Next time you need to drop off a package, would you consider also applying for a loan? Well, at least you’ll now have the option.
What happened: Canada Post has expanded its MyMoney loan program in partnership with TD Bank to locations across Canada, offering loans between $1000 and $30,000, with approval in as little as 10 minutes.
- Canada Post launched a pilot for the program last year at select locations in Ontario, Manitoba, and Nova Scotia.
Why it’s happening: Many rural, remote, and Indigenous communities don’t have easy access to traditional financial institutions which provide most loans in Canada, but Canada Post locations are everywhere.
- There are ~5,780 bank locations across Canada, highly concentrated in urban areas, compared to the over 6,000 evenly distributed Canada Post locations.
- The loans could also be an attractive option for people who don’t want to deal with the fuss of getting a loan from a big bank, which can come with long approval times and lots of paperwork.
Plus: Banking offers Canada Post another revenue stream. Despite being a crown corporation, our postal service is still expected to turn a profit.
- The decline in snail mail has made that more difficult: Canada Post last earned a profit in 2012 and has lost a staggering ~$1.27 billion over the past two years.
Yes, but: These aren’t great loans. They come with interest rates comparable to many credit cards and could end up trapping more people in debt cycles.
- They are, however, better than payday lenders, which typically charge exorbitant interest rates (up to a 500% annual percentage rate, in some cases) and surprise fees.
Zoom out: Postal banking, in which a postal service also offers basic financial services, isn’t a new concept. Canada operated the Post Office Savings Bank until 1969, and it’s a common practice throughout Europe and Asia, but this lending program is only a very minor step in that direction.