Google announced Wednesday that it is imposing a ban on payday lender ads and payday loan-related products from its advertising scheme as of July 13, 2016.
Instabill has long offered merchant accounts for online payday lenders. It would be pretentious for us to say we saw this coming – we didn’t.
Are we surprised? Not in the least. One year ago, California’s Department of Business Oversight announced it would block online ads for unlicensed payday lenders on Google and Bing searches.
Ban on Payday Lender Ads Consistent with the Culture
This is now the culture for high risk industries – a culture closely watched by the Consumer Finance Protection Bureau (CFPB) and the Federal Trade Commission (FTC) – both of which are phasing out businesses that they deem unsavory or shady. The payday lending industry has been in the CFPB’s crosshairs for several years.
Google’s announcement, posted on its Public Policy Blog, is merely the latest news consistent with the high risk industry culture.
What Does it Mean for Payday Lender Merchants?
In addition to its ban on payday lender ads, Google is vetoing ads for loans where complete payment must be settled within 60 days of the date of issue, and ads for lenders which impose APRs of 36 percent or higher.
However, we do not feel it is cause for panic among lending merchants. Here are three reasons why:
1. You can still search for payday lenders on Google
Google’s ban on payday lender ads impacts paid search – merchants will no longer have the option for paid search after July 13. It means when a consumer is on a particular website, they will no longer see google-sponsored ads for payday lenders on the page.
Online payday loan merchants can still advertise on Google by using key words and phrases within their website content such as ‘need a payday loan,’ or ‘payday lenders in Anytown, USA.’
It’s a minor setback for the industry. But if consumers need to find a payday loan provider, they can and will.
2. Payday lenders and consumers may turn to Bing and Yahoo
In consideration to the above point, payday lenders can turn to Bing and Yahoo for paid search advertising. Whether consumers turn to Bing and Yahoo for payday loan options remains to be seen. Google dominates the search market up to 68 percent while Bing and Yahoo currently share the leftovers.
3. The CFPB and FTC are not going away
While the CFPB and the FTC continue to weed out the unsavory and predatory types, this is a time for those in the payday loan industry – both online and brick-and-mortars – to reconsider their practices and do what they need to remain in favor with the federal government.
The last thing lending merchants want is to run afoul of either.
What about payment processing for payday lenders?
Naturally, we are curious as to what will happen to payment processors who offer merchant accounts for payday loan merchants, who utilize Google Adwords as its primary advertising method. When the CFPB and FTC introduced Operation Choke Point, its purpose was to reduce banking opportunities for businesses they deemed predatory or shady.
Regardless, Instabill will continue to offer payment processing methods such as ACH, virtual checks and direct debit for high risk industries, including payday lending. Our merchant account managers are reachable direct at 1-800-318-2713, or by using the live chat feature at Instabill.com.