Only weeks after launch, TD hits pause on loan program partnering with Canada Post | 24CA News

It solely launched final month, however TD Bank and Canada Post have already put a brand new program providing loans for patrons in distant communities on pause, citing unspecified “processing issues.”

Known because the MyMoney program, the mail provider and lender introduced simply final month that 6,000 Canada Post areas throughout the nation would quickly be capable to provide people small loans of between $1,000 and $30,000.

Targeting distant communities that lack full service financial institution branches however do have Canada Post areas, this system was an instance of what is generally known as postal banking — a system that international locations akin to Italy, Brazil, New Zealand, Switzerland and others have, to various levels of success, however one which hasn’t existed in Canada in additional than 50 years.

While clients would apply both in particular person or on-line by way of Canada Post, the loans themselves could be with TD Bank, and include charges of as much as 20 per cent per 12 months — a lot greater than many different conventional strains of credit score, however lower than what instalment and payday lenders are inclined to cost in communities with out full-service financial institution services.

A report from the Canadian Postmasters and Assistants Association in 2015 discovered that nearly 1,200 Canada Post areas are situated in communities that do not have a financial institution or credit score union department. That’s virtually half of all areas, and people are the communities that this system is attempting to focus on.

When this system was launched in October, TD stated it deliberate to broaden this system to much more banking providers, however after barely a month, 24CA News has realized that the lender has put this system on short-term hiatus.

“Since the launch, the product was paused both online and in physical locations, after experiencing processing issues,” the financial institution stated, with out elaborating. “We’re still working through this and will update accordingly.”

The web site the place Canadians can apply for the loans has an advisory that the loans are “temporarily unavailable.”

Unanswered questions

Duff Conacher, co-founder of civic advocacy group Democracy Watch, helps the idea of postal banking usually, however was underwhelmed when he heard the small print of this system.

“It’s gouging on the top end,” he stated in an interview. “A line of credit should be around 10 to 12 per cent right now, unless it’s tied to a mortgage and then it should be lower.”

“There’s no reason to go above that.”

Ben Dachis, the affiliate vice-president of public affairs on the C.D. Howe Institute think-tank, informed 24CA News in an interview Thursday that he was “not surprised that this isn’t taking off as easily as one would expect.”

He is amongst those that is skeptical of the concept of postal banking within the first place, noting that on-line banking choices and credit score unions already do an excellent job of filling the void for banking wants in areas the place they lack.

“Postal banking has always been a solution looking for a problem.”

24CA News has requested Canada Post and TD Bank for extra particulars on what kind of “processing issues” led to the choice — and what the standing of current functions is.

Canada Post directed all inquiries to TD Bank, which has up to now declined to elaborate on the character of the processing points.