As lawmakers work on finishing fiscal 2022 appropriations, they’ll have to decide whether to keep a House spending provision that would allow some post offices to offer more financial services.
Coming in the wake of a largely ignored U.S. Postal Service test of a check-cashing service, a new initiative could test whether the Postal Service can attract millions of Americans who now lack banking services, serve areas largely vacated by banks and make money by doing so.
Those tests depend on the Senate going along with the $6 million for a pilot project in the House’s fiscal 2022 Financial Services appropriations bill. Lawmakers are trying to finish the appropriations work before the current continuing resolution expires on March 11.
“We are looking to provide very basic services at post offices across our country because they are in every neighborhood,” said Rep. Marcy Kaptur, D-Ohio. “We're looking at simple things like cashing their check, or paying a utility bill or selling a savings bond.”
The House proposal would allow five rural and five urban post offices to offer nonbank services such as free ATMs, wire transfers, check cashing and bill payments. Post offices already sell money orders.
Proponents of postal banking hope the test does better than one the Postal Service launched in September, offering check cashing in four East Coast urban and suburban sites. Customers cashed six checks, generating $35.70 in fees, according to a Postal Service regulatory filing in January.
The pilot capped the amount at $500, charged a $5.95 fee and required users to buy a gift card.
“I don't know whether a pilot can be called a serious pilot if it's not in a neighborhood that actually has demand for the services,” said Porter McConnell, the Take on Wall Street Campaign director at Americans for Financial Reform. McConnell, who in 2020 co-founded the Save the Post Office Coalition, said high fees, the low limit on gift card amounts and the absence of advertising also undermined the pilot.
“The checks cashed need to get up to $2,000. It needs to be a lot cheaper. It needs to be cheaper than Walmart, not $2 more expensive. It needs to be in neighborhoods that need it,” McConnell said. “It needs to be advertised. It needs to be sent out in mailers. At the very least, some posters, some signage. That is all very basic.”
Postal banking is a catchall term for financial services offered through the Postal Service, including checking and savings accounts, small loans, and nonbank services such as cash machines or check cashing.
Research by the University of Michigan in May 2021 found that 60 million people live in a census tract with a post office but not a bank branch. From 2008 to 2020, more than 13,000 bank branches closed, according to the National Community Reinvestment Coalition.
In 2017, 8.4 million households lacked a savings and checking account — the definition of unbanked — and another 24.2 million households had a bank account — the underbanked —but still used alternative financial services such as payday loans, according to the Federal Deposit Insurance Corporation. More recent FDIC studies lack comparable data on underbanked households.
Financial deserts or mistrust of banks
Among the questions is why.
“There are financial deserts of magnitude across our country, and unfortunately, these individuals become prey for exploiters, like payday lenders, like auto title loan folks,” Kaptur said in an interview. Kaptur and other postal banking supporters say the House appropriations provision could aid those with no bank accounts and those who rely on alternative financial services.
Physical locations and affordable products are two of the chief factors that would set the Postal Service apart from private sector competitors, especially with the closing of bank branches, McConnell said.
People without bank accounts cited having too little cash to open an account as the main reason they didn’t have one, according to a 2019 FDIC study.
“They've left your community, and they've made traditional banking too expensive to bother with,” McConnell said, citing overdraft fees. “That to me is a textbook case for a public option.”
The House provision would allow the 10 post offices to offer services for lower fees than the pilot started last September.
McConnell said the expansion into areas like check cashing, ATMs, wire transfers and bill payments should replicate the success the Postal Service has had with money orders that are cheaper than those of competitors and bring in revenue for the agency.
“That is exactly the space that they should be occupying —cheaper than the private market and accessible to everyone, and yet still profitable because there are more post offices than McDonald's and Starbucks combined,” McConnell said.“It is a question of scale and location for them.”
A 2015 report from the Office of the Inspector General said the Postal Service could bring in about $1.1 billion in annual revenue after five years. But sticking to nonbank financial services alone would do less to help the unbanked and underbanked than more expansive alternatives, such as checking and savings accounts, the report found.
