Today, the U.S. Postal Service is best known for delivering packages and letters. One day in the future, though, customers might also be able to take care of their banking needs, including prepaid cards, bill payments and small loans, at post office windows.
At an event hosted by The Pew Charitable Trusts last month, Postal Service inspector general David C. Williams pointed out that many postal services around the world already provide these types of financial services to customers, and the U.S. Postal Service did as well during the first part of the 20th century. "The post office already sells money orders, runs a huge cash retail business, sells insurance on parcels and cashes Treasury checks," he said, adding that post offices exist in many communities throughout the country, including in low-income areas that lack bank branches. (The Postal Service is also authorized to provide some financial services, including money orders and international money transfers.)
"The postal service could provide a digital and physical platform for making financial services available to everyone ... [and] provide a critical link to Americans who have no alternatives to check cashing and payday loans," Williams said. Offering these services would also benefit the Postal Service by allowing it to adapt to the needs of its consumers and generate new income streams, he added. A white paper released earlier this year by the U.S. Postal Service's Office of Inspector General estimated that adding financial services to the Postal Service's offerings could generate $8.9 billion a year. It also noted that 1 in 4 American households currently lack access to mainstream financial services like bank accounts, which leads to them spend an average of $2,412 a year on interest and fees.
Sen. Elizabeth Warren, D-Mass., who supports the proposal for the Postal Service to start offering financial services, says the current financial industry is suffering from a "market failure." "There's a need for expanded financial services for families of moderate means, and the traditional banking industry no longer works," she said at the Pew event in the District of Columbia.
The American public also appears receptive to the idea of doing their banking at the post office. The vast majority of 1,626 respondents in a 2014 Pew Charitable Trusts survey expressed positive views toward the post office, and 7 in 10 said it didn't matter to them that the Postal Service currently offers money orders. A similar portion said they were indifferent to the prospect of financial services being available at post offices. "There is a market here, but it's limited. The majority say they're not at all likely to use these services," said Alex Horowitz, research officer at The Pew Charitable Trusts. The sliver of the population that is likely to use the services are those who already use alternative financial services like payday loans, the report found.
Not everyone is on board with that proposal, though. Speaking at the Pew event, Rep. Darrell Issa, R-Calif., said that often the type of low-income neighborhoods that lack bank branches also lack postal facilities, and that postal employees currently don't have the skills required to offer financial services. "You would be building from scratch," he said. "If our goal is to have banking services for the underserved that is subsidized, then we can do better." Instead, the needs of the underserved populations might be met by greater oversight of alternative financial services like payday lenders, he added.
While lawmakers continue to debate the merits of expanding the Postal Service's purview, here are three things consumers should know about what it might mean for them if the post office became their bank:
1. Easier access to low-cost financial services, especially for those who currently conduct their financial business outside of traditional banks.
Williams noted in his remarks at the Pew event that financial products offered by post offices could be approved by regulators, meet Federal Deposit Insurance Corp. standards and avoid deceptive practices. Consumers wouldn't have to worry that someone was trying to push them into an abusive product, and the postal service could be trusted and offer low and affordable prices, he added.
2. Greater competition when it comes to financial products, which could mean lower prices all around.
Adam Levitin, professor at Georgetown University Law Center, said at the event that if the Postal Service offered low-cost financial services, then it could potentially help to drive unfair products out of the market because people would opt for the fairer and safer product instead. Unfair products can include payday loans with extremely high interest rates or high fees for services like bill paying.
Perhaps for that very reason -- stiffer competition -- the banking industry has voiced concerns over the concept of the Postal Service joining the financial industry. Jana Barresi, director of federal governmental relations for Wal-Mart, which currently offers an array of financial services to customers such as international money transfers and prepaid cards, said at the event that the company doesn't have a position on the Postal Service proposal.
"More than 95 percent of the U.S. population lives within 15 miles of a Wal-Mart store, and many are open 24 hours a day," she said, adding that Wal-Mart has money centers at about 1,000 stores, and other transactions can be done at the customer service desk. Bill pay services start at $1, and flat fees on money transfers help keep costs down. Money orders start at 70 cents at Wal-Mart, while the Postal Service money orders start at $1.25, she pointed out.
3. Longer lines.
The policy experts didn't broach this topic at the Pew event, but it's worth considering: With lines at some post offices already stretching out the door during holiday season and lasting a half hour or longer on typical weekdays, what will become of wait times if yet more services are added to employees' plates? The experts at the event did not address that particular problem in detail.
There's also the convenience factor to consider. When you need to buy stamps, mail a package to a friend and also pay a bill, you could take care of all three tasks in one place under this proposal, which could end up saving you time even if you have to stand in a longer line to do it.