UK payday lenders will be forced to provide details of their products on impartial price comparison websites.
This will enable the sector's 1.8 million customers to shop around more easily for the best deal under a proposed clampdown set out by a watchdog.
Unveiling the plans, the UK's Competition and Markets Authority said there is little transparency over the cost of loans and competition on price is "weak".
It said that by ensuring there are accredited websites providing "impartial, relevant and accurate" information about payday loans, there will be a much greater incentive for lenders to offer low cost loans to win borrowers' business.
The watchdog said payday lenders should provide details of their products on accredited websites as a condition of operating in the market.
It has previously found that a general lack of access to credit elsewhere, unclear fees and charges levied on payday loans and a shortage of ways to compare prices all combine to make it hard for customers in particular to find the cheapest deals.
The CMA has estimated that a typical payday loan customer could be up to £60 a year better off if measures were put in place to make it easier for them to shop around, and collectively, UK customers could save £45m a year if the market were more competitive.
It said that the development of effective price comparisons would make it easier for new entrants to become established and challenge the existing big players.
The CMA's research found that lenders which have tried to offer substantially lower rates have not been particularly successful in attracting new business because of consumers' focus on speed and convenience over price.
It has previously found that the three largest lenders in the sector - Wonga, Dollar and CashEuroNet - accounted for around 70% of revenue from payday lending in the UK.
Dollar's subsidiaries include The Money Shop, while CashEuroNet's online lending products include QuickQuid and Pounds to Pocket.
Payday lenders should have to give summary of charges
The CMA also suggests that payday lenders should be required to give borrowers a summary of the charges they have paid on their most recent loan and over the previous 12 months, so they can get a clearer overview of how much they are spending with a particular lender.
It wants to see greater transparency over late fees and charges, which are not always clear to customers when they are choosing a payday loan.
It is also proposing that "lead generator" websites, which act as payday loan middlemen by selling potential borrowers' details on to lenders, should be forced to explain "much more clearly" how they operate.
This could involve, for example, displaying messages which tell a potential customer: "We are a broker, not a lender," and: "We sell your application details on the best terms for us rather than you," before asking whether they still want to go ahead.
Often, consumers can mistake a lead generator for a firm which is going to lend them the money.
The UK financial ombudsman recently highlighted complaints it is dealing with from consumers who have complained of payday loan middlemen draining money from their accounts without even providing the loan they were looking for.
The CMA's provisional recommendations will be subject to a final consultation before a final report is released around the turn of the year. They are part of a wide-ranging crackdown on the sector after controversy erupted over the treatment of some customers.
Last week, City regulator the Financial Conduct Authority warned the industry to take note after Britain's biggest payday lender Wonga announced it had written off £220m of debt belonging to 330,000 customers.
The move came after the FCA found that Wonga had granted loans to some people after carrying out inadequate affordability checks.
FCA director of supervision Clive Adamson said last week: "This should put the rest of the industry on notice - they need to lend affordably and responsibly."
The FCA has already strengthened the rules under which lenders are allowed to operate since it took over supervision of the sector in April and it plans to impose a price cap in January on the fees and interest charged by firms, to protect borrowers from escalating debts.
The tougher measures which have recently been introduced have seen payday lenders banned from rolling over a loan more than twice and they are now only allowed to make two unsuccessful attempts to claw money back out of a borrowers' account. Payday lenders are also obliged to place "health warnings" on their advertising.
At present, such firms have only "interim permission" to operate under the FCA's toughened regime and they will need to pass assessments in the months ahead to get full permission to carry on.
