Canada Post now offers credit alongside stamps, packaging and its existing financial services as it officially partners with TD Bank Group.
The Crown Corporation said Wednesday the loan program, which could be expanded to other services, will give Canadians more financial options 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, Canada Post’s vice president of financial services, in a pre-launch interview.
The loans, which range from $1,000 to $30,000, bridge a gap between payday lenders and traditional banks. The loans will bear interest rates set by TD, but customers do not need a bank account and can be reinstated on the loan.
“When we spoke to Canadians, we realized that there really is a need in the market for easy and affordable lending services,” Yee said.
The Post has been piloting the loan program called MyMoney since last year and has ramped it up in some 6,000 post offices nationwide in recent weeks. Customers have used the loans for unexpected emergencies like car repairs or vet bills, as well as to consolidate debt from higher-interest-rate products, Yee said.
Postal workers are not allowed to give financial advice, but have been trained to instruct customers on how to apply for the loans, either online or over the phone, and to provide materials with more information. TD employees support customers during the actual application, decision-making and financing process.
The partnership will help TD reach more Canadians, Michael Rhodes, group leader of Canadian personal banking, said in a statement.
“Financial services are an essential service and this alliance allows TD to play a meaningful role in expanding access to banking to more Canadians.”
Canada Post declined to provide details on the commercial terms of the partnership with TD, including how the two will share profits and risks.
The Canadian Union of Postal Workers supports the move as part of a broader push to bring low-cost banking to post offices, said national President Jan Simpson.
“This is just the beginning as we are pushing for a full public bank because as we know post banking has been really successful in France and elsewhere around the world and we know it can be successful here in Canada too .”
Other countries such as Italy, Brazil, New Zealand and Switzerland also offer postal banking, while Canada had a Post Office National Savings Bank until 1969.
Simpson said it’s important that Canada Post staff properly as it wants to offer more services, but that the expanded offerings could help pay off the company’s debt, create good unionized jobs and help communities .
“We hope that Canada Post will expand beyond lending and offer savings and checking accounts, mortgages, insurance and even credit cards because we really have a lot of services to offer to those who are currently underserved in our society,” she said.
Donna Borden, a director of advocacy at ACORN, said in an emailed comment that she’s glad to see a lower-interest alternative to payday loans that can charge interest rates of nearly 400 percent annually.
However, she said it’s still unclear how easily those with little or no credit will be able to access the new credits, and she also would like to see a lower entry point.
“We wish they would offer even smaller, fair-interest loans for people in a financial crisis in the future – so people don’t have to resort to payday loans.”
Canada Post already offers a range of financial services, including international remittances, money orders and prepaid gift cards, which together account for 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 financial services partner to many Canadians. As such, we look to expand these financial services through partnerships in the future to provide greater access for Canadians.”
By Ian Bickis
