Giving people on welfare the option of paying for their groceries with a bank card, saving them a trip to the storefront loan company, has a few obvious benefits, said Catholic Charities executive director Michael Fullan.
"It enhances people's dignity," he said.
The idea of welfare payments as a profit source for payday loan companies makes Fullan see red.
"I have a lot of problem with that," he said. "It prays on the most vulnerable."
In American jurisdictions where the debit card system has been implemented there has been controversy over the possibility of welfare recipients using the cards at casinos, liquor stores or tattoo parlours.
But a Christian would want to respect the freedom of poor people as much as they do everyone else, said Pazak.
"We're going to hope they spend it well," he said. "I would trust them as much as I could. If it was shows after debit cards were distributed that there was widespread abuse, then maybe there needs to be another look at it."
The city estimates it will save between $1 million and $2.5 million per year on the switch to plastic.
Whether bank automated teller machines will charge fees on withdrawals using the cards is yet to be determined. Card design will try to minimize the extent to which welfare recipients can be identified.
Welfare payments via debit card welcomed
By Michael Swan, The Catholic RegisterTORONTO - When the City of Toronto stops sending out welfare cheques over the coming winter it could be a very good thing, maybe something worth expanding to the entire province, said Catholic observers of the welfare system.
Instead of welfare cheques, the city intends to issue debit cards to Torontonians on Ontario Works. While 65,000 Toronto recipients already receive welfare payments via direct deposit into their bank accounts, there are still about 35,000, most without bank accounts, who receive cheques.
"(The debit card plan) doesn't seem to degrade anybody's dignity or anything like that. It sounds like a good idea," said Bishop John Pazak, chair of the social affairs commission of the Assembly of Catholic Bishops of Ontario.
For many cheque recipients the only way to turn the cheque into spendable cash has been to frequent payday loan companies that charge hefty fees for cashing a cheque. Money Mart charges $2.99 per cheque, plus three per cent of its value. The Cash Store, which operates 574 Cash Store and Instaloan branches across Canada, reported third quarter profits of $1.15 million as of June 30 on quarterly revenue of $49.7 million. The company's profits were down because of a $3 million class-action payout. The courts ruled brokerage fees charged by the payday loan company pushed interest rates above the legal limit.
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