But skeptics say the ubiquity of post offices, a chief advantage of postal banking, doesn’t solve many of the barriers keeping the unbanked from traditional financial services.
Nicholas Anthony, manager of the Cato Institute's Center for Monetary and Financial Alternatives, pointed out that when asked by the FDIC why they avoid banks, only 14 percent of unbanked respondents said it was because bank locations were too far away, the eighth-most cited reason.
By contrast, 36 percent said they avoided banks because of distrust, or privacy concerns, the second- and third-most commonly cited reasons in the 2019 FDIC survey.
“Having the post office come in as a suggested solution really doesn't make sense because you're suddenly asking these people who have concerns about trust and privacy to now trust their information with the government,” Anthony said in an interview. “I just don't see that lining up.”
Anthony and Republicans in Congress also took issue with how the Postal Service went about launching its check-cashing test. By limiting it to gift cards, the Postal Service circumvented a 2006 prohibition against offering new nonpostal products without regulatory approval.
“While I understand the desire for folks at the USPS to jump into the space, and I understand the concern that many have for financial inclusion efforts, I just don't think this is the right way to go about that program,” Anthony said. “One of the worst things that could happen is if they had something that actually helped, and then it had to be shut down because it wasn't set up the right way.”
Kentucky Rep. James R. Comer, ranking Republican on the House Oversight and Reform Committee, and North Carolina Rep. Patrick T. McHenry, ranking Republican on the House Financial Services Committee, wrote to Postmaster General Louis DeJoy in October to object to the pilot.
Senate Banking ranking member Patrick J. Toomey, R-Pa., and 18 other Republican senators also wrote to DeJoy in November asking for more information about the pilot, saying it may fall outside “statutory boundaries.”
‘They’ve earned the right to try’
Rep. Mark Amodei, a member of the House Appropriations Committee, may be one of the few applauding the Postal Service’s check-cashing pilot. The Nevada Republican supports the expansion into financial services but is reluctant to spend taxpayer dollars to do it.
Postal banking is a tough sell for Republicans, but lackluster banking options in his home state won him over, Amodei said. Many big banks have reduced their presence in his district, he told CQ Roll Call.
“The big ones, quite frankly, don't seem to be real concerned about being located in every community, and that's fine,” he said. “But don't sit here and say we can't have this going on in the post office.”
Amodei said he preferred the Postal Service’s check-cashing pilot to the $6 million appropriations pilot because any move into financial services should be gradual, self-funded and self-sustaining. In 2019, Amodei co-sponsored an amendment to the Financial Services appropriations bill that would have provided $1 million to fund expansion into nonbank financial services by the Postal Service.
“If they want to try banking, they need to figure that out on a very slow roll and they need to figure out how to fund it without getting taxpayer dollars to get them started,” he said. “I don't know whether this is the silver bullet or not … but I think they've earned the right to try.”
Why are Post office savings banks not treated as banks? Solution not provided. Because they do not perform bank's essential function of lending.What do you mean by post office as a financial sector? ›
The Post Office savings bank is the oldest and by far the largest banking system in the country, serving the investment need of both urban and rural clientele. These services are offered as an agency service for the Ministry of Finance, Government of India.
- Adam & Co.
- Allied Irish Bank (GB)
- Bank of Ireland.
- Bank of Scotland.
- Cashplus Bank.
