Income-streaming company Wagestream obtained the figures from the regulator using freedom of information laws.

The FCA figures show there were 861,781 payday loans taken in the first three months of this year. This figure represents a drop of 31.7 per cent (399,339) from the 1,261,120 recorded by the FCA in the same quarter in 2018.

The payday loans registered for the first quarter of this year represent £240m of credit. The high interest rates mean these borrowers will have to pay back £410m, according to the regulator.

The FCA data also revealed the number of active payday loan firms has dropped 24.5 per cent from 94 to 71 in Q1 2019.

Wagestream said the research “paints a torrid picture for the predatory payday loans industry”. The sector has come under scrutiny in recent years for ripping off customers with high charges and interest.

Wagestream is campaigning against payday poverty and blames the payday loan industry for trapping low income workers in a damaging cycle of credit dependency.

Its solution is to give workers early access to a percentage of their accrued salary when they need it in return for a £1.75 fee. It says this solves a major cash flow issue for UK workers that is created by monthly wage payments, forcing many workers to take short-term high interest credit options.

Peter Briffett, CEO and co-founder of  Wagestream, said: “This sharp collapse in the number of payday loans taken out is fantastic news for UK consumers who, to their credit, are getting wise as to how expensive and toxic this form of borrowing is.

“Consumers are becoming savvier and the backdrop to this collapse in payday and high-cost loans is a more general slowdown in the overall amount of consumer credit people are taking on, as evidenced by the latest Bank of England Money & Credit report. That has been the run of play since the EU referendum.

“However, it’s in payday loans that the loss of appetite is most apparent and it’s fantastic to see this parasitical industry finally begin to contract.”