Concerns regarding fees for cashing government cheques are not unique to Ontario. Several Canadian jurisdictions have taken steps to address this issue. Some examples are provided below.
Regulation: At the same time as it regulated payday loans, the Province of Manitoba passed legislation limiting cheque cashing fees. Under this law, the Manitoba Public Utilities Board is given responsibility for setting maximum fees for cashing government cheques. In the spring of 2007, the Board set the general rate for cashing government cheques at $3.00 plus two per cent of the face value of the cheque. Businesses that charge in excess of the set rate may be charged fines of between $1000 and $5000.
The province of Quebec has taken a different approach. Since 1978, this Province has prohibited any person from charging a fee to cash a government cheque.
Indemnity Agreements: Several jurisdictions have entered into agreements with the banks to allow both bank and non-bank customers to cash government cheques without fee, upon presentation of the appropriate identification. In return, the government agrees to reimburse the banks should a cheque be fraudulent. The federal government, British Columbia, Alberta, Quebec and New Brunswick all have indemnity agreements of various types with the banks.
Alternative Methods of Payment: The costs associated with cheque cashing fees may be eliminated by avoiding the use of cheques for government payments. Several governments have programs to encourage the use of direct deposit for government payments. The Province of Alberta, in particular, has a well-organized and extensively promoted direct deposit program for social assistance recipients. More recently, the governments of Alberta and British Columbia have been experimenting with the use of pre-paid debit cards as a means of providing social assistance payments to recipients who do not have accounts with banks or credit unions.
Encouraging the Use of Banks and Credit Unions: In recent years, the federal government has taken a number of steps to make it easier for low-income Canadians to use banking services, including streamlining the identification requirements for opening an account, mandating low-cost basic banking accounts, establishing the Financial Consumer Agency of Canada, and requiring banks to disclose their cheque hold policies. As well, several provinces have addressed issues regarding identification by providing low-cost photo identification that is an alternative to the drivers’ license.