The Philippine Postal Savings Bank (PPSB), also known as PostalBank, is the state-owned postal savings system in the Philippines.Is the post office in decline? ›
In 2020, the Post Office posted a $9.2 billion loss even though total revenues increased by $2 billion (to $73 billion). Package delivery increased sharply during the pandemic (18.8 percent), but first-class mail experienced a 4.2 percent decline and marketing mail declined by 15.2 percent.Can you trust the post office? ›
The annual study has ranked the Postal Service as the most trusted government agency for the past 7 years, but its fifth-place finish on the list of most trusted companies is the Postal Service's highest yet.What are the disadvantages of investing in post office? ›
Unlike other investment avenues like Mutual Funds, Equity, Gold etc it is not possible to operate your Post Office Savings Schemes account online i.e. you cannot track your account or invest online. You always need to keep your passbook updated all the time by standing in post office queues for hours.What is a post office in simple words? ›
A post office is a public facility and a retailer that provides mail services, such as accepting letters and parcels, providing post office boxes, and selling postage stamps, packaging, and stationery. Post offices may offer additional services, which vary by country.What are the three main services provided by the Post Office? ›
The primary function of Post Office is collection, processing, transmission and delivery of mail.Can post offices put money into your account? ›
Use your debit card and PIN to pay cash into your account. Once your deposit is counted and a receipt issued, you will have instant access to your money. You can pay in up to £2,995 cash a month over Post Office counters using your debit card and PIN (If your account's joint you can each pay in up to £2,995).
What can you do at the post office? If you can get to a post office, you can just pop in and: Withdraw cash from your usual bank account using your card. Pay cash into your usual bank account using a card or paying-in slip.How much cash can I deposit at Post Office? ›
Deposit up to $6,000 per transaction.Which is better Post Office or bank? ›
Compared to HDFC Bank and SBI FDs, Post Office is providing a higher interest rate. On booking a term deposit of 5 years at a post office, you can get up to 6.7% interest. For tenors up to 1 to 3 years, Post office is providing 5.5% interest. Also Read: How long does it take to get Rs 1 crore with PPF at 7.1%?What is an advantage of postal banking? ›
Advantages of Postal Banking
For those that are unbanked, postal banking can provide a more affordable and accessible option for financial services. As a result, fewer unbanked individuals would need to turn to expensive alternatives like payday loans and check-cashing stores.
Postal savings system shut down in 1967
The idea of going into a post office to cash a check may wax nostalgic. After all, it was in 1967 that the Postal Service stopped providing banking services. Prior to that, the Postal Savings System was a powerhouse, holding billions of dollars in assets at its peak.
The 2020-2021 United States Postal Service crisis was a series of events that caused backlogs and delays in the delivery of mail by the United States Postal Service (USPS). The crisis stems primarily from changes implemented by Postmaster General Louis DeJoy shortly after taking office in June 2020.Why is the post office slowing down? ›
The U.S. Postal Service is moving forward with its plan to slow down delivery for about one-third of small and lightweight packages as it advances its plan to cut costs and reverse longstanding financial losses at the agency.Will government shut down affect post office? ›
In a shutdown furlough, an affected agency would have to shut down any activities funded by annual appropriations that are not excepted by law. QUESTION: The Postal Service does not shut down.Is post office safer than bank? ›
Guaranteed Returns: As a government backed savings scheme, the post office fixed deposit is one of the safest option of investment and offers guaranteed return.What is the safest Postal Service? ›
Registered Mail is the most secure way to send a package through the USPS. As part of the security conditions for this mail class, Registered Mail must be sent with proof of mailing which requires a trip to the Post Office (you cannot deposit your package in a collection box).
The group that brought the legal action was awarded nearly £43m in compensation, however they were left financially disadvantaged after having to pay significant legal costs resulting from the “no win, no fee” agreement with the company that funded its litigation.What is Post Office advantages and disadvantages? ›
- Commute. ...
- Quality family time. ...
- Save on costs.
(1) Sending large quantities of goods by parcel post is more expensive than rail or sea transportation. (2) The maximum weight of a parcel permitted is 20 kg. The packages should not to be more than one-meter long. Thus, heavy and bulky goods cannot be sent by parcel post.Which scheme is better in post office? ›
|Scheme||Interest Rate||Minimum Investment|
|National Savings Certificates (NSC)||6.8% p.a. (Compounded annually)||Rs 100|
|Kisan Vikas Patra (KVP)||6.9% p.a. (Compounded annually)||Rs 1,000|
|Sukanya Samriddhi Accounts||7.6% p.a. (Compounded annually)||Rs 1,000 per financial year|
Postal service clerks and mail sorters, processors, and processing machine operators work indoors, typically in a post office. Mail carriers mostly work outdoors, delivering mail.What is post office job called? ›
Alternative titles for this job include Post Office counter clerk, Post Office counter consultant. Post Office customer service assistants help customers in post offices and at counters in shops.Why is the post office so important? ›
The post office provides an important public service. To our country's founders, the Postal Service's social and civic purpose—connecting people to each other and fostering a well-informed citizenry—were as or more important than its economic benefits.How many types of post office are there? ›
It is basically classified into 3 types, namely – Head Post office, Sub Post Office and Branch Post Office.Why is it called a post office? ›
post office (n.)
