Review of banking fees in Canada
Prepaid payment products
Background
Prepaid payment products can be used to pay for purchases, with some also allowing cash withdrawals at ATMs. They can generally be used wherever cards from major payment card networks (Mastercard, Visa, and American Express) are accepted. They are available in both physical and electronic forms.
There are several types of prepaid payment products (see Annex 5: Sample of prepaid payment products in Canada):
Reloadable cards: Some prepaid payment products can be loaded and reloaded with funds, with the amounts determined by the user. They can be linked to a deposit account with a financial service provider or be standalone products.
Non-reloadable cards: The initial balance on these products is fixed (e.g., $100) and no additional funds can be added. This product can no longer be used once its balance reaches zero.
Government disbursement and benefit cards: These products are designed to support government or benefit payments, including for consumers who may not have access to a bank account.
Multi-currency cards: These are reloadable products that allow consumers to hold, convert, spend, or withdraw funds in multiple currencies.
According to the Canadian Payment Methods and Trends Report 2025:
- 81 million prepaid payment product transactions were made in 2024, totalling $7.4 billion in value
- Total loads on prepaid payment products grew by an estimated 9% to $12.4 billion in 2024
- In 2024, the average load grew by an estimated 2%, to $185
Prepaid payment products in Canada are issued by banks and trust companies. Fintechs also offer prepaid payment products, typically in partnership with banks and third parties that support card issuance, account linkage, and related services.
Prepaid payment products are distinct from store-branded prepaid payment cards (also known as “gift cards” or “closed-loop cards”) that can only be used at specific merchants or groups of stores. These products are not issued by banks and not regulated by the federal government. As a result, they are not within the scope of the analysis below.
Regulatory framework
Canadian bank-issued prepaid payment products are regulated under the Bank Act and its regulations. In addition to the general requirements set out in the “Regulatory landscape: Dealings with customers and the public” chapter of this report, the framework provides that:
- Consumers’ right to use loaded funds must not expire, except for promotional products.
- Banks must not charge maintenance fees for the first 12 months after activation, except in specific cases, such as promotional products or reloadable products for which the consumer has expressly agreed to the charge.
Prepaid payment products issued in Canada by federally regulated trust companies are subject to the Trust and Loan Companies Act and must meet the requirements set out in the legislation and the Prepaid Payment Products Regulations.
The requirements imposed under the legislation and regulations are similar to those under the Bank Act, with a notable distinction related to external complaints-handling mechanisms. This distinction is a general feature of the legislative framework and is not specific to prepaid payment products.
Canada Deposit Insurance Corporation (CDIC) coverage may apply to prepaid payment products when the funds are held as eligible deposits at a CDIC member institution and CDIC requirements are met. Prepaid payment product disclosure information must state it if the funds are not insured by CDIC.
Several provinces and territories have rules that apply to prepaid payment products, though scope and approach vary across jurisdictions. In many cases, provincial and territorial rules are embedded within broader consumer protection frameworks.
For example, Quebec’s Consumer Protection Act treats prepaid payment products as consumer contracts under its general consumer protection law. Provincial rules tend to focus on retailer gift cards, and some provincial frameworks exclude prepaid payment products issued by financial institutions when these products can be used on the major payment card networks.
Fee structure
| Fee type | Description | Range of fees |
|---|---|---|
| Activation/Purchase | One-time fee charged when buying the card | $3.95–$15 |
| Monthly/Maintenance | Regular fee to keep the card active | $0–$22/month |
| Reloads | Fee for adding funds to the card | $0–$6.95 per reload |
| Inactivity | Charged after a period of no transactions | $2.50–$5/month (after 90 days to 12 months of inactivity, or after expiry) |
| ATM withdrawals | Fee for withdrawing cash at ATMs (domestic or international) | $1.50–$5 per transaction |
| Cross-border debit fee | Percentage charged on transactions in non-CAD currencies | 0%–3% of transaction amount |
| Replacement cards | Cost to replace a lost, stolen, or expired card | $0–$15 |
| Balance inquiries | Fee for checking balance via ATM or customer service | $0.50–$2 per inquiry |
| Card customization | Optional fee for personalized card design | $0–$6.99 |
| Balance transfer/Closure | Fee for transferring remaining balance or closing the account | $0–$10 |
Disclosure
Issuers of prepaid payment products are required to disclose key information to consumers, including applicable fees. These requirements are intended to support consumers’ informed decision-making related to purchasing and using prepaid payment products.
Key findings and implications
Key finding 17: Fees can significantly reduce prepaid payment products’ balances over time
Some prepaid payment products (e.g., fintechs’ prepaid payment products) offer a low-fee structure, with no monthly or annual fees. These are typically linked to an account and generally do not charge inactivity fees, helping preserve balance over time.
In contrast, other prepaid payment products (e.g., mainly distributed in retail stores) carry higher upfront fees and may charge inactivity fees after a period of non-use (e.g., 12 months). These products are not typically linked to an account. As a result, a $25 prepaid payment product could lose its full value in under 2 years if left unused.
Overall, balance depletion is more likely for prepaid payment products with higher upfront and ongoing fees, particularly when the products are not used soon after purchase. Timely use matters, as inactivity and maintenance fees can deplete balances, even in the absence of transactions.
Consumer scenario: Charles’ story
Charles gets 2 prepaid payment products and loads them with $100 each:
- a prepaid card issued by a Big Six bank (with an annual fee of $9.99 and $5 transaction fees)
- a prepaid card issued by a digital bank (with no annual fee and no inactivity fee)
In 2 weeks, Charles makes a $45 purchase with both cards. He uses both cards again 4 months later to make a $25 bill payment.
While the transaction patterns are the same, the remaining balance on each card differs after 13 months due to differences in fee structures.
Big Six prepaid card |
Digital bank prepaid card | |||
|---|---|---|---|---|
| Fees | Balance on card | Fees | Balance on card | |
| Initial value (CAD) | - | $100 | - | $100 |
| Week 1 (annual fee) | $9.99 | $90.01 | $0 | $100 |
| Week 2 ($45 purchase) | $0 | $45.01 | $0 | $55 |
| Month 4 ($25 bill payment) | $5 | $15.01 | $0 | $30 |
| After 13 months (annual fee) | $9.99 | $5.02 | $0 | $30 |
Key finding 18: How a prepaid payment product is used can significantly affect the total fees paid
The way consumers use prepaid payment products can significantly affect how much they will pay in fees. For example, ATM withdrawal fees and cross-border debit fees vary widely across different products on the market, and not using a prepaid payment card in a timely manner can trigger inactivity fees that consumers may not anticipate.
Consumer scenario: Mary and Emma’s story
Mary buys 2 prepaid payment cards loaded with $100 CAD each for her daughter Emma, who is travelling on a school trip to the United States:
- a prepaid card issued by a bank (with a $9.99 annual fee and
$5 transaction fees) - a prepaid card issued by a fintech (with no annual fees and no flat withdrawal fees)
Emma needs cash several times during her trip, both in Canada and in the U.S. She uses each card to make 3 withdrawals of $20 each, from 3 different ATMs, for a total of 6 withdrawals.
Although Emma’s usage is identical for both cards, the total cost differs significantly due to differences in fee structures.
| Bank prepaid card | Fintech prepaid card | |||
|---|---|---|---|---|
| Fees | Balance on card | Fees | Balance on card | |
| Initial value (CAD) | $100 |
$100 |
||
| Annual fee | $9.99 |
$90.01 |
$0 |
$100 |
| $20 CAD ATM withdrawal | $5 |
$65.01 |
$0 |
$80 |
| $20 CAD ATM withdrawal | $5 |
$40.01 |
$0 |
$60 |
| $20 USD ATM withdrawal | $5.69 |
$6.861 |
$0 |
$32.542 |
1 Currency conversion using USD to CAD Mastercard daily rate (1.3729) = $27.46 CAD + 2.5% foreign exchange fee ($0.69 CAD) + $5 flat fee = $33.15 CAD.
2 Currency conversion using USD to CAD Mastercard daily rate (1.3729) = $27.46 CAD.
Key finding 19: Prepaid payment product fees may not be transparent, which may limit consumers' ability to make informed decisions
For physical prepaid cards, fee information may appear in small print on the packaging, with the full terms and conditions inside. This presentation can make it difficult for consumers to identify and understand the potential fees before purchasing the card. Consumers may face similar challenges with digital prepaid payment products when certain terms and conditions do not appear prominently at the point of sale.
As a result, consumers may find it more difficult to compare options and select products that best meet their needs, such as a product with lower currency conversion fees for travel.
In addition, ambiguous marketing can blur the distinction between prepaid payment products and retailer gift cards. This may lead consumers to assume that prepaid payment products operate like gift cards—carrying no fees or restrictions—when in practice, they are subject to different terms, conditions and fee structures.