Online Payday Loan Service: Profit, Convenience and Functionality

Back in 2013, Europe saw its first online payday loan service; now there are dozens of them. These services got even more popular as soon as the pandemic and lockdowns started causing people to stay home and not leave their safe space. Here are some examples: LightStream, Avant, Upgrade. 

We designed a similar service and previously had compared different products existing on the market. This article will remind you why online payday loans are a win-win solution for all participants. We will also give a hint of what should be considered during its development.

Why Loan Service is a Promising Solution?

 56% of those who applied for loans in 2017-2018 (USA) completed at least part of the loan process via online or mobile channels. Nearly four in 10 (38%) applied for at least one loan completely via online or mobile. 69% of millennials completed at least part of the loan process via online or mobile while 48% completed the process entirely online.

Loan service is a promising solution both for clients and businesses.

Convenience for Clients

It is pretty simple: a borrower should not apply time management skills to find an hour to spend on bureaucratic havoc visiting a bank branch. At any time, day or night, a client registers in a system using their computer or a smartphone, confirms their identity, fills in an application form and gets a loan and then pays it off.

Profit for the Business

Payday loan companies waste money on rent and staff they do not actually need. Doing business online eases the financial load of the business but does not exclude it completely. A company still needs to pay for customer services, maintenance, and third party’s services.

However, these expenses make sense when you see that the number of issued loans skyrocket. First of all, this approach helps you widen your business geography. A loan is available not only to people from a particular city, anyone on the territory of the country can get it. Secondly, the service functions 24/7. No days off, no bank holidays. Finally, the decision-making process decreases the most: if a risk assessment system is integrated into the system there is no need to check any income proof, credit history or other documents. Applications are processed automatically.

Next we will talk about the loan service development case. 

Mandatory Functions 

There are universal functions that exist in every payday loan service. They cover the key points of interaction with a client. We make sure that they are a part of a user flow: we visualize the actions of a user which lead him to the final goal: taking out a loan.

But there has to be a second person — an administrator. An administrator approves or rejects applications and monitors the statistics of issued loans. A separate dashboard is developed for an administrator.

user flow

Client-Side Functions

1. Home page. This page helps a client to learn about the product, loan terms, and general provisions of the loan agreement. We strongly suggest adding an interest and installment calculator to help a borrower see and adjust the loan amount and term according to their needs.

2. One-step registration. At this stage, a screen with fields for the name, last name, telephone number , and email is enough. A client can fill in the application form and upload documents at later stages. We advise doing the telephone number confirmation procedure. It is harder to validate the authenticity of a borrower where you can not see them in person. To make sure it is a real client, you can call them as soon as they fill in the application form. You can simply ask them about their age and credit history to check if they are real. When a person is telling the truth it does not take them long to answer such questions and if it does take some time it must raise a red flag.

3. Document upload. To pass the identification process and enter the system, a user needs to upload a picture of the main page of their passport and a picture where they hold the passport next to their face.

4. Completion of a loan. At this stage, a user selects the way they are credited with a loan, reads the terms of the loan agreement and signs it with a code sent through a text message.

5. Prolongation of the agreement. In case a client does not have enough funds to pay off the loan, they fill in a form for agreement term prolongation. The form can be approved or rejected.


Administrator Functions

1. General statistics. An administrator sees how many loans have been paid off, how many loans are overdue, and how much money is being circulated.

2. Monitoring over issued loans. Following the analysis of these data, an administrator can block users, accept or reject forms for agreement term prolongation (or alter the agreement terms, for instance, reducing the period of the agreement term prolongation), and build up the scoring systems.

3. Scoring system. This system provides a credit rating for users and financial security for the business. Scoring is basically a script based on prior experience and designed in the form of simple formulas. For instance, if a particular user took out loans and properly paid them more than five times then their later loans of $700 or less are approved automatically. Another option: if a user took out a loan and has not paid it off, their new application form is automatically rejected. Such a system decreases the workload of an administrator, however, an administrator might change the script at any time.

4. Automatic increase of a pre-approved loan amount and term. For instance, a first loan must not be bigger than $150 with a term to maturity of 14 days. If a borrower pays off three loans in time, the interest rate of their future loans gets smaller.

5. Referral system. This tool helps to boost the loyalty of the existing clients and attract new leads. It is pretty simple: a client refers their friend to the system, in case the friend takes out a loan, the initial client gets a lower interest rate for their next loan or all of the future loans.


The pandemic resulted in the increased demand for payday loans and such a service allows you to get a high monetization. To guarantee it is working for you and not against you, you need to think through all the legal aspects, security of document exchange and loan issuance, provide a user-friendly interface for both a user and an administration, adding all the necessary functions to it.   

We are happy to do the last bit for you. If you have an idea of a similar project or in case you have any questions, please email us at


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