Canada Post now offers loans alongside stamps, packaging and its existing financial services as it officially launches a partnership with TD Bank Group.
The Crown corporation said Wednesday that the loan program, which could be expanded to other services, will provide more financial options for Canadians across the country including in rural, remote, and Indigenous communities.
“We believe that this is the best way of providing Canadians with better access to financial services, especially underserved Canadians,” said Michael Yee, vice-president of financial services at Canada Post, in an interview ahead of the launch.
The loans, which range from between $1,000 and $30,000, fill a gap between payday lenders and traditional banks. The loans will carry interest rates set by TD but customers do not need to have a bank account and can be new to credit.
“What we found when we spoke to Canadians is that there is really a need in the market in accessing simple and affordable loan services,” said Yee.
The postal service has been running pilot programs for the loan program, called MyMoney, since last year and in recent weeks ramped it up across the roughly 6,000 post offices nationally. Customers have been using the loans for unexpected emergencies like car repairs or veterinarian bills, as well as to consolidate debt from higher interest rate products, said Yee.
Postal workers aren’t allowed to give financial advice, but have been trained to direct customers on how to apply either online or by phone for the loans as well as to provide materials with more information. TD employees will support customers through the actual application, decision-making and funding process.
The partnership will help TD reach more Canadians, said Michael Rhodes, group head of Canadian personal banking, in a statement.
“Financial service is an essential service, and this alliance enables TD to play a meaningful role in helping to expand access to banking to more Canadians.”
Canada Post declined to provide specifics on the commercial terms of the partnership with TD, including how the two are sharing profits and risks.
The Canadian Union of Postal Workers supports the move as part of a wider push to bring low-cost banking to post offices, said national president Jan Simpson.
“This is just the start, because we’re pushing for a full public bank, because as we know, in France and other locations around the world, postal banking has really been successful, and we know that it can be successful here in Canada as well.”
Other countries such as Italy, Brazil, New Zealand and Switzerland also offer postal banking, while Canada did have a post office-based national savings bank up until 1969.
Simpson said it’s important that Canada Post ensures proper staffing levels as it looks to roll out more services, but that the expanded offerings could help pay down the corporation’s debt levels, create good unionized jobs, and help out communities.
“We hope Canada Post expands beyond the loans and goes to savings and checking accounts, mortgages, insurance, and even credit cards, because we really need to offer a lot of services to those who are who are underbanked currently in our society,” she said.
Donna Borden, a leader at advocacy group ACORN, said in an emailed comment that she is happy to see a lower-interest alternative to payday loans, which can charge what works out to interest rates of almost 400 per cent annually.
She said, however, that it’s still unclear how easily those with no or low credit will be able to access the new loans, and would like to see a lower entry point as well.
“In the future we would like to see them offer even smaller, fair interest loans for people in a financial crisis – so that people can avoid having to use payday loans.”
Canada Post already provides a range of financial services including international remittances, money orders, and prepaid gift cards that together amount to five million transactions worth $2 billion a year, but the new program could be part of a wider expansion, said Yee.
“We believe we have a strong base and are already a trusted partner for many Canadians to do financial services. And so we are looking to expand those financial services through partnerships in the future to better provide access to Canadians.”
This report by The Canadian Press was first published Oct. 12, 2022.