Why Faster, More Inclusive Government Payments Start with Prepaid

When people are waiting on a government payment, the experience matters. Delayed benefit payments, uncashed cheques, or hard-to-access emergency funds only add pressure for those who need support most.

Whether for income assistance, tax refunds, or disaster relief or emergency response, Canadians should be able to receive payments quickly, securely, and through a method that is easy to use in everyday life.

For many, that no longer means waiting for a cheque, depositing it, and waiting again for funds to clear. Canadians already use digital wallets, banking apps, and prepaid cards to access and spend money. Government payments should meet them there.

Modern payment methods enable faster access, greater usability, and fewer barriers than paper-based processes. This shift isn’t just about updating an admin process. Moving beyond cheques modernizes delivery and ensures critical funds reach people in ways that work when they need them most.

Paper cheques no longer meet consumer expectations

For too many government programs, paper cheques remain part of the payment process, even as consumer expectations have moved toward digital options. Cheques are slow, costly and increasingly misaligned with how Canadians expect to receive money.

CPPO research shows that 69% of Canadians believe the government should stop mailing cheques and adopt modern digital options. The same research also found that 81% rank direct deposit as their preferred method for receiving government payments, with respondents prioritizing security and speed of delivery. At the same time, direct deposit alone does not solve every access challenge. Roughly one million Canadians are unbanked, with millions more underbanked while still using digital and alternative financial services.

The frustration is especially high among people with limited banking access. Research shows 70% of unbanked or underbanked people said they were frustrated by paper cheques, compared with 54% of fully banked respondents.

Common pain points include making an extra trip to the bank, waiting in line, cheque holds, cheque cashing fees, waiting for mail delivery and difficulty depositing cheques online or through mobile apps. Support for modern, digital government payments is overwhelming and cuts across income levels and demographics, making the continued reliance on cheques increasingly hard to justify.

The cost of cheque-based payments adds up

Cheque-based disbursements are often inconvenient for recipients and create unnecessary costs and administrative burden for governments.

There is a significant cost gap between paper cheques and digital or prepaid disbursements. Digital and prepaid payments cost approximately $0.30 per transaction, compared with an estimated $4 to $20 for paper cheques. That represents a 10 to 65 times cost differential.

The Canada Revenue Agency is currently holding more than $2 billion in uncashed cheques, creating fiscal waste and delaying access to funds consumers are owed. This 10–65x cost gap represents not just inefficiency but avoidable fiscal waste, with every month these cheques sit compounding inconvenience for people waiting on funds they are already entitled to receive.

Beyond cost and convenience, cheque-based payments also create security and operational risks. Cheque fraud remains a major vulnerability, and according to CPA Canada, every day nearly 1,700 cheques issued by the federal government, amounting to around $500,000, are added to the pile of uncashed cheques.

Prepaid improves access, speed and security

Prepaid offers a practical alternative for government social services and emergency payments and aligns with how Canadians already use digital-first tools. Open-loop prepaid cards can be used online and in-store anywhere the card network is accepted. They do not involve credit, do not have to be tied to a bank account and can be replaced if lost or stolen.

This makes prepaid especially useful for programs serving people who may be unbanked, underbanked, in remote communities or temporarily displaced during emergencies. Funds can be loaded in real time, giving recipients immediate access without waiting for mail delivery, bank processing or cheque clearing.

For many Canadians, prepaid is also a practical money-management tool: users value spending limits, budgeting features and the ability to avoid overdraft and interest charges when every dollar counts. In an environment where economic uncertainty has spurred a strong desire for financial control, prepaid and digital solutions give people greater confidence that help will arrive quickly and can be managed on their own terms.

Prepaid also supports program control and accountability

Beyond faster access, prepaid can support better program design. Cards can be configured for use at selected merchant categories, such as grocery, childcare or transit. Programs can also set usage timeframes, and unused portions of support payments can be returned to government when cards expire.

These capabilities are important for public sector programs that need to balance recipient choice with accountability. Digital transactions can provide better tracking and transparency for both recipients and administrators, while helping governments reduce manual administrative work and focus more resources on program delivery. These controls help governments target funds to essential needs, prevent misuse and improve auditability, while still giving recipients flexibility in how they manage their support. 

There are already strong prepaid use cases across Canada, from everyday financial tools to public-sector and emergency disbursements:

• Royal Bank of Canada’s Right Pay platform has supported the replacement of paper cheque disbursements within Canada’s public sector since 2015.

• We Financial, issued by Peoples Trust, uses prepaid card capabilities to distribute a range of payments, including income assistance, treaty annuity payments, CRA benefits, Jordan’s Principle and Inuit Child First supports, and CERB.

• Challenger banks such as KOHO have made it easier for users to receive CRA direct deposits through app-based accounts, giving Canadians another digital option for accessing government funds.

• The Canadian Red Cross uses instant disaster relief prepaid cards to help people access emergency support quickly when they need it most.

Together, these examples show that prepaid is not limited to one type of payment or recipient. It is established, regulated infrastructure that can support daily money management, financial inclusion and rapid government disbursements when timely access to funds matters most.

A more modern approach to public payments

Canadians already manage their money across digital wallets, online banks and prepaid accounts. Government payments should work the same way. Modernizing how government moves money also supports federal priorities: lowering costs for Canadians, building one integrated economy and improving operational efficiency. Digital prepaid disbursements reduce program costs, give more people reliable access to funds regardless of banking status or geography, and streamline back-office operations so governments can focus more resources on service delivery.