CUPW calls for Canada Post to get back into banking
With Canada Post review underway, proponents call for post offices to offer banking services
Should Canadians be able to do their banking at the local post office?
It's an old idea that's recently resurfaced, with a federal government panel now conducting a formal review of Canada Post's services.
"I think anyone who grew up in North America, it's a head scratcher to them. If you grew up mostly anywhere else in the world, then it's not," said Tony Rogers.
He's the president of the Halifax-based Nova Local of the Canadian Union of Postal Workers, the union that represents Canada Post's employees.
There are indeed many other countries where government-run post offices double as banks. Great Britain, Japan, India, Brazil and France all offer some sort of postal banking, with services that include savings accounts and cheque cashing.
Postal banking was introduced in New Zealand through Kiwibanks in 2002, as a way to provide a New Zealand-based alternative to the dominance of Australian banks in that country.
Canada Post used to offer banking services, but got out of the business in 1968.
More options for rural Canada
Now, CUPW is among those calling for a return to postal banking, arguing it's needed in part to provide better service to rural Canada.
It's also an idea that's been promoted by the Canadian Centre for Policy Alternatives.
CUPW says there are 2,000 communities in this country with post offices, but no banks. And Rogers says that puts financial pressure on the people in those communities, citing one northern British Columbia reserve as an example.
"There's a post office. Directly across the street, there's a small corner store," he said.
After picking up cheques at the post office, people would cross the street to cash them.
"And he [the store owner] was charging them anywhere from 15 to 20 per cent off their social assistance check to cash it for them," said Rogers.
He argues it makes sense for Canada Post offices to be able to perform simple transactions for a smaller fee instead.
He also said postal banking could be an alternative to payday lenders, which are often accused of predatory lending practices for charging double-digit interest rates on short-term loans.
Other players already involved in banking
Rogers also points out there are already lots of non-traditional players involved in banking. Walmart, Canadian Tire and the Loblaw grocery chain offer financial services.
"There, I think, is one of the real fundamental flaws," of Canada Post being involved in banking, said Dalhousie University economics professor Don McIver.
He points out that Canada Post already operates in hundreds of Loblaw owned stores — and it's unlikely the company would be pleased about competing with its tenant in banking.
He's also not sure Canadians would like the idea of Canada Post offering short-term loans.
"How well does that resonate with Canadians, that our Crown corporation is lending money to less advantaged individuals at a 20 per cent interest rate? I don't think that's going to fly very long."
But proponents of postal banking say as long as Canada Post offers a better rate than its competitors, it would be a welcome addition to the system.
During a May 5 press conference, Community Services Minister Judy Foote didn't rule out the idea of Canada Post getting back into banking.
"We need to look at what lines of business there might be that they could be engaged in, that they are not presently engaged in," she said.