Canadians can now borrow money through the post office

Canadians can now borrow money through the post office.

Canada Post has partnered with TD bank to offer personal loans between $1,000 and $30,000 on a fixed or variable rate. Applications can be completed online.

Introduced as a pilot project in Nova Scotia a year ago, the Canada Post loan project quietly launched nationwide on Sept 12.

The MyMoney Loan offers lower interest rates than other loan products and credit cards through Canada Post offices and is aimed at underserved regions.

Canadians have told us that they face limits in accessing simple, affordable and transparent financial services," Canada Post spokesperson Philipe Legault said in an email. By combining Canada Post's strength in serving the entire country with the expertise and security of a long-standing financial services provider, we believe we can improve access and options for more Canadians."

Canada Post is a crown corporation mandated to operate in rural areas. It has more than 6,000 post offices across Canada.

Now that the internet has gutted demand for letter mail, Canada Post had been looking at redefining its services and how to make better use of its rural post offices, says Ken Wong, a marketing professor at Queen's University's Smith School of Business.

Canada Post lost nearly half a billion dollars last year, recording a loss before tax of $490 million in 2021.

During the last decade, as it has become more and more apparent that post offices were becoming less frequently used, there were a lot of suggestions that Canada Post had, as one of its greatest assets, all of this real estate," Wong said.

The question was what else can we do in all of those locations?' For a long time it had been discussed that these postal areas could serve as bank outlets," he said.

This is really Canada Post trying to take advantage of all of these locations and the fact that they have access to all of these Canadians."

Offering financial services is not a new concept for the post office. Canada Post already provides a wide range of financial services including domestic and international money transfers, postal money orders and the sale of payment options such as prepaid reloadable cards, gift cards, eVouchers and remittance payments.

The Canadian Union of Postal Workers has long advocated that Canada Post offer banking and financial services to reach rural towns and villages that do not have access to banks and as an alternative to high interest payday lenders.

Canada Post did not say whether it plans to launch further banking services. At this time we are focusing on ensuring a successful national launch," Legault said.

Whether or not the new service will be successful remains to be seen, said Wong, especially in light of market uncertainty.

I don't think you'll see great uptake in urban centres, but you probably will see it in more rural areas," Wong said.

During the 2021 market test at select post offices in Nova Scotia, Canadians used the loans for unexpected emergencies such as car repairs, vet bills and to help with larger purchases.

As soaring inflation pushes up the cost of living some people are going to be short on resources," so might turn to a product like MyMoney which is easily accessible, Wong said.

But at the same time there is a lot of uncertainty with interest rates and inflation, so there may not be a lot of demand for loans."

Ghada Alsharif is a Toronto-based staff reporter for the Star. Reach Ghada via email: galsharif@torstar.ca