Replacing cheques with pay cards may benefit Ontario Works recipients

Moving Ontario Works payments away from cheques and onto reloadablepayment cardscould shiftclose to$400,000 a year away from cheque cashing businesses and into the pockets of financial aid recipients in Waterloo Region.

Ontario Works (OW) is a provincial program that provides money to low-income individuals for essentials such as food, clothing and shelter. The program is administered locally by regional government, and servesapproximately 7,000 people.

Of those, 10 per cent receive their OW payments via paper cheque, according to a report submitted to the community services committee.

The remaining 90 per cent receivethe fundsthrough direct deposit into a bank account.

Cheque cashing costs

"To open up a bank account you have to prove who you are," said Carolyn Schoenfeldt, director of employment and income support for community services at the Region of Waterloo.

Some people receiving OW assistance don't havethe proper identificationor the money to get or replace it, she said.A smaller group are sceptical of banksor just don't want to open an account.

As a result, the region provides them with a physical cheque that the individualmust then convert to cash. For that, many of the recipients use retail cheque-cashing businesses, which charge a fee for the service.

About $32 million in cheques have been cashed in the region by OW recipients in the last three years.

The amount has been steadily decreasing, with just under $9.6 million changing hands in 2019.

Northern Cash on King Street in Kitchener told CBC it charges $1.99, plus 3.99 per cent of the cheque's total value, to cash it.

If all OW cheque recipients in the region had been charged thatrate, just under$400,000 of benefit payment funds would have floweddirectly to cheque cashing business in 2019.

Save fees

The switch from cheque to card will generate savings forthe region by reducing administrative and printing costs,Schoenfeldt said.

Replacing or cancelling a lost card requires less administrative support than the same process for a cheque.

Belinda Karahalios, MPP for Cambridge saysthe movement toward payment cardscould also prevent theft.

She's heard of people who are targets for robbery because others know they are holding their monthly OW disbursement in cash.

"This is something that goes on, and that people don't typically know about. So, I think this is a positive change," she said.

Like acredit card

The reloadable payment cards will look like, and act similarlyto, any other Visa cardissued by the Royal Bank, says Sam Paulos, RBC'sdirector of prepaid services.

RBCwill be the region's banking provider for the program.

"The real difference isthere's no credit extended on the product," he said.

"If somebody has a hundred dollars on this product, then they have a hundred dollars available to them to spend at a merchant or to withdraw from an ATM, or to conduct a transaction online."

According to Paulos, Ontario is leading the charge with the move from paper to plastic, but in general Canada lags behind the United States.

"Every state in the U.S. and the [American] federal government offers a card option for disbursement payment in a variety of programs," he said.

In 2016 Ontario's provincial government began modernizing the Ontario Disability Support Program (ODSP) by introducing the cards.

According to the report submitted to committee, the Region of Waterloo is in the third "wave" of rollouts for municipalities making the change to OW.