I'd rather, for their own sake and for the good of society that they couldn't get credit at all. It's too easy and tempting and it doesn't help for more than a few days.
Also I think you may misunderstand who these people are. Take wonga.com for example, they're on ads on TV with their iPhone app. How many truly poor people have iPhones?? Their customers are people who need (want) cash for the weekend before payday to go drinking/clubbing/partying. It's a luxury (of sorts) and people always pay a premium for luxury.
I don't know, but most jurisdictions have a view on that and most ethicists would to. I can tell you it's less than 400%.
I think "these people" are not a homogeneous group, so defining them as truly poor is tricky. I would argue though that it is still a social negative to lend to anyone who has an iPhone but doesn't have the money to go on a night out before pay-day. I can't think of a better example of socially-useless lending. I think that is bad for the state to allow that, but I can see not everyone would agree. There are however definitely much worse off people using such services, and they should be prevented from doing so [1].
The other issue thing I want to mention is that the state schooling system is woefully inadequate in the area of personal finance. Maybe it's the parent's job, but budgeting and managing your finances is too important a skill to be left to them, and schools waste plenty of time teaching "personal, social and health education" — it'd be easy to shove money management in there.
[1] With the possible proviso of a proper social emergency loan or payment system for people living below the poverty line with unexpected non-discretionary spending [2], e.g. car breakdown which prevents them getting to work.
[2] Don't even get me started on medical bills here. Pay-day loans are a third-level kludge on a totally broken system there.
The headline interest rate is misleading remember. Let's say it costs s fixed amount to do the paperwork to set up any loan. Obviously that is going to be a greater or lesser part of the overall interest charge if the loan is for 1 week or 100 weeks.
How would you ensure your "social emergency loans" were ever repaid?
I think no credit at all might be better alternative in many cases.
Taking credit with interest rate 2500% is rarely thought trough, free, conscientious market decision. If you don't have money this month how can you be sure that you will have such money, plus insane interest rate, next month?
