Federal government will continue to issue benefits by cheque

The federal government plans to phase out cheques in favour of a direct deposit system for all federal benefits and benefits, except in the case of Canadians living in remote areas, it says.

If residents of Nunavut and Nunavik are worried about plans to phase out federal benefit cheques in favour of a direct deposit system, they shouldn’t be, says the federal agency that issues those cheques.

In 2012, the federal government announced plans to gradually phase out its system of mailing out cheques by April 2016 — payments such as child tax benefits, employment insurance, and GST and HST tax credits.

That’s been a source of concern in many northern communities, the majority of which don’t have local banking services. Many residents don’t have their own bank account and instead rely on cheque cashing services at their local co-op or Northern store.

Although Public Works and Government Services Canada has used direct deposit for many years, it announced in 2012 that the federal government would be transitioning to direct deposit for all payments, calling it “fast, convenient, reliable and secure.”

The move is also expected to save the government more than $17 million a year, the department said, noting it costs roughly 82 cents to produce a cheque, while a direct deposit payment costs about 13 cents.

As that April 2016 deadline approaches, Public Works and Government Services Canada says that those Canadians not enrolled for direct deposit will continue to receive cheques.

“Cheques will only be issued under exceptional circumstances, for example when Canadians do not have access to a financial institution because they live in a remote location,” reads the original 2012 news release.

PWGSC spokesman Pierre-Alain Bujold said that’s still the case today, although Nunavut residents are still encouraged to enrol for direct deposit if they can.

A major northern retailer has offered another solution for customers: the North West Co., which operates stores across Nunavut and Nunavik, introduced a new prepaid card this month that will allow customers to receive their government benefits and pay cheques directly to the new We Financial Visa Card.

That credit card is a reloadable prepaid card used by customers instead of a bank account, designed for shoppers with limited access to banking services, although the new card charges a number of user fees.