The United States Postal Service has quietly revived a banking program that includes cashing checks at a handful of post offices.
The program, which began September 13 at post offices in Washington DC, Baltimore, Bronx and Falls Church, Va., Allows customers to purchase gift cards up to $ 500 using their check. payroll or their business check for a small lump sum. This could serve the one in four American households who are unbanked or underbanked, according to a 2017 survey by the Federal Deposit Insurance Corporation.
The effort comes after increased calls from progressive politicians to offer a public banking option in the United States and is a collaborative effort between the USPS and the American Postal Workers Union.
“Delivering new affordable, convenient and secure products and services aligns with Postal Service’s 10-year Delivering for America plan to achieve financial sustainability and service excellence,” said USPS spokesperson Tatiana Roy, in an emailed statement to Marketplace.
She added that “this is an example of how the postal service leverages its large business footprint and resources to innovate.”
Although Americans are largely unfamiliar with public banking services, the offering is not new to the USPS.
When a post office cream was also a bank
In 1910, an act of Congress established the Postal Savings System, allowing customers – some of whom were immigrants accustomed to banking at post offices in other countries – to deposit money at their post office. local.
“It was something that was just part of the fabric of everyday American life, that you could drop your money off at the post office,” said Christophe shaw, historian, political analyst and author of books on the USPS and popular banking movements.
Shaw said the program was launched largely as a result of popular advocacy by farmers and workers, and the banking industry was largely against the public option.
His patronage peaked around WWII, but then began to falter in the 1960s, when President Lyndon B. Johnson aimed to streamline the federal government and as consumer mistrust of private banks during the Depression began to fade. The postal savings service officially ended in 1967.
A supportive “regular drumbeat”
As it stands, the services provided at the four USPS pilot program sites are relatively limited, although the Washington Post reports that the program is likely to expand locations and services, such as ATM access and bill payment services.
In addition, the idea of leveraging post offices for public banking gained momentum. A USPS Office of Inspector General 2014 White Paper reviewed the plan and concluded that “underserved Americans need financial services that work for them … the postal service is in an excellent and, in some ways, unmatched position to meet the needs of these citizens.”
The main democrats pleaded for the question on the trail of the presidential campaign in 2020.
“I think it’s actually been a pretty steady pace over the last 10 years or so of postal experts and inspectors general and members of Congress and just about everyone saying that postal banking needs to come back, ”said Porter McConnell, co-founder of the Save the Post Office Coalition and Take on Wall Street campaign manager.
How public banking differs
“I think the big difference has to do with the type of mission and the purpose that such a bank would have,” said Shaw. “There are some potential services that [private banks] are not interested in offering because the profitability is not there, so that means there is a whole range of individuals and locations that are not served by these banks.
Advocates of postal banking services see an opportunity to serve those who bank deserts, or locations that do not have access to a physical bank for deposits or withdrawals. The St. Louis Fed estimated that in 2014, some 3.74 million Americans lived in banking deserts. A 2019 survey of the fDTHIS found that 5.4% of Americans had neither a checking account nor a savings account.
The problem of banking deserts only got worse and worse after the Great Recession. Since 2008, more than 13,000 bank branches have closed in the United States, according to the National Community Reinvestment Coalition. This represents over 14% of all bank branches.
Although there are more commercial bank branches in the United States, there are currently over 34,000 post offices nationwide. That footprint is large – roughly the same number as all US Starbucks, McDonald’s and Walmart locations combined – and spans unbanked areas in rural, suburban and urban areas.
“I think in terms of viable partners for a public option for the bank, the post is just, you know, a very clear option,” McConnell said.
While the new program aims to study how the USPS can increase profits, it could also offer low-income people a reprieve from companies that offer predatory payday loans or check cashing services.
“A lot of times these places charge a lot of money, and that’s why they’re considered exploitation,” Shaw said. “Cashing checks is something where you have people paying a lot of money to do. The price for the postal service to do it now isn’t the lowest you can find, but it’s competitive, and it’s definitely better than what you can find in a lot of places. And then there is the trust people have in the postal service.
But will the program get the seal of approval?
However, support for postal banking is by no means universal. Banking industry lobbyists, including the Consumer Bankers Association, the American Bankers Association, and the National Association of Federally-Insured Credit Unions, have already go out in opposition to the small pilot program.
In order to truly determine the potential success of the program, Shaw and McConnell said an expansion of services and locations would likely be needed. But they pointed out that postal banking is very successful all over the world and expanding banking services seems like a logical step for the USPS.
But will it be easy to reinvent the role that the post plays for Americans? Can post offices become banks again?
McConnell pointed to another political struggle at the turn of the 20th century involving the post: this time over whether the service expected to enter the parcel delivery market. Now, a USPS without a parcel service would be almost unthinkable.
Joe Biden previously indicated his support for postal banking services; last year, a working group set up by him and Bernie Sanders pleaded for a broader banking partnership between the USPS and the Federal Reserve.
It gives hope to postal banking supporters like McConnell.
“All the postal banking proposals that are on the table, you know, allow unbanked or underbanked people to access their own money cheaper and more easily,” she said.