New Report Calls for Fundamental Changes in Payday Loan Market

HAMILTON, ON, Feb. 22, 2016 /CNW/ - Our current payday loan market is failing consumers and society and government regulations alone cannot solve the current situation. Banking on the Margins, a report released today from the think-tank Cardus, aims at reforming Canada's payday loan market. Authors Brian Djikema and Rhys McKendry call for joint efforts between government, banks, credit unions and charities to provide customers with lower rate loans as an alternative to payday loans.  

  • More than 2 million Canadians borrow over $2.5 billion per year from over 1500 retail outlets across the country.
  • The industry, which has grown rapidly since the first store appeared in Edmonton in 1996, offers loans at interest rates that range from 600% to over 900% annually to customers who need immediate cash.
  • 49% of payday loans users have a household income of less than $35,000 and 68% of users make less than $50,000.

Citing analysis of the business structure of payday loan providers and the structure of the loans themselves, the report finds that the payday market is structured to draw customers into dependence on payday loans.

Payday loans often stand in to prevent worse outcomes, like eviction or utility disconnection, but the report highlights the long-term costs of payday loan use to communities, neighbourhoods, and governments. "It's damning with faint praise," notes Brian Dijkema, Cardus's Program Director for Work and Economics. "Payday Loan companies thrive when their customers are desperate and as a result many of the costs associated with that desperation – increased health care costs, reliance on social services, family breakdown, policing costs –are socialized."

The report outlines a three pronged approach to for a small-dollar loan market that better aligns the interests of consumers with providers:

  • Moving government focus away from interest rate caps and towards mandating longer loan terms which can sustain the market while increasing affordability for consumers.
  • Partnership between government, charities, and financial institutions to provide funds for loan loss reserves which will encourage innovation in the small dollar market.
  • The introduction of social impact bonds which will reward organizations that achieve outcomes that enable indebted consumers.

"Payday loans are an issue that can't be solved by government alone" concludes report author Dijkema. A payday loan market built to enable customers also requires action from banks, credit unions, and community associations."

To read the report, go to:

About Cardus:
Cardus is a think tank dedicated to the renewal of North American social architecture. It conducts independent and original research, produces several publications, and regularly stages events with Senior Fellows and interested constituents across Canada and the U.S. To learn more, visit: and follow us on Twitter at


For further information: Media Contact: Marisa Monnin, Director of Communications - Cardus, (613) 314-8733,


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