WASHINGTON–After years of discussion and debate, the U.S. Postal Service has launched a pilot program offering consumers financial services. NAFCU is calling on policymakers to nix the expanded offerings, although many Democrats in Congress have long supported such a plan.
The USPS is testing the program at just four post offices in the eastern U.S. allowing individuals to deposit payroll or business checks of up to $500 onto a single-use debit card for a flat fee of $5.95. The postal service has in the past discussed a more comprehensive set of services, but is at least initially offering the more limited menu.
According to the USPS, its management worked with the American Postal Workers Union to set up the pilot. APWU has also long advocated for postal banking, including by negotiating it into a previous collective bargaining agreement, even though postal workers are widely served by credit unions.
The pilot program is being offered at four sites--Washington, D.C.; Falls Church, Va.; Baltimore and the Bronx, N.Y. The sites will not accept any checks larger than $500. The debit cards, to which USPS is referring as “gift cards,” allows users to withdraw cash from an ATM for a fee or purchase goods online or at retail stores, according to the postal service.
In announcing the new offerings, the APWU said the initial sites and services are designed to be a “proof of concept” test for the postal service. The APWU said it is hopeful the USPS will expand the pilot in early 2022, both in terms of services offered and locations where they are available. One place it may start is with the gift cards. Thousands of post offices already offer Visa gift cards, and the USPS said it believes there would be few legal hurdles to simply accepting another form of payment for them. The cards USPS currently has in stock are capped at $500, hence the current maximum.
Other Offerings Discussed
According to the postal service, among the other financial services it has discussed are a bill pay product, offering its own branded and reloadable gift cards, and wire transfers from one post office to another. The Postal Service is also currently soliciting proposals from the private sector for check verification services.
In addition, previously the USPS has expressed an openness to setting up its own ATMs, but that is considered a longer-term initiative.
The U.S. Post Office offered banking services for more than 50 years before exiting the business in 1967.
According to USPS spokesperson Tatiana Roy, offering “affordable, convenient and secure” services aligns with Postmaster General Louis DeJoy’s 10-year plan to fix its ailing finances.
Neither the USPS nor the APWU have announced any specific information around how the program might expand.
NAFCU Response
In response to the USPS banking pilot, NAFCU President and CEO Dan Berger issued a statement saying, “NAFCU urges policymakers to take steps to end the USPS’ pilot program offering paycheck-cashing services to consumers. Last week, USPS informed American consumers that it cannot manage its current mission of delivering mail on time. Now, it has come to light that USPS is quietly expanding its reach into financial services without providing much clarity on how it plans to balance its current duties alongside this new undertaking. This program stretches the bounds of the postal service’s statutory authority and allows the underfunded and understaffed USPS to unfairly compete with credit unions who are already meeting the needs of low- to moderate-income individuals.
“To better help the underbanked and underserved, Congress should instead allow all credit unions, as community-based financial institutions that prioritize consumers over generating profits, the ability to add underserved areas to their fields of memberships. The USPS already admits has its hands full with its current mission and lacks the bandwidth needed to run such a large and complex operation,” Berger stated,