For all the talk about moving debt collection and paying bills into the 21st century by allowing consumers to communicate via text messaging and pay bills using apps like Venmo, a published report is touting the expanding presence of an old school brick-and-mortar building — the post office — as a financial services hub for consumers, especially those without bank accounts.
Post offices in certain cities on the East Coast are cashing consumers’ paychecks and giving consumers Visa check cards that top out at $500. Along with expanding the check-cashing service, other financial products, like ATMs and bill-paying services are also expected to be added to the program in a bid to improve the financial situation of the U.S. Postal Service while also also offering individuals without bank accounts access to financial services products.
If successful, post offices can present a government-backed alternative to check cashing stores, payday lenders, and other financial services providers that target the unbanked and the underbanked population without charging those individuals “outsize fees and interest rates,” according to the report.
Proponents of the program say it gives post offices a lifeline at a time when the postal service is reeling in red ink and thought of as a relic of a bygone age when sending letters was one of the only ways to communicate with one another. Adding financial services to its suite of product offerings can help the postal service improve delivery and help right its financial ship, said Sen. Kirsten Gillibrand [D-N.Y.], who has introduced legislation to expand postal financial services.
But is this the right time for the USPS to be considering such a dramatic shift? From the report:
“The Postal Service processes and delivers billions of pieces of mail and packages. It is not a financial services firm,” said Paul Steidler, who studies the agency at the right-leaning Lexington Institute. “It comes down to introducing a new business line at probably the worst time imaginable, when they’re struggling with profitability and struggling to get through the pandemic.”
The USPS recently raised its postage costs while also adjusting its delivery timelines to give itself more time to deliver the mail.
