US Postal Service Pilots Paycheck Cashing Service
The U.S. Postal Service (USPS) recently started piloting a paycheck-cashing service in select markets that financial experts say could potentially change the way low-wage and financially underserved Americans access their money. At several East Coast post offices, customers can redeem paychecks for Visa gift cards maxing out at $500.
“The well-being of the Postal Service—that the people in the country so overwhelmingly support—in the future is partly going to rest on these kind of expanded services,” said Mark Dimondstein, president of the American Postal Workers Union. “New services will not just have the post office doing well by the people, but will bring in needed revenue.”
Postal officials expect the program to expand with more locations and products like ATMs and bill-paying services. In recent years, the potential for the Postal Service to provide financial services has been backed by Democrats who say that the program not only helps the Postal Service’s current financial condition, but it helps the many U.S. households that face obstacles with accessing their money and building wealth.
The Washington Post noted that for the 14.1 million underbanked and unbanked adults in the United States, the plan provides a government-backed alternative to payday lenders and paycheck-cashing stores.
The pilot service began in September in collaboration with the American Postal Workers Union. David Partenheimer, a spokesman from the union, said the pilot “is an example of how the Postal Service is leveraging its vast retail footprint and resources to innovate. 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.”
Alternatively, some postal insiders fear that the program could put the Postal Service in direct competition with small community banks, which are often the first point of entry for households that are new to the banking system or struggle to maintain a balance.
“I just don’t think the Postal Service is even equipped to compete with the complexity of delivering financial services right now,” said Paul Merski, executive vice president for congressional relations at the Independent Community Bankers of America, as reported in the Washington Post. “I just don’t see how you’d hire and purchase the computer equipment and do training.”
“Money orders are fine. That’s something that’s very simple to provide. But things like underwriting loans, things like checking and savings accounts, that’s a whole different animal. Post offices are in no shape to do those kind of financial transactions.”