The elimination of payday applications

Published in El Pais, October 15th 2019.

There’s always a time in people’s lives where you worry about money and you need to borrow it to get by. If your credit score is good enough you might be able to borrow some from the bank at a favourable interest rate, if not your choices are much more limited included cash advance on your credit card or even worse, a payday loan.

For those who do not know, a payday loan is a short term loan (usually for a couple of weeks to cover until your next payday, hence the name) that comes with very high interest rates. A common example is a $300 loan with a $40 interest payment. These institutions are often accused of being predatory as they take advantage of vulnerable people who have nowhere else to go. They argue however that these people have terrible credit and their default rate is much higher so they charge a higher interest rate. While both make good arguments it is clear that Google has taken the formers side by removing all loan applications with an interest rate of 36% or higher from the Google Play store.

Lenders of course are not happy as they argue that what they do is not illegal and thus Google has no right to intervene. Borrowers as well might not be happy with this move either as while the move was designed to protect them it does not change the fact that they still need access to a loan somewhere even if it has high interest rates.

I personally do not like payday institutions and am glad to see it banned but I can’t help but admit that lenders have a point. It may not be a good idea for Google to have the ability to decide who can and cannot do business even if it is on their own platform. Large companies like Google have the ability to impact any industry they get involved in like Walmart’s decision to stop selling guns or retail giants limiting the ability to purchase E cigarettes. These are all controversial industries but what if they decide to ban products just because it would give them an unfair competitive edge?

I know payday loans are bad but banning it may set a dangerous precedent for companies to ban non controversial products. Legislators may want to keep an eye on this one in case it gets out of hand. lsdpriority