I am in the midst of conducting research in several parts of the country with low- and moderate-income households who live paycheck to paycheck. Some of them use credit to manage fluctuations in their budgets. And they are not the unbanked — a checking account and an income are both required to secure a payday loan.

We should change the regulations so that these customers could stay in the financial mainstream and not leave banks where they already have accounts just to go borrow a few hundred dollars. The high rates and aggressive collection practices of payday lenders cause consumers to lose their bank accounts and sometimes to exit the formal banking system entirely. Well-structured small bank loans, repayable in installments, could prevent that.

While these loans will never be a big part of banks’ revenue compared with mortgages and credit cards, some banks are interested in offering them. A federal regulatory framework issued by the Consumer Financial Protection Bureau this year provides an initial pathway for banks to issue loans with payments limited to an affordable 5 percent of monthly income. Some credit unions already make such loans and a survey by the Pew Charitable Trusts estimates that a $500 loan made to a typical borrower would cost about $250 in finance charges over six months. The same loan from a payday lender typically costs well over $1,000.

So far policy makers have proposed a much more complex way to address this: Let the Postal Service do it. Senator Elizabeth Warren, Democrat of Massachusetts, proposed that the post office offer low-cost financial services like small loans to compete with payday lenders, with banks supplying help on the back end. It would be “the public option” for small-scale finance, but it would require that a new infrastructure of services be built and new skills acquired. Even if the Postal Service idea could be implemented without a technological glitch, the idea has already run into political opposition.

Banks are in a stronger position both to address emergency needs quickly and to achieve scale in the business. There are nearly 100,000 bank branches in the United States, and most banks could lend to their customers through their websites, mobile platforms, A.T.M.s or automated phone systems. That would help keep down the overhead costs that are the main driver of high payday loan prices. If regulators do not require excessive underwriting and documentation procedures for loans that meet basic safety guidelines, origination costs will also be low. Losses on these loans are typically modest, because access to a customer’s checking account gives lenders strong collateral. Credit unions that have offered such services have written off between just 2 and 4 percent of their loans.