How Many Payday Lenders Are There in the UK?

Last updated on January 8th, 2026 at 01:05 pm

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There are currently around 40 to 50 payday lenders operating in the UK, which is a fraction of the number that existed a decade ago before major regulatory changes reshaped the industry.

At one point, more than 200 payday lenders were active, but tighter rules on affordability, interest caps and repeat borrowing forced many firms to close. MoneyHelper explains how high-cost credit has changed in recent years and why lenders now operate under much stricter standards.

The Financial Conduct Authority also outlines how payday lenders are regulated, including the limits on fees, interest and how many times a borrower can roll over a loan. These protections transformed the market, reducing the number of lenders but improving safety for borrowers.

Below, we look at how many lenders remain, why numbers fell and what this means for anyone considering short-term credit today.

How Many Payday Lenders Are There In The UK Today?

There are around 40 to 50 licensed payday lenders currently operating in the UK. The exact number changes slightly each year because firms enter and exit the market, but the overall size has stayed relatively stable since regulation tightened.

Only lenders authorised by the FCA can legally offer high-cost short-term credit, and the approval process is now far more demanding than it once was. This has kept the number of active payday lenders comparatively low.

How Many Payday Lenders Used To Operate Before Regulation Changed The Market?

Before regulation changed the market, more than 200 payday lenders operated in the UK. In the early 2010s, payday loans were widely advertised, easy to access and often approved within minutes. The industry was large, profitable and faced little oversight.

Things changed dramatically when the FCA took over regulation in 2014. The introduction of affordability assessments, rollover limits and interest caps caused many firms to leave the market or shut down entirely. The number of lenders quickly fell from over 200 to only a few dozen.

Why Did The Number Of Payday Lenders Fall So Dramatically?

The number of payday lenders fell dramatically because the new FCA rules made it harder for lenders to operate profitably while protecting borrowers. Price caps limited how much firms could charge per day, how much they could add in fees and how much interest a borrower could pay in total. Companies that relied on high interest rates and repeat borrowing could no longer survive under the new framework.

Affordability checks also became stricter. Lenders must now review income, expenses and credit history before approving any loan. This reduced the number of eligible borrowers and further reduced revenue for lenders. The combination of lower profits and higher compliance costs pushed many firms out of the market.

How Does The FCA Regulate Payday Lenders In The UK?

The FCA regulates payday lenders by setting rules that control interest rates, limit default charges and require thorough affordability checks. A payday loan cannot charge more than 0.8 percent interest per day, cannot apply more than £15 in default fees and cannot cost more than 100 percent of the original loan amount over time.

Lenders must also check that borrowing is affordable, provide clear information about costs and avoid encouraging repeat borrowing. These rules ensure borrowers are protected, but they also limit how payday lenders operate and how much revenue they can generate.

What Does This Mean For People Looking For A Payday Loan Now?

For people looking for a payday loan now, the reduced number of lenders means fewer options but safer products. Borrowers are less likely to face excessive interest, hidden fees or aggressive collection practices. Approval may be more difficult because lenders must follow strict affordability rules, but the loans offered are regulated and transparent.

Some borrowers find the market more limited, but the changes have significantly reduced the risk of spiralling debt.

Are There Alternatives To Using A Payday Lender?

There are several alternatives to payday lenders, depending on your financial situation. Credit unions offer small, affordable loans with interest caps. Some banks provide short-term overdraft support. Other options include budgeting loans, employer schemes or discussing payment plans with creditors.

If you are struggling financially, speaking to a free debt advice organisation can also help you understand your options.

Will The Number Of Payday Lenders In The UK Increase Again?

It is unlikely that the number of payday lenders in the UK will increase significantly in the near future. The regulatory environment remains strict, compliance costs remain high and lenders must operate within tight margins. While a few new firms may enter the market occasionally, most analysts expect the sector to remain small and stable.

The focus in the market has shifted from traditional payday loans to instalment loans, credit unions and alternative forms of short-term credit.

The UK payday lending market has shrunk from more than 200 lenders to around 40 to 50, largely due to strict regulatory changes introduced to protect borrowers. While the number of lenders has fallen, the products available today are safer, more transparent and better controlled. Anyone considering a payday loan should check affordability carefully and explore alternatives before deciding.