Mainstream Financial Institution Alternatives to the Payday Loans

  • Brenda Spotton Visano


This chapter identifies some of the key barriers to accessing mainstream banking services and discusses various attempts to reduce, overcome, and bypass them. It reviews the federal banking regulations intended to improve access to basic banking services and introduces readers to some of the special loan products and projects designed to provide customers with an alternative to payday loans. Where barriers to using a bank account and accessing short-term loans for emergency funding needs drive some customers to the payday loan business, this chapter profiles community-based initiatives, many in partnership with local credit unions, designed to address these barriers. It concludes with an assessment of resurrecting the postal savings bank as a nationwide alternative to the payday loan.


  1. Anderson, J. 2013. Why Canada Needs Postal Banking. Ottawa: Canadian Centre for Policy Alternatives.
  2. Baradaran, M. 2015. How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy. Cambridge, MA: Harvard University Press.CrossRefGoogle Scholar
  3. Bickerton, G., and K. Steinhoff. 2013. Banking on a Future for Posts? A Financial Assessment of Postal Banking and Financial Services at Various Postal Administrations.
  4. Boisclair, D., A. Lusardi, and P.C. Michaud. 2017. Financial Literacy and Retirement Planning in Canada. Journal of Pension Economics & Finance 16 (3): 277–296.CrossRefGoogle Scholar
  5. Brennan, M., B. McGregor, and J. Buckland. 2011. The Changing Structure of Inner-City Retail Banking: Examining Bank Branch and Payday Loan Outlet Locations in Winnipeg, 1980–2009. Canadian Journal of Urban Research 20 (1): 1–32.Google Scholar
  6. Buckland, J. 2008. Community Banking Projects for Low-Income Canadians: A Report Examining Four Projects to Promote Financial Inclusion. SSRN, October 29.
  7. ———. 2011. Money Management on a Shoestring: A Critical Literature Review of Financial Literacy & Low-Income People.
  8. ———. 2012a. Hard Choices: Financial Exclusion, Fringe Banks, and Poverty in Urban Canada. Toronto: University of Toronto Press.Google Scholar
  9. ———. 2012b. Passing the Buck? Examining Canadian Banks Approaches to Financial Exclusion. Research and Working Paper No. 49, Institute of Urban Studies.Google Scholar
  10. ———. 2014. Structural Barriers, Financial Exclusion, and the Possibilities of Situated Learning for Financial Education. New Directions for Adult and Continuing Education 2014 (141): 15–24.CrossRefGoogle Scholar
  11. Buckland, J., and B. Guenther. 2005. “There Are No Banks Here”: Financial and Insurance Exclusion in Winnipeg’s North End. Winnipeg, Canada: Winnipeg Inner-City Research Alliance.Google Scholar
  12. Buckland, J., and M. Thibault. 2005. Fringe Banking in Winnipeg’s North End. Winnipeg, MB: Canadian Centre for Policy Alternatives.Google Scholar
  13. Buckland, J., A. Fikkert, and J. Gonske. 2013. Struggling to Make Ends Meet: Using Financial Diaries to Examine Financial Literacy among Low-Income Canadians. Journal of Poverty 17 (3): 331–355.CrossRefGoogle Scholar
  14. Buckland, J., D. McKay, and N. Reimer. 2016a. Financial Inclusion and Manitoba Indigenous Peoples Results from an Urban and a Rural Case Study. Winnipeg, MB: Canadian Centre for Policy Alternatives.
  15. Buckland, J., E. Sinclair, and K. Martin. 2016b. Small Loan Workshop: Summary of Proceedings and Recommendations. Unpublished manuscript.Google Scholar
  16. Bunbury, D. 1997. The Public Purse and State Finance: Government Savings Banks in the Era of Nation Building, 1867–1900. Canadian Historical Review 78 (4): 566–599.CrossRefGoogle Scholar
  17. Canada. 2014. Harper Government Secures Commitment from Largest Banks to Offer No-Cost Accounts for Financially Vulnerable Canadians. May 27.
