There's good news coming from the U.S. Postal Service (USPS). Yes, the 10- year plan from Postmaster General Louis DeJoy—who is still in the job—to make Americans pay more for worse service and slower deliveries is being implemented starting this week. That's bad and it needs to stop. However, thanks to the tireless work of the American Postal Workers Union (APWU), a pilot project to start postal banking has quietly begun.
David Dayen at The American Prospect reports that the pilot program allows customers to cash business or payroll checks at participating post offices, transferring the funds to gift cards. It's in just four buildings in this test in Washington, D.C.; Falls Church, Virginia; Baltimore, Maryland; and the Bronx, New York. The art director for Prospect, Janos Rothstein, tried out the process at the Falls Church location. "At first, [the postal worker] said she didn’t think she could take the check," Rothstein reported. "But she read the check into her scanner and it went through." Rothstein was charged a flat fee of $5.95, the charge for cashing a check for any amount less than $500. Rothstein didn't have to provide identification or endorse the check.
The USPS already sells generic gift cards, which can be used just like a debit card, so this pilot project is allowing customers to in essence purchase those gift cards with a third-party business or payroll check. That meant the pilot program required no authorization from Congress to start. "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," USPS spokesperson Tatiana Roy told the Prospect. "This pilot, which is in collaboration with the American Postal Workers Union (APWU), is an example of how the Postal Service is leveraging its vast retail footprint and resources to innovate."
That's where DeJoy's plans for the USPS come in. