How Prepaid and Digital Banking Are Bringing Down the Cost of Banking in Canada

Banking has long come with a familiar set of costs: monthly fees, minimum balance requirements, overdraft charges, foreign transaction markups. Many Canadians treated those costs as the price of having a bank account. Prepaid and digital banking products have changed that, giving people lower-cost ways to manage money without accepting those charges by default.

On September 3, 2026, Prime Minister Mark Carney launched Digital Transformation Canada, a new federal organization built to scale shared digital solutions, cut duplication and operating costs, and modernize how government delivers services to Canadians. That mandate lines up closely with what prepaid technology already does. Prepaid delivers on all three of the new government's stated priorities: lowering costs for Canadians, building one integrated economy, and enabling more efficient operations.

Canadians Want More Cost-Effective Ways to Manage Money

CPPO's market research found that economic pressure is changing how Canadians bank. 75% say avoiding banking fees has become more important to them over the past year. Our research also showed 44% are cutting credit card use for everyday purchases. Along the same lines, 48% prefer financial apps that help them budget and manage money better.

That preference already shows up in the numbers. In 2024, 27% of Canadians opened a new prepaid account, outpacing new debit account openings at 21% and new credit account openings at 14%. Satisfaction among reloadable prepaid users sits at 96%. Canadians aren't just saying they want lower-cost options. They're opening them.

Digital banking accounts from providers like KOHO, EQ Bank and Wealthsimple serve as  primary financial accounts at a lower cost than a traditional chequing account, with no monthly fee and no minimum balance requirement.

There is strong demand for flexible, low‑cost, and seamless digital payment experiences. Prepaid and digital payment infrastructure aligns well with that need. 

Among prepaid users, 45% point to spending limits and budgeting tools as the most helpful feature for staying financially healthy, and 44% prefer prepaid over credit or debit for online shopping, citing convenience, spending controls and security.

On the digital payments front, consumer support for government payment modernization is overwhelming 69% of Canadians believe the government should stop mailing cheques and adopt modern digital options.

Multi-Banking Is a Cost Strategy

Canadians are actively adopting multi‑banking habits by mixing traditional banks with digital challengers and fintech solutions.

The research shoes 47% now use online or challenger banks, a number that climbs to 52% among those 18 to 64, and 41% maintain relationships with both a traditional bank and a digital-first provider at the same time. When CPPO's research asked people why they switch providers, 42% cited lower fees and better rates as the primary driver, ahead of mobile app quality and every other reason offered. 

At the core of this shift is prepaid infrastructure as the connective tissue of modern money movement and the flexible, regulated foundation that enables Canada’s fintech ecosystem to scale responsibly while meeting real‑time consumer demand.

Each product fills a specific gap in that toolkit. KOHO pairs

everyday spending with cash-back rewards and lets users receive CRA and payroll direct deposits onto the same card they spend from. EQ Bank combines everyday spending with high-interest savings, budgeting tools and no-FX purchases, so money earns interest while it sits and costs nothing extra to spend abroad. Wise lets Canadians load funds in multiple currencies and spend abroad or online at lower FX fees than a typical credit card. PC Financial ties everyday spending to the PC Optimum loyalty program, so grocery and pharmacy purchases earn rewards on a card that functions like a chequing account.

None of these require giving up a traditional bank account. They cover the specific costs a traditional account doesn't. Earned wage access products extend that same logic to pay cycles. Ceridian's Dayforce Wallet, built on prepaid, gives employees access to wages they've already earned before payday, which reduces the need to reach for a credit card or short-term loan to cover a bill that lands a few days early.

These examples show how prepaid has become the catalyst in fintech. It is highly regulated to build trust, yet flexible enough for fintechs and governments to quickly launch new solutions.

Lower Cost Doesn't Mean Less Protection

Open-loop prepaid cards, the network-branded cards issued by regulated financial institutions and accepted anywhere Visa or Mastercard is accepted, operate under the same consumer protection, KYC, AML and privacy requirements as any other regulated financial product. They carry the same fraud and loss protections as credit card networks and can be replaced if lost or stolen. Lower cost comes from a leaner product built for a specific purpose, not from cutting the regulatory protections Canadians expect from their bank.

Prepaid platforms are highly regulated for safety and security while allowing more flexibility than traditional banking products.The use cases are vast. Canadian companies use prepaid rails to launch digital wallets, power gig worker payouts, and embed finance into new customer experiences. Canadians have shifted to digital-first payment tools and multi-banking relationships, with many powered by prepaid infrastructure.

The Fee Pressure Extends Beyond Canada

The same fee pressure shows up in other markets as digital-first competition grows. In the U.S., overdraft and NSF fee revenue at large banks fell more than 50% over the past several years, alongside the growth of neobanks like Chime and Varo that built their offerings around eliminating those fees. In Brazil, commercial bank lending rates dropped 2.7 percentage points between 2018 and 2024 as fintech competition increased. Canada is following the same trajectory. Once lower-cost alternatives exist, consumers choose them.

Lower Cost Also Means Lower Barriers to Entry

Cost and access are connected. Roughly 1 million Canadians remain unbanked, and millions more are underbanked while still actively using digital and alternative financial tools. Traditional bank accounts often require a minimum balance or a credit check.

Prepaid products typically require neither, which is part of why younger Canadians and communities historically underserved by traditional banking are leading their adoption. My Beacon, for instance, gives newcomers to Canada a Canadian money account and a virtual prepaid card before they've even arrived, so they can start managing money in Canadian dollars ahead of landing.

Canadians Are Building a Lower-Cost Banking Toolkit

Digital banking and prepaid products give Canadians a lower-cost way to manage everyday spending, budget deliberately and avoid some of the fees built into traditional banking. CPPO's research shows most Canadians aren't giving up their bank entirely. They're adding cheaper tools alongside it, and Canada's $14 billion prepaid market, spread across more than 67 million open-loop accounts, already backs that shift at scale.

Canadians wanted more cost-effective ways to manage money, and prepaid supplied them. The cost of banking in Canada is coming down as a result.