Canada’s northernmost reaches are beautiful, and isolated. So isolated, in fact, that everyday banking can be a bit of challenge, given extreme weather conditions, among other obstacles.
And, reported The Wall Street Journal on Wednesday (June 17), as many as three percent of all Canadians are not able to access a bank account on a regular basis. That opens the door for Visa Inc., which, as WSJ notes, is linking up with retailer North West Co. Inc. to launch a “virtual” bank experience via direct deposit. The service will target Canadian communities that offer no physical bank branches and are so remote that even mobile or online banking proves difficult.
WSJ reports that a little more than 107,000 people live across a huge area comprising a third of Canada’s land, including the Yukon, Northwest Territories and Nunavut. Yet there were only 23 branches and 42 ATMs operating across that area as recently as 2013, stated WSJ, citing the Canadian Bankers Association.
Paychecks and government benefits will be directly deposited onto Visa prepaid cards rather than into a traditional bank account. The prepaid cards, which operate in a manner similar to debit cards in the U.S., will be issued through Bank of Nova Scotia, the third largest Canadian bank as measured by assets. The program will be managed by North West. The cards can be used to pay bills and shop, and transactions will take place across Visa’s network, which helps Visa generate fees from banks.
The new program will lay the groundwork for more outreach to remote areas in other countries such as Australia, according to WSJ. Visa’s rival MasterCard has noted that the prepaid market in Canada, at nearly C$5 billion estimated this year, is up from C$4.2 billion in 2014.
The direct-deposit program is expected to enjoy increased acceptance once the Canadian government phases out paper checks for federal tax refunds and other benefits by April of next year.
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