In unveiling new rules Thursday to shake up the payday-lending market, federal regulators said they wanted to curb what they consider abusive practices, while encouraging new lenders to enter the market and maintain credit for hard-up, low-income borrowers.

But many conventional lenders—credit unions and community banks—said the new rules were too onerous to encourage them to try to expand in a market that many have abandoned to smaller storefront and online lenders.

Prominent online lenders, on the other hand, said they could step up their business in the small-dollar credit market under the new regulations, seeing opportunity for the rapidly growing sector to expand even further.

The new rules were proposed Thursday in Kansas City, Mo., and the final version would likely take effect in 2018 or later.

The “field hearing” was one of the Consumer Financial Protection Bureau’s longest—and rowdiest—since the agency was created five years ago. Regulating payday lending is highly controversial because it is seen as a product that has helped millions of Americans under financial duress and yet often predatory because the fees can be more expensive than the loan amount itself and trap people in a repeated cycle of debt.