Competitive Strategies for Payday Loan Companies

While payday lending companies contribute significantly to the U.S. economy by offering short-term loans to people in need, payday loan company leaders face challenges such as regulatory scrutiny, operational costs, and competition from traditional financial institutions. Grounded in Porter’s five forces model of competition, the purpose of this qualitative pragmatic inquiry was to explore competitive strategies that ensure business sustainability in the payday loan sector. Data were collected from in-depth interviews with eight industry experts who successfully developed competitive payday loan strategies. Through data analysis, four themes emerged, including (a) customer and community relationships, (b) financial management, (c) capital base and employee training, and (d) technology to enhance capacity and customer experience. A recommendation that emerged from the study is for payday loan company leaders to engage with the local community, thus increasing the credibility of their enterprises and easing potential concerns about predatory lending. The implication of the study for positive social change includes enhancing the living standards of families through expanding the availability of funding options and encouraging financial responsibility of community members.