Tag Archive for Canadian government

No More Door-To-Door Delivery?

No More Door-To-Door Delivery?

Canada Post has recently announced that it will be making changes to its delivery service.  The planned changes will include the phasing out of door to door delivery as well as the introduction of community mail boxes.  There will also be an increase in postage stamps from 63 cents to $1.  However, to make postal services more accessible for customers, Canada Post plans to open up more outlet offices.

The primary reason driving this change is the fact that there has been a rapid decline in the use of postal services. Since 2006, approximately one billion fewer pieces of mail have been delivered by Canada Post as people are now choosing to use email and online payment services instead of regular post.  This has resulted in a decline in Canada Post’s revenues thus forcing it to change its strategy. It is being forecasted that Canada Post will lose nearly $1 billion by 2020.  In light of such dire projections, Canada Post has decided to alter its mode of operation.

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Why Phasing Out Cheques Is Not The Answer

The Federal Government of Canada has announced that it will be phasing out the use of printed cheques completely by 2016.  The goal of the Canadian government is to save taxpayer dollars and to use tax money wisely.

While this may be effective as far as old age security benefits, Canada pension plan, child tax benefit and pension payments are concerned, this does not in any way indicate that the use of cheques itself is likely to disappear in the near future. According to the Federal Reserve, 90% of adult consumers in the US have a checking account as compared to 70% having credit cards.  Each year, more than 20 billion cheques are written for over 30 trillion dollars. There is no doubt that in the past twenty years, multiple payment options have evolved and the face of conducting financial transactions has been transformed. Nevertheless, cheques still continue to remain an efficient, secure and comfortable method of making payments.

Cheques offer many benefits to both consumers and businesses. First and foremost, cheques provide an additional payment option.  Despite the fact that consumers can use credit cards, debit cards, prepaid cards, money orders, travelers cheques, PayPal, Zoompass, Google Wallet etc., payment through cheques is still the second most commonly used method.  Secondly, cheques give consumers a little time to stretch out their payments since processing cheques takes longer than a transaction registering on your credit or debit card.  Small businesses can still utilize the float period and for personal transactions, one can always ask friends or family members to wait a few days before cashing a cheque if one is short of cash or if there has been a delay in receiving expected funds.

Cheques are also not associated with annual or monthly charges.  Any fees associated with cheques are still generally half of credit card processing fees that merchants generally charge today. Cheques are also more secure and harder to misuse since they have to be physically deposited or need to be forged in order to be misused. On the other hand, your credit card information in the wrong hands can be misused quite easily.  Identity theft is one of the most common problems associated with credit cards but most banks offer sufficient security for cheques to minimize any improper usage.  According to the Canadian Anti-Fraud Center, 11,095 fraud reports were filed by Canadian victims in 2009 for more than 10 million dollars in losses.  Additionally, there are still many instances where identity theft and fraud with credit cards go unreported.

Payments made through cheques are protected by the Uniform Commercial Code and banking law and offer greater payment protection as compared to credit cards.  Credit cards have been associated with increasing number of disputed transactions and these transactions take months to be resolved.

Cheques are still a widely accepted payment method for bill payments and purchases.  They are also a safer alternative to carrying cash.  Businesses still prefer to pay each other and their vendors through cheque.  They do this because cheques provide them more control and improve their overall financial management. Also, generating cheques through the payroll system is a straightforward process. Direct deposit on the other hand requires more steps than cheques.  Cheques are also less expensive than direct deposit.  Companies like Cheques Plus offer affordable pre-printed computer cheques to clients across Canada. They also provide custom cheques for businesses enabling them to promote their brand more effectively.

Cheques are also easier to keep record of.  Most of us do not even know how much we’ve spent on our cards until we receive our credit card bills.  On the other hand, cheques help us monitor our expenses and keep control of our finances.  While preauthorized payments may be extremely convenient, there can be times when they can cause major financial headache.  Sometimes, payments you once authorized can become perpetual and despite repeated requests, funds can continue to be deducted from your accounts.  If for some reason, you forget to put funds in your account on the date of withdrawal, not only do you face penalties from the merchant/financial institution that was withdrawing the payment but your bank also penalizes you for non-sufficient funds.  When you make a payment with a check, you are more aware of the date that you wrote it and you are more likely to ensure that the funds are there for the cheque to clear.

Cheques also work very well for certain payments such as rent payments, school fees, donations, utility bills and so on.  Person to person transactions are also more effectively handled with cheques.  People don’t go around carrying debit machines and most people do not feel comfortable handing out their credit card information to another individual, even a friend. Cheques are a much better choice and work out most effectively in such situations. Cheques Plus provides consumers with cheques that have multiple security features in order to ensure minimum risk of fraud and misuse.  They also ship these cheques for free within 24 hours.

Overall, advancement in technology may have provided consumers several options but cheques are and will continue to remain one of the most commonly used tool for making payments.