1650s, "public department in charge of letter-carrying," from post (n. 3) + office. Meaning "building where postal business is carried on, office or place where letters are received for transmission," is from 1650s.
- Priority Mail Express (the fastest shipping option)
- Priority Mail.
- First-Class Mail.
- USPS Marketing Mail.
- Package Services/USPS Retail Ground.
How Much Cash Can You Deposit without Raising Suspicion in the UK? Deposits below £5,000 shouldn't raise any suspicion with the bank, even if you don't state the source. But if you make multiple deposits in one day or hefty deposits in a week, suspicion will arise.How much money can you put in a bank without questions? ›
The Law Behind Bank Deposits Over $10,000
The Bank Secrecy Act is officially called the Currency and Foreign Transactions Reporting Act, started in 1970. It states that banks must report any deposits (and withdrawals, for that matter) that they receive over $10,000 to the Internal Revenue Service.
Funds can be transferred using below options: From your POSB account to self or third party POSB accounts using the option Initiate Funds Transfer within DOP. From your POSB account to other bank accounts through NEFT or RTGS using the option Funds Transfer To Other Bank.How much money can you put in the bank at one time UK? ›
Cash limit: the maximum you can pay in each day is £2,500. You cannot deposit more than 90 notes per day. Cheque limit: the maximum for a single cheque is £2,000, with a daily limit of £50,000.How long does cash paid in at Post Office take to clear? ›
Cash deposited with a chip and PIN debit card will show in account immediately. Cash paid in using a paying-in slip will be added to your NatWest account by the end of the next working day, if paid in before the Post Office cut off time. If missed, this will be two working days.How can I keep money at the Post Office? ›
- Post Office Savings Account(SB) ...
- National Savings Recurring Deposit Account(RD) ...
- National Savings Time Deposit Account(TD) ...
- National Savings Monthly Income Account(MIS) ...
- Senior Citizens Savings Scheme Account(SCSS) ...
- Public Provident Fund Account(PPF ) ...
- Sukanya Samriddhi Account(SSA)
Minimum balances aside, how much money can you have in a checking account? There is no maximum limit, but your checking account balance is only FDIC insured up to $250,000. However, as we'll cover shortly, it makes sense to put extra cash somewhere it will earn interest.How much cash can be kept at home? ›
Failure to reveal the source of the money kept in the house can lead to a fine of up to 137 percent. Transactions exceeding Rs 20 lakh in cash in a financial year can attract a penalty. According to the CBDT, it is necessary to provide PAN number for depositing or withdrawing cash more than Rs 50,000 at a time.How much can you take out of bank account at Post Office? ›
Withdrawals are free of charge. You can withdraw up to £1000 a day via a Post Office branch or ATM.Is my money safe in post office? ›
Yes, it is safe as investments under Post Office bear sovereign guarantee of Government of India. All these schemes are tax-exempt up to a certain limit and some schemes like PPF, Sukanya Samridhi Yojna have tax benefits on returns as well.
