A coalition of faith based, environmental, and labor groups are pushing for the Postal Service to offer financial services, pointing out that the model has successfully helped postal services and consumers in other countries.
Cleveland is one of five cities nationally in which the Alliance is holding such meetings. A coalition spokesman said Cleveland was chosen to highlight the plight of the underbanked, who frequently rely on check cashing, payday loans and other high-priced, often unregulated, financial services. Underbanked communities are those in which there aren’t enough banks to meet demand.
The Alliance says that about a quarter of Cleveland households are underbanked, citing statistics from the Assets and Opportunity Local Data Center in Washington, D.C. The national average is 20 percent.
The Postal Service has investigated the possibilities of offering services beyond the money orders, remittances, and gift cards that it offers today. The idea makes sense intuitively in that the Postal Service has an extensive branch network, some experience with providing financial services, and a need for new revenue streams. The agency would need to overcome a number of hurdles. It would need to ensure that the services it offered were consistent with the regulations governing its operations. It would likely need to win Congressional approval while fending off challenges from the banks and other financial services companies.
At the same time, adding financial services would require building new operational systems. The Postal Service would also need to retrain its workers and deal with customer service issues that it has struggled with in the past. Additionally, advocates might be disappointed if the Postal Service could not sustainably offer financial services in all the areas that they think need financial services. The Postal Service would need to make money on its services, so it would need to pick and choose those post offices that have enough traffic to sustain the business.
All the same, the idea is not without precedence. In the 20th century, the Postal Service did offer savings accounts that were aimed at helping immigrants integrate into the United States. The Postal Service worked with its local banks to offer the accounts so that there was no challenge to private industry. Offering financial services today would likely need some kind of assurance for today’s financial service companies that the Postal Service would not become a goliath competitor that would destroy their business.
Overview by Ben Jackson, Director Prepaid Advisory Service at Mercator Advisory Group
Read the full story here
