USPS Testing Out Postal Banking. Thank The Postal Union!
The US Postal Service seems poised to make a whole lot of good-government nerds very very happy with a four-city pilot program that will try out an old idea whose time probably never should have ended: postal banking. From 1910 until 1966, when you went to the Post Office, you could not only get stamps or send a package or dodge bullets, you could also put some money in your postal savings account, or withdraw some after it had grown by a whopping two percent interest rate.
At its height, postal banking served some four million Americans, and before the New Deal created the stabilizing force of the Federal Deposit Insurance Corporation, postal savings accounts were especially attractive because, unlike a bank that could go bust, the deposits were backed by the full faith and credit of the USA.
The USPS got out of the banking business in 1966, but for decades, think tanks and policy geeks have said it would be a great thing to bring back, because there are millions of Americans who don't use banks, yes in 2021. Instead, far too many Americans are unbanked — about five percent of us — and pay too much to cash their paychecks at payday lenders, (some) grocery stores, or Walmart.
Starting last month, the USPS began testing out a new system where people can cash business checks up to $500 and receive the money in the form of a gift card that can be used pretty much anywhere. As David Dayen puts it at the American Prospect, this is a big effing deal: He calls it "the most far-reaching executive action that the Biden administration has taken since Inauguration Day."
The move puts the USPS in direct competition with the multibillion-dollar check-cashing industry, which operates storefronts to allow unbanked or underbanked residents to cash their paychecks.
And if you cash your check at the Post Office, nobody's going to try to interest you in a short term high interest loan, either.
The pilot program is starting out (very) small, with just a single post office location in each of the four cities of Washington DC, Falls Church, Virginia, Baltimore, and the Bronx. And it's new enough that when the American Prospect sent reporter Jandos Rothstein to try cashing a business check at the P.O. in Falls Church, the postal worker at the counter "said she didn't think she could take the check."
"But she read the check into her scanner and it went through." He didn't need to show identification or endorse the check. The post office charged Rothstein a flat fee of $5.95, for any amount up to $500.
Several larger check-cashing chains charge a percentage rate that comes out to $15 or more for a $500 check. Walmart charges between $4 and $8 for check cashing.
Post offices already sell single-use generic Visa gift cards that work like debit cards, either to buy stuff at a store or online, or to get cash at an ATM (for a fee, unfortunately). This made the check-cashing pilot fairly easy to put in place, from both a tech and legal standpoint:
Because the only innovation in the test pilot involves allowing gift cards to be purchased with a business or payroll check, no additional authority from Congress was required. Those who set up the product expansion are confident that it falls within their legal mandate. [...]
[But] officials have floated ideas for how it could expand. The card could be reloadable rather than single-use, used to store multiple paychecks over time. USPS could keep track of the card value, accounting for a user's balance in case it gets lost or stolen. Postal gift cards, currently branded for businesses like Barnes & Noble or Olive Garden as well as the generic Visa card, could be branded as coming specifically from USPS, with no-fee branded ATMs inside post office buildings.
Now, you may ask, how did something this smart happen under Louis Goddamned DeJoy, the schmuck who as soon as he became Postmaster General last year set to dismantling the USPS, slowing mail times, and in general monkeywrenching the mail just in time to make Americans worry their mail-in ballots might not arrive? If you can read past the business-speak bafflegab in this statement, it gets a little clearer:
"Offering new products and services that are affordable, convenient and secure aligns with the Postal Service's Delivering for America 10-year plan to achieve financial sustainability and service excellence," said USPS spokesperson Roy in a statement to the Prospect. "This pilot, which is in collaboration with the American Postal Workers Union (APWU), is an example of how the Postal Service is leveraging its vast retail footprint and resources to innovate."
Firstable, there's some revenue in it, and DeJoy desperately wants USPS to make some money. But that bit about the union is key, it turns out: It seems that the union had insisted on postal banking pilot programs as part of its 2016 contract with USPS. The postmaster-general prior to DeJoy, Margaret Brennan (hired during the Obama administration), didn't do a damn thing to move on those pilot programs. And then DeJoy came along, and the postal workers appealed to his desire to raise revenue:
[The] union engaged him personally in a series of meetings, pitching the postal banking idea again. In a sign that DeJoy was interested, those meetings soon became weekly events, involving technical staff.
"They listened, they didn't shut us down," said one APWU source involved in the negotiations. "They have made the analysis that the future of the USPS lies not in letters but in packages, and they see the expansion of financial services as a companion to the package market."
So it was kind of a package deal, ha! ha!
Now, there's no love lost between the union and DeJoy; they still want him gone, baby gone. But hey, postal workers, having to get all those letters and packages to fit in a pokey little van, know all about compartmentalization. So they were happy to collaborate on the postal banking while still calling for DeJoy go the way of the hated three-wheel Cushman Mailster, which had a habit of falling over while cornering and getting stuck in even a little bit of snow.
In conclusion, fuck Louis DeJoy, fuck payday lenders, Fuck the Cushman mailster except for people who collect 'em, hooray for the union, and let's have postal banking again, yay!
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