Canada Post is now offering 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 rural, remote and indigenous communities.
“We believe this is the best way to give Canadians better access to financial services, especially underserved Canadians,” said Michael Yee, Canada Post’s vice president of financial services, in an interview before the launch.
The loans, which range from $1,000 to $30,000, fill a gap between payday lenders and traditional banks. Loans will have interest rates set by TD, but customers don’t need to have a bank account and can be new to credit.
“What we discovered when we talked to Canadians is that there really is a need in the market for access to simple and affordable loan services,” said Yee.
The postal service has been running pilots for the loan program, called MyMoney, since last year and in recent weeks has ramped it up to about 6,000 post offices nationwide. Customers have been using the loans for unexpected emergencies, such as car repairs or veterinary bills, as well as to consolidate debt from products with higher interest rates, Yee said.
Postal workers cannot provide financial advice, but have been trained to guide customers on how to apply for loans online or over the phone, as well as provide more informational materials. TD employees will support customers through the actual application, decision-making, and financing process.
The partnership will help TD reach more Canadians, Michael Rhodes, group head of Canadian personal banking, said in a statement.
“Financial service is an essential service, and this alliance allows TD to play a significant role in helping expand access to banking to more Canadians.”
Canada Post declined to provide details about the business terms of the partnership with TD, including how the two share profits and risks.
The Canadian Postal Workers Union supports the move as part of a broader push to bring low-cost banking to post offices, national president Jan Simpson said.
“This is just the beginning, because we are pushing for a full public bank, because as we know, in France and other places in the world, postal banking has been very successful, and we know that it can be successful here in Canada. also.”
Other countries such as Italy, Brazil, New Zealand, and Switzerland also offer postal banking, while Canada had a post office-based national savings bank until 1969.
Simpson said it’s important for Canada Post to ensure adequate staffing levels as it looks to roll out more services, but expanded offerings could help reduce the corporation’s debt levels, create good union jobs and help communities.
“We hope that Canada Post will expand beyond loans and go into checking and savings accounts, mortgages, insurance and even credit cards, because we really need to offer a lot of services to those who are currently unbanked in our society,” he said. he said she.
Donna Borden, leader of the advocacy group ACORN, said in an emailed comment that she’s happy to see a lower-interest alternative to payday loans, which can charge what works at interest rates nearly 400 percent annually.
He said, however, that it is still unclear how easily those with no or poor credit will be able to access the new loans, and he would also like to see a lower entry point.
“In the future, we’d like to see them offer even smaller fair interest loans to people in a financial crisis, so people can avoid having to use payday loans.”
Canada Post already offers a variety of financial services including international remittances, money orders and prepaid gift cards that together add up to five million transactions worth $2 billion a year, but the new program could be part of a broader expansion, Yee said.
“We believe we have a strong foundation and are already a trusted partner for many Canadians to provide financial services. And so we’re looking to expand those financial services through partnerships in the future to provide better access for Canadians.”
By Ian Bickis