Canada Post is now offering loans in addition to 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 to Canadians across the country, including in rural, remote and Indigenous communities.
“We believe this is the best way to provide Canadians with greater 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 $1,000 to $30,000, fill a gap between payday lenders and traditional banks. The loans will come with interest rates set by TD, but customers don’t need to have a bank account and may be new to credit.
“What we discovered when we spoke to Canadians is that there really is a need in the market for access to easy and affordable loan services,” Yee said.
The Postal Service has been running pilots for the loan program, called MyMoney, since last year and in recent weeks it has scaled it up to the roughly 6,000 post offices nationwide. Customers used the loans for unexpected emergencies like car repairs or vet bills, as well as consolidating debt for higher-interest products, Yee said.
Postal workers are not authorized to give financial advice, but have been trained to instruct customers on how to apply for a loan online or over the phone, as well as to provide documents with more information. TD employees will help customers through the application, decision-making and financing process.
The partnership will help TD reach more Canadians, said Michael Rhodes, group head of personal banking in Canada, in a statement.
“Financial services are an essential service, and this alliance allows TD to play an important role in helping to expand access to banking services for more Canadians. »
Canada Post declined to provide details on the commercial terms of the partnership with TD, including how the two share benefits and risks.
The Canadian Union of Postal Workers supports the move as part of a broader campaign to bring low-cost banking to post offices, National President Jan Simpson said.
“This is just the beginning, because we are calling for a fully-fledged public bank, because as we know, in France and elsewhere in the world, the postal bank has really succeeded, and we know that it can succeed here in Canada. as well.”
Other countries like Italy, Brazil, New Zealand and Switzerland also offer postal banking services, while Canada had a post office-based National Savings Bank until 1969.
Simpson said it was important for Canada Post to ensure appropriate staffing levels as it considered rolling out more services, but the expanded offerings could help reduce the company’s debt levels, create good union jobs and helping communities.
“We hope Canada Post will expand beyond loans and go into savings and checking accounts, mortgages, insurance and even credit cards, because we really need to offer a lot of services to those who are currently underbanked in our society,” she said. said.
Donna Borden, an executive with advocacy group ACORN, said in an emailed comment that she was happy to see a low-interest alternative to payday loans, which can charge what amounts to interest rates. interest of almost 400% per year.
She said, however, it’s still unclear how easily those with little or no credit will be able to access the new loans, and would also like to see a lower entry point.
“In the future, we would like to see them offer even smaller equity interest loans to people in financial crisis – so 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 account for five million transactions worth $2 billion a year, but the new program could part of a larger expansion, Yee said.
“We believe we have a solid foundation and are already a trusted partner for many Canadians providing financial services. We are therefore looking to expand these financial services through partnerships in the future to provide greater access to Canadians.
By Ian Bickis