 2001 To 2016
By Business Monitor International
Source: Bank of England / BMI

• Industries : Banking
• Countries : United Kingdom

United Kingdom Domestic Banking System, Client Loans, Gbpmn

• $ 250
• Industry data
• February 2013

Yearly, From 2001 To 2016
By Business Monitor International
Source: Bank of England / BMI

• Industries : Banking
• Countries : United Kingdom

United Kingdom Client Loans, Us$ Per Capita

• $ 250
• Industry data
• January 2013

Yearly, From 1998 To 2017
By Business Monitor International
Source: Bank of England / BMI

• Industries : Banking
• Countries : United Kingdom

United Kingdom Client Loans, Eurmn

• $ 250
• Industry data
• January 2013

Yearly, From 1998 To 2017
By Business Monitor International
Source: Bank of England / BMI

• Industries : Banking
• Countries : United Kingdom

Credit and Loan in United Kingdom

United Kingdom Domestic Bank Lending Rate, %, Ave

• $ 250
• Industry data
• February 2013

Yearly, From 2001 To 2016
By Business Monitor International
Source: IMF

• Industries : Credit and Loan
• Countries : United Kingdom

United Kingdom Real Domestic Bank Lending Rate, %, Ave

• $ 250
• Industry data
• February 2013

Yearly, From 2001 To 2016
By Business Monitor International
Source: BMI/IMF

• Industries : Credit and Loan
• Countries : United Kingdom

United Kingdom Loan/deposit Ratio

• $ 250
• Industry data
• January 2013

Yearly, From 1998 To 2017
By Business Monitor International
Source: Bank of England / BMI

• Industries : Credit and Loan
• Countries : United Kingdom

United Kingdom Loan/asset Ratio

• $ 250
• Industry data
• January 2013

Yearly, From 1998 To 2017
By Business Monitor International
Source: Bank of England / BMI

• Industries : Credit and Loan
• Countries : United Kingdom