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This assumes people are A) rational and B) intelligent enough to shop around.

Neither is true.

It's quite likely that the company making 20% has a much higher marketing budget than the 15% one. People can't choose the cheaper option if they don't know about it.

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Yes, I would suggest looking at how people comparison shop dollar stores and convenient stores to understand payday loans if you aren’t able to talk to customers directly. Rather than a comprehensive review, calling, etc., they tend to build up a body of experience (which can be shared with others) and make changes over time. It’s certainly not optimized behavior, but since the loans are frequent and short term, there is opportunity to correct course as opposed to something like a mortgage.

Also many who end up taking these loans don't have reliable access to transportation, making shopping around logistically difficult.

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