That's a farcical argument. X% of people will also default on their home-loans. Ergo, no-one should offer them. X% of people will default on service payments

That's a farcical argument. X% of people will also default on their home-loans. Ergo, no-one should offer them. X% of people will default on service payments. X% of people will never claim on their insurance. X% of your customers will never go from 'trial' to 'customer'. Every business requires examination of the risks and amortization via the costs. So yes, some of their clients will go bankrupt. The rest will be charged high fees. And the pay day loaner? They will make a moderate amount of money, because they DON'T GET BACK THE DEFAULTED LOANS. They're not taking someone's house when they don't pay back, they're just losing their loan amount entirely.