Can Postal Service Stay Alive By Cashing Checks & Selling Prepaid Debit Cards?

The once-great US Postal Service continues to sink into obscurity and financial oblivion, a destiny that will probably not be saved by all the postage stamp price increases in the world. But could the USPS keep its head above water by offering the financial services that are generally reserved for run-down strip malls?

Yesterday, the Postal Service Office of Inspector General issued a white paper [PDF] suggesting that maybe the USPS could make money by offering financial services to America’s unbanked and under-banked.

“Millions of Americans do not have a bank account, or use costly services like payday loans and check cashing exchanges just to make ends meet,” reads the report. “The entire underserved population comprises more than a quarter of all U.S. households — some 68 million adults. They are an economically diverse
mix of working and middle class families, poor and unemployed people hurt by the recent economic crisis, young people, immigrants, and others who are trying to
make it paycheck to paycheck. Together, they represent a huge market. In 2012, they spent about $89 billion just on interest and fees for alternative financial services.”

The white paper contends that USPS, more than most businesses, is in a position to help these people while earning much-needed revenue. Given that the Postal Service is financially tapped, the Inspector General’s office is not suggesting that it become bank, but that it partner with banks to offer their services to a class of consumers they aren’t currently serving.

“The Postal Service could help financial institutions fill the gaps in their efforts to reach the underserved,” explains the report. “While banks are closing branches all over the country, mostly in low-income areas like rural communities and inner cities, the physical postal network is ubiquitous. The Postal Service also is among the most trusted companies in America, and trust is a critical element for implementing financial services.”

It points to national mail services in other parts of the world that already sell financial services to consumers as evidence that this is not such an outlandish idea.

Among the services USPS could offer, suggests the white paper, are reloadable prepaid cards, check-cashing, wire transfers of money internationally and domestically, and small-dollar loans (hopefully at non-payday loan interest rates).

In all, the white paper concludes that USPS could cash in to the tune of $8.9 billion a year.

Read Comments7

Edit Your Comment

  1. Thorzdad2 says:

    Consumerist certainly seems to have it in for the USPS. It’s rare that a story on the USPS isn’t chock full of snide jabs and snark about the postal service.

  2. CommonC3nts says:

    Why does consumerist hate the US postal service????
    “The once-great US Postal Service continues to sink into obscurity and financial oblivion, a destiny that will probably not be saved by all the postage stamp price increases in the world.” = 100% a lie

    The USPS is profitable and will continue to be a profitable business.
    Why dont they write a story about how republicans in congress have one of their goals to destroy the postal service to eliminate competition for fedex and ups??

    Also congress would never let the USPS offer any service of their own for check cashing. They would only allow the USPS to resell an existing private company’s service. They dont want to create more competition.

  3. radioone says:

    The only thing to do for the USPS is to make it a full governmental agency- not just a quasi self-funded agency.

    The USPS is vital, people still send/receive mail every day and so do businesses.

  4. SirJanes says:

    When I first heard of email, perhaps in the 90s I thought of the USPS and thought they should get into high(er) tech communications. Fax came and they missed out. Couldn’t they sell routers and wi-fi services too. USPS has always seemed like a good idea. I would hate to see it go.

    BTW, is there any way to edit or delete our comments?

    Where are we supposed to put comments about consumerist.com comments section?

  5. careycat says:

    As if lines weren’t long enough when people need a passport, open a PO BOX, or don’t have proper ID to pick up a package…now they want to offer an array of services that will make the line go outside the building and around the block.

  6. Airwave says:

    Yes, they should get into full-service banking. Post Offices are like banks in Europe.

  7. cesariojpn says:

    What the USPS could do is offer more postage services thru the Automated Kiosk or online at USPS.com. Right now, you cannot buy Media Mail Postage thru either venue, and online also doesn’t have Parcel Post or First Class Parcel. It’s either going thru a third party service which means you either need to pay, or be enrolled into something. Which is frustrating to say the least. The most obvious answers to increase cash flow is to increase the postage options thru it’s existing venues.