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Should USPS Move Into Financial Services?

WASHINGTON – In January, the inspector general’s office at the U.S. Postal Service floated the idea that retail post offices could begin offering customers financial services like international money transfers and facilitating ecommerce payments.

The OIG pitched its proposal as a “win-win,” offering needed financial services to households unserved or underserved by the banking system, while – and perhaps more importantly for online sellers and others in the mailing community – potentially generating billions of dollars in much-needed revenue for the cash-strapped Postal Service.

The inspector general’s report suggested that offering nonbank financial services could net the agency as much as $8.9 billion in annual revenue, a significant sum when viewed alongside the $5 billion loss the Postal Service reported in fiscal 2013.

So what do Americans think of the idea?

Researchers at the Pew Charitable Trusts have done some polling on the issue, querying a nationally representative sample of adults, including a hefty dose of those without a checking account or who otherwise rely on alternative financial services such as payday loans and nonbank check cashing.

Turns out, in response to many of the questions, a majority of respondents shrugged their shoulders, though significant minorities expressed enthusiasm for an expanded menu of services at the post office.

As a starting point, respondents were highly enthusiastic when asked how they felt generally about the Postal Service alongside other institutions.

While 82 percent of respondents said that they have positive feelings toward the bank branch they visit most often, the banking sector at large only received a 56 percent favorability rating. Payday lenders and in-store check-cashing services scored far lower, with positive ratings at 9 percent and 21 percent, respectively.

By contrast, some 78 percent of respondents told Pew that they view their letter carrier positively (60 percent said “very positively”); 74 percent said the same about their local post office branch, and 71 percent about the Postal Service generally.

So with a generally favorable view of the Postal Service throughout the survey sample, 69 percent of respondents said that the fact that post office branches currently offer money orders doesn’t matter to them. Slightly less than two-thirds said that if the Postal Service were to begin offering prepaid debit cards, as the inspector general suggested, it wouldn’t make a difference.

But more significant was the imbalance of respondents who had favorable opinions (30 percent for money orders; 27 percent for debit cards) and those expressing opposition (1 percent for money orders; 10 percent for debit cards).

“It looks like there is a market here, but it’s limited,” said Alex Horowitz, a research officer with the Pew Charitable Trusts.

“People are saying this doesn’t really resonate, this isn’t a top-of-mind issue, doesn’t really affect their life,” Horowitz added. However, “of people with an opinion, they generally like it.”

Respondents expressed stronger support for an expansion of postal services. Asked whether they favored convenience stores offering services like weighing packages, drop-off boxes and selling postage, 44 percent said they were in favor, against 46 percent who said they were indifferent and 10 percent who were opposed.

As with much of Pew’s work, the latest research is meant to gauge citizens’ attitudes and sentiment, so there is no revenue projection to compare with the nearly $9 billion the inspector general forecast.

But Pew researchers agree with the OIG’s premise that the current network of bank branch locations offers uneven service availability, leaving large geographic gaps that the Postal Service, by virtue of its sprawling retail network, could help fill in. The Postal Service, with its nearly 32,000 owned or leased facilities, has a footprint more than five times bigger than the largest bank, according to according to Pew research officer Clint Key.

One such “bank desert” appears in Montana, where in one spot residents are some 75 miles away from their nearest bank branch. On the way to that location, drivers would pass about four post offices, Key said.

“There’s a substantial proportion of the American public for whom there isn’t a convenient bank,” he said. “There’s a huge amount of heterogeneity across states.”

Kenneth Corbin on Linkedin
Kenneth Corbin
Kenneth Corbin
Kenneth Corbin is a freelance writer based in Washington, D.C. He has written on politics, technology and other subjects since 2007, most recently as the Washington correspondent for InternetNews.com, covering Congress, the White House, the FCC and other regulatory affairs. He can be found on LinkedIn.