  18. ———. 2015. Enhanced Low-Cost and No-Cost Banking Services Now Available to Canadians. January 15.
  19. Canadian Credit Union Association. 2015. Credit Union Community and Economic Impact Report.
  20. ———. n.d. Credit Unions in Canada.
  21. Canadian Union of Postal Workers. n.d. Postal Banking.
  22. Collins, D. 2011. Aboriginal Financial Literacy in Canada: Issues and Directions.
  23. Cox, E. 2013. How to Save Canada Post. National Post, December 16.
  24. Deloitte Canada. 2011. The Canadian Payments Landscape. Report submitted to the Federal Task Force on Payments System Review.
  25. Demirgüç-Kunt, A., and L. Klapper. 2013. Measuring Financial Inclusion: Explaining Variation in Use of Financial Services Across and Within Countries. Brookings Papers on Economic Activity 2013 (1): 279–321.CrossRefGoogle Scholar
  26. Demirgüç-Kunt, A., L.F. Klapper, D. Singer, and P. van Oudheusden. 2015. The Global Findex Database 2014: Measuring Financial Inclusion around the World. World Bank Policy Research Working Paper, No. 7255.
  27. Department of Finance. 1999. Reforming Canada’s Financial Services Sector – A Framework for the Future. Ottawa: Supply and Services Canada.
  28. Financial Consumer Agency of Canada. 2007. CG-2 Access to Basic Banking Services Regulations: Refusal to Open an Account.
  29. Hopper, J. 2004. ‘Credit Union Firsts’ Commemorate a Strong History of Innovation.
  30. Kempson, E., A. Atkinson, and O. Pilley. 2004. Policy Level Response to Financial Exclusion in Developed Economies: Lessons for Developing Countries. Report of Personal Finance Research Centre, University of Bristol.
  31. Law Commission of Ontario. 2008. Appendix C: Federal Initiatives.
  32. Le Goff, P. 2005. Canada Post Corporation as a Provider of Financial and Government Services: The Way of the Future? Parliamentary Information and Research Service.
  33. Lux, M., and R. Greene. 2015. The State and Fate of Community Banking. M-RCBG Associate Working Paper, No. 37.
  34. MacPherson, I. 2006. Credit Unions. The Canadian Encyclopedia.
  35. Marsh, S., Y. Dildar, and R. Janzen. 2010. Payday Lending: In Search of a Local Alternative. Centre for Community Based Research.Google Scholar
  36. Monsebraaten, L. 2016. Ontario Trades Checks for Debit Cards for Disabled People. The Toronto Star.
  37. Pew Charitable Trusts. 2016. How a Set of Small Banks Compares on Overdraft: An Analysis of Programs, Fees, and Terms at 45 Financial Institutions.
  38. Prosper Canada. n.d. Barriers to Safe and Affordable Financial Products and Services for People on Low Incomes.
  39. Realini, C., and K. Mehta. 2015. Financial Inclusion at the Bottom of the Pyramid. Victoria, BC: FriesenPress.Google Scholar
  40. Ricketts, J. 2016. The Impact of Financial Exclusion on Vulnerable Groups Accessing Check Cashing Services. Unpublished manuscript, York University.Google Scholar
  41. Simpson, W., and J. Buckland. 2016. Dynamics of the Location of Financial Institutions: Who Is Serving the Inner City? Economic Development Quarterly 30 (4): 358–370.CrossRefGoogle Scholar
  42. Stapleton, J. 2014. Welcome to the Financial Mainstream? The Hazards Facing Low Income People When Navigating the Financial World. Prepared by John Stapleton for Houselink (with Max Wallace), Edited by Sally McBeth, Clear Language and Design.
  43. Task Force for the Review of the Canada Post Corporation. 2016. Canada Post in the Digital Age.
  44. U.S. Postal Service Office of Inspector General. 2014. Providing Non-Bank Financial Services for the Underserved.
  45. World Council of Credit Unions. n.d. Our Global Reach.

Copyright information

© The Author(s) 2018

Authors and Affiliations

  • Brenda Spotton Visano
    • 1
  1. 1.Department of Economics, School of Public Policy and AdministrationYork UniversityTorontoCanada

Personalised recommendations