The U.S. Postal Service has only provided financial services to six people since it launched a pilot program in September, calling into question whether the Postal Agency will expand the effort that many progressive lawmakers and advocates have pushed for years.
USPS launched its limited foray into banking last fall at four post offices and with little fanfare. It allowed customers at these locations to use “corporate cheques”, i.e. checks with a company’s name printed on the check and made payable to the individual, to pay for Visa gift cards up to $500. The six check sales between Sept. 13 and Jan. 12 netted the Postal Service just $35.70 in fees, the agency said in a filing with its regulator Friday, and provided a total value of $548. $.46 in gift cards.
The Post Office declined to say what its plans are with the pilot going forward, explaining that any decision is pending further evaluation of the results of the initial program. USPS said it will measure the success of the initiative based on customer usage and whether there has been a demonstrated benefit to the community. Research from the University of Michigan found that one in four U.S. census tracts, home to 21 million people, has no bank within its borders. Postal banking advocates have pointed out that the private sector often charges high fees for check cashing services and that historically disadvantaged communities are disproportionately affected. The Postal Service charges $5.95 per check transaction and, for now, only allows checks to be used for gift cards.
USPS has made little effort to market the availability of its financial services. Before the program gained national media attention, the USPS advertised the availability of the check cashing service only through signs at the four affected post offices.
The limited services of four East Coast post offices fall far short of the much fuller range of financial services that many left-leaning advocates and lawmakers have been seeking for years, but still led the USPS in a direction surprising under the difficult tenure of Postmaster General Louis DeJoy.
The program drew criticism from leading House Republicans, who accused the Postal Executive of developing it “in secret” and said they “strongly oppose the concept of postal banking”. Lawmakers said DeJoy’s approach undermined the trust he built during legislative discussions on a postal reform bill, which won bipartisan support at the committee level. The USPS said it was confident it could win over skeptical lawmakers by explaining the limited nature of the pilot.
When the USPS launched the initiative, American Postal Workers Union officials, who worked closely with postal management to set it up, said the initial sites and services were meant to be a test of “proof of concept” for the postal service. The union hoped the USPS would expand the pilot in early 2022, both in terms of the services offered and where they are available. The easiest areas for expansion would be to allow gift cards for checks over $500. Thousands of post offices already offer Visa gift cards, and management concluded that there would be few legal barriers to simply accepting another form of payment for them. The cards the USPS currently has in stock are capped at $500, hence the existing maximum.
When it launched the pilot project, the postal administration was seeking both to raise the ceiling for these and to allow the grouping of several cards. Other services under discussion were a bill payment product, making cards marked at the Postal Service and reloadable, and wire transfers from one post office to another. The USPS expressed openness to setting up its own ATMs, although this may require additional statutory authority and was therefore not planned until much later. USPS offered banking services for over 50 years, but stopped in 1967.
For now, however, the postal management denies having even entered the world of financial services, telling the Postal Regulatory Commission that it has simply started accepting a new form of payment for an existing product. He started the pilot project at the request of the APWU, he said, and did not seek prior approval from the commission due to the limited nature of the program. The USPS engaged in limited training for the three dozen employees at the four affected post offices, including a service discussion and PowerPoint presentation.