Can crypto benefit payday lending?

It was almost illogical to think that digital currencies could benefit financial sectors like payday loans, especially after the first digital currency was launched. If you remember quite well, the early years of digital currencies were quite challenging, given the differing opinions people had about crypto. Well, this does not mean that everyone has welcomed crypto, as several countries still have a tough stance when it comes to digital currencies.

With that said, do you think that sectors like payday loans have any benefit they can reap from crypto? If so, will we see more short-term lenders turn to cryptocurrencies in the future? Of course, paying attention to such trends is very important due to the volatile nature of digital currencies. For instance, if more people buy Bitcoin, it could result in significant price increments and vice versa. So, let us now look at how short-term lenders can benefit from crypto and other important insights.

Payday loans amid financial inclusion

We live in a time when people want to access financial services almost instantly, regardless of whether they have bank accounts. This agrees with a recent PwC study that found that about 80% of Americans consider speed and convenience critical parts of a good customer experience. Payday lending offers exactly that, which could be the reason why twelve million Americans opt for such services, LendEDU reports.

That is not all: according to FinDev Gateway, only about 76% of the adult population globally has official financial accounts. So, there is an apparent need for the world to become even more financially inclusive. A good number of professionals believe that crypto can be a convenient solution to achieve this.

The best part of crypto is that you do not need a bank account; you do not need to give your personal information to any particular site. Such benefits are very convenient, especially if you’re seeking to access some funds and you don’t have an official bank account. And who knows? Maybe such benefits could encourage more payday lenders to turn to crypto – particularly those eyeing financially exclusive regions.

The allure of speed and cost-efficiency

In a world where everything can now be accessed almost immediately, who would want to wait for ages before receiving their funds? We have already hinted that immediacy could be part of the reasons why many people use payday loans, even though these services have high interest rates. But remember again, sometimes these loans can be delayed.

Crypto comes in handy as it ensures that you receive your funds in a matter of seconds or minutes. What’s more, the transaction costs are quite minimal, so you won’t need to worry about unnecessary cuts. Do you know that you can actually spend as low as 0.0001 on one Bitcoin transaction alone? And since crypto eliminates intermediaries, transaction costs can be reduced further.

Staying relevant

One of the crucial ways to survive in the business world is maintaining customer centricity. You do not want to offer products that contradict customer preferences. In fact, if we are to look at the statistics, Business Dasher believes brands that are more suited to meet customer needs are 60% more profitable than those that don’t.

That means that any payday lender cannot afford to ignore current trends in the industry. For instance, just a few years ago, Checkout.com released a study showing that about 39% of customers wanted crypto to be used for payments and not just for investing. As if that were not enough, nearly 560 million of the global population already use digital currencies. Could such statistics dry payday lenders to adopt digital currencies as a strategy for staying relevant?

And mark you; Statista found that about 36% of respondents preferred crypto payments because they didn’t like the money control of banks. Another 35.6% felt using digital currencies was safer than traditional methods. This presents a great opportunity for payday lenders who adjust to such trends.

Challenges

Even though crypto offers a great opportunity for payday lenders to stand out, there several challenges that face this sector. In countries like China, where crypto is banned, it may be quite difficult for these service providers to reap crypto benefits. Plus, regulations keep changing. Imagine you are a lender who has implemented crypto, and your government later bans the use of crypto.  

In other places, like the US, governments are now seeking to outlaw these short-term loans completely. A recent Washington Post article actually revealed that six states had recently banned payday lending. Such moves make it quite difficult to predict what the future holds for such a sector that appeals to customers seeking instant financial remedies.

Final remarks

Well, looking at the overall benefits of crypto, such as speed and security, we can conclude that the payday lending sector stands a great chance of benefiting. That is without mentioning the fact that more people are turning to crypto. After all, who does not want to receive their funds almost instantly and cheaply?

However, with all these benefits, the payday sector has several challenges to deal with. For instance, different jurisdictions have different opinions regarding crypto, and it may be tough when a country completely outlaws these currencies. In other regions, payday lending may actually be completely outlawed.