An Post Money Current Account review: Is it better than Wise? The An Post Money Current Account is straightforward and easy to manage, especially if you prefer banking via mobile app. The MoneyBack cashback feature is a great way to make some extra money, or to claw back some of your monthly maintenance fees.Is An Post bank safe? ›
An Post is regulated by the Central Bank of Ireland. An Post is a designated activity company incorporated in Ireland under company registration number 98788 and with limited liability.Do postal workers have good benefits? ›
Postal career employees enjoy excellent benefits, including annual and sick leave that can be accumulated, the opportunity to donate leave, basic life insurance paid for by the Postal Service with additional options at the employee's cost, pretax health benefits with most of the cost paid by the Postal Service, pretax ...What is the concept of postal banking? ›
The Post Office savings bank is the oldest and by far the largest banking system in the country, serving the investment need of both urban and rural clientele. These services are offered as an agency service for the Ministry of Finance, Government of India.Is the post office in financial trouble? ›
WASHINGTON, Nov 10 (Reuters) - The United States Postal Service (USPS) on Wednesday reported a net loss of $4.9 billion for the year ending Sept. 30, narrowing its losses over the prior year. USPS's operating revenue was $77 billion for the 2021 budget year, an increase of $3.9 billion, or 5.3%.Are post office bank accounts closing? ›
About 6,800 Post Office card account customers, who receive tax credits, Child Benefit or Guardian's Allowance payments, need to transfer their account by 5 April 2022 to continue receiving their money without interruption. HMRC is stopping making payments to Post Office card accounts from 6 April.Can I use the post office as a bank? ›
If you can get to a post office, you can just pop in and: Withdraw cash from your usual bank account using your card. Pay cash into your usual bank account using a card or paying-in slip. Check your bank balance using your card.How is post office different from bank? ›
Bank vs Post Office
While post offices have been there to provide mailing services and handle people's and governmental mails, letters and envelopes along with parcels, banks have been used for banking services such as deposit and withdrawal of money apart from loans and mortgages.
How Postal Banking Works. With postal banking, the local post office also serves as a sort of bank branch. For example, it might provide check cashing, bill payment processing, and even small loans.Is the post office the same as a bank? ›
A U.S. bank is a financial institution that is licensed to accept deposits of money and to make loans. The U.S. Post Office has no license to accept deposits of money or to make loans. Therefore, the U.S. Post Office is not a bank.
Guaranteed Returns: As a government backed savings scheme, the post office fixed deposit is one of the safest option of investment and offers guaranteed return.Do banks get suspicious of cash deposits? ›
The Bank Secrecy Act dictates that financial institutions create a paper trail of financial activity that could be suspicious. The reasoning is that law enforcement authorities can better control money laundering activities and tax evasion by having a record of these larger deposits.How much cash can you withdraw from Post Office? ›
Cash: You can use your ATM Card to withdraw up to £1,000 a day through any Post Office branch, or at an ATM. Cheque: Write or telephone us to request a cheque. There is no limit on the amount you can withdraw by cheque.Is post office account better than bank? ›
For a 5-year time term deposit, the interest rate is 6.7 per cent. The rates are the same for general and senior citizen investors. The biggest draw about Post Office FDs is as these are government schemes, they are linked with government securities, and therefore, are the least volatile to market fluctuations.What are the disadvantages of Post office savings? ›
Post Office Savings Schemes are not digitized:
Unlike other investment avenues like Mutual Funds, Equity, Gold etc it is not possible to operate your Post Office Savings Schemes account online i.e. you cannot track your account or invest online.
A savings account is insured up to Rs. 1 lakh by the Deposit Insurance and Credit Guarantee Corporation (DICGC), Ministry of Finance. Apart from a bank, you can also open a savings account under the Post Office. A savings account of a Post Office attracts better interest rates than bank savings accounts.Is the Post Office in debt? ›
According to the USPS itself, the service will incur a $160 billion shortfall over the next 10 years.Did the government take money from the Post Office? ›
The Postal Service receives no direct taxpayer funds. It relies on revenues from stamps and other service fees.Who owns an Post bank? ›
An Post is a designated activity company, incorporated under the Companies Act, 2014. The Minister for Public Expenditure and Reform holds one ordinary share in the company and the remainder of the issued share capital is held by the Minister for Communications, Climate Action and Environment.Who Bought Post Bank? ›
The bank was established in 1867. It became PostBank in 1987 and was disestablished and the branches were rebranded when it was acquired by Australia and New Zealand Banking Group in 1989.
It is one of the few government agencies explicitly authorized by the U.S. Constitution. The USPS, as of 2021, has 516,636 career employees and 136,531 non-career employees.