U.S. Bank Takes on Payday Lenders With New Small-Dollar Product

U.S. Bank’s entrance into the short-term, small-dollar lending market could be the serious challenge to payday lenders that consumer advocates and regulators have been hoping for.

The bank’s Sept. 10 announcement that it will allow existing checking account customers to borrow amounts between $100 and $1,000 for three months won praise from the Office of the Comptroller of the Currency, which has been pushing banks to compete against the payday lending industry.

“Consumers need more choices that are safe and affordable, and banks should be part of that solution,” Comptroller of the Currency Joseph Otting said in a statement emailed ...