High street payday lenders could disappear next year after a new price cap on the industry was set by the Financial Conduct Authority.
From January, interest rates will be capped at a daily rate of 0.8% of the amount borrowed, while default fees will be limited to £15.
Meanwhile, the total cost of borrowing will be capped at no more than 100% of the loan, ie twice the amount that was originally borrowed.
The FCA's chief executive, Martin Wheatley, suggested the caps could reduce the total number of payday lenders to as few as four, while there could be none operating on the high street by the end of 2015.
John Gathergood of the Nottingham School of Economics pointed out that high street lenders have higher costs.
"The capped price is likely to be too low to keep them profitable. It's therefore possible some well-known names will vanish."
But the move could open the door to a new wave of overseas firms, warned Richard Scrivener, a regulatory consultant at Bovill.
"There is strong evidence to suggest that, with the new price cap established, international subprime lenders will enter the UK market.
"Larger players are already adjusting their business models and the space cleared by the demise of some of the fringe players will create an attractive market."
The price cap plan has not changed from proposals that the regulator published in July. The FCA said someone taking out a loan for 30 days, and repaying on time, would not pay more than £24 in fees and interest for each £100 borrowed.
"For people who struggle to repay, we believe the new rules will put an end to spiralling payday debts," Mr Wheatley said.
"For most of the borrowers who do pay back their loans on time, the cap on fees and charges represents substantial protections."