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as long as people default on their loans. If businesses (banks or other lenders) did that then they couldn't pay their workers or other fixed expenses, credit would vanish entirely and the business would fold because it is no longer profitable. I agree that the interest rates are too high, but they are serving a clientele that has poor credit history who does not pay their bills reliably.

The payday lending industry takes into account that there are going to be people that are late paying their loans, collection activity (i.e., harassing phone calls), processing the checks they hold as collateral, outright defaults, and arbitration agreements. In the instances where the check amounts are large it could also include civil court cases for fraud and theft by deception which will involve attorneys. Finally, the parties that provide the capital to start the businesses also expect a return on their investment commensurate with the risk they are taking for making those loans.