Canada Post launches financial accounts through Koho with few no-fee options

Canada Post has launched spending and savings accounts in a move that mirrors programs in other countries where postal services offer basic banking options to lower-income customers and underserved communities. But the new offering lacks transparency and includes few low-cost options, a leading consumer advocacy group say.

The Crown corporation is relying on a partnership with Canadian fintech startup Koho Financial Inc. to provide what it described in a press release on Monday as “fair, transparent and, above all, accessible” financial services.

Canadians who set up an account through Canada Post’s MyMoney service can make deposits at the post office in addition to loading funds online through the Koho app. All account types offer unlimited transactions, as with many chequing accounts, and the ability to earn interest on deposits, as with a savings account. Users also get a prepaid, reloadable Mastercard they can use for both purchases and ATM withdrawals.

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But the new service is difficult to navigate, with hard-to-find information on fees and terms and services, said Geoff White, executive director and general counsel at the Public Interest Advocacy Centre, a consumer rights group. There are also limited low-cost options for consumers, with fees as high as $22 a month for accounts with higher interest rates and more features, he added.

“This was pitched as no-frills banking,” Mr. White said. But, he added, “there are frills and the frills come with the monthly fees.”

Canada Post has long pondered a foray into postal banking, in which post offices offer a limited array of financial services. It’s an option that already exists in countries such as France, Italy, Brazil and Switzerland. Canada had its own postal service-based national savings bank until 1969.

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Canada Post argues its extensive retail network allows it to reach rural and Indigenous communities that may have difficulty accessing traditional banks.

The Crown corporation attempted an earlier foray into postal banking in 2022 when it launched a lending program with TD Bank Group, only to close it weeks later, citing processing issues.

Still, post offices in Canada already provide an array of financial services, including domestic and international remittances, money orders and prepaid reloadable cards, handling millions of transactions per year, Canada Post spokesperson Lisa Liu said via e-mail.

Now, Canada Post believes it can do more.

“Research has shown a particularly clear need for more banking and savings products tailored to specific customer segments in Canada,” she said.

But Mr. White said Canadians considering doing some of their banking through the post office might struggle to understand what they’re signing up for.

For example, getting deposit insurance coverage, which protects customers’ money if a financial institution fails, involves an extra step compared to a traditional bank.

While Koho has applied to become a bank it is not currently a deposit-taking institution eligible for coverage through the Canada Deposit Insurance Corporation (CDIC), a federal Crown corporation that insures funds held in savings and chequing accounts, term deposits and foreign currency at its member institutions up to certain limits.

Instead, Koho partners with a federally regulated Canadian bank to provide CDIC insurance. However, that coverage extends only to users who choose the “earned interest” feature on their accounts.

While there is no cost to activate that option, clients must provide a social insurance number to do so, Koho spokesperson Ziv Deutsch said.

Information about account fees is also hard to decipher on both the Canada Post and Koho websites, Mr. White said.

Canada Post offers only one account, called Non-Member plan, that has no monthly charges by default. The option is displayed less prominently compared to three other account types, called Essential, Extra and Everything, that come with monthly fees.

Users can also avoid fees on the Essential plan by setting up recurring direct deposits or depositing at least $1,000 a month in the account.

Mr. White called both requirements “onerous” for accounts that he said are supposed to be accessible.

Customers who choose any of the fee-bearing plans receive competitive interest rates on savings ranging from 2.5 per cent to 4 per cent, in addition to cash-back perks and other features.

But the monthly charges can be as high as $22, which Mr. White called “high retail banking fees.”

If Canada Post wants to become a truly accessible option for low-income and underserved customers, “there is work to do,” he said.

Editor’s note: (March 20, 2025): A previous version of this article incorrectly stated that Peoples Trust provides CDIC insurance to Koho customers. Peoples Trust holds only non-insured funds on behalf of Koho. Koho partners with federally regulated Canadian banks to provide CDIC insurance.