Northerners could be hurt by a new federal rule

By Kathleen Martens
APTN Investigates

Ottawa’s plan to directly deposit all government cheques could be a windfall for a Winnipeg firm.

The North West Company (NWC) operates grocery stores in 126 northern Canadian communities where there usually are no banks. Now it is offering to direct deposit federal cheques on its We Financial Visa Prepaid Credit Card.

The service would help thousands of people, says NWC. But it would come at a steep price for Northerners – there is a service fee for nearly every transaction on the card.

Opponents say that’s bad news for people without access to traditional banking services. So community agencies like the Ma Mawi Wi Chi Itata Centre in Winnipeg’s inner-city have partnered with a local credit union to open accounts with only one piece of identification. It will provide a community referral letter as a second piece of ID.

Traditionally, Canada’s five major banks demand two pieces of ID to open an account. And come April 1, 2016, people won’t be able to receive any government payments or benefits without a bank or credit union account number.

But things are very different in Canada’s remote and fly-in Aboriginal communities.

A spokesman for NWC says the card is already in the hands of 40,000 of its customers in northern parts of Newfoundland-Labrador, Quebec, Ontario, Manitoba, Saskatchewan, Alberta, all of Nunavut and the Northwest Territories. In some cases, NWC is the only grocer in those communities and provides postal and banking services, too.

Adding the direct-deposit service to its pre-paid credit card is a smart alternative, says Mike Beaulieu, NWC’s vice-president of services, noting it helps customers avoid interest payments and prevents them from racking up debt like on regular credit cards. However, there are several transaction fees associated with the cards.

For example, it costs 50 cents to check the balance online, $2.50 to withdraw cash, $3 a month to have the card and $15 to replace a lost card. Perhaps more controversial is the $1 charge to check the balance through an automated service or $2.50 to speak to a customer service agent. Transferring money to someone else’s card is $3 and requesting the card balance in cheque form will cost $17.

Beaulieu says the fees posted on the company’s website help offset its administration costs along with its partner, VISA.

As well, NWC is not prevented from charging fees because it is not a chartered bank. Banks, on the other hands, are not allowed to charge for cashing federal government cheques.

Ottawa is moving to direct deposit everything from tax refunds to GST rebates to pension payments because it wants to save money by no longer issuing paper cheques.

Kent Driscoll will have a follow up to this story on tonight’s broadcast of APTN National News, 6:00 PM Eastern and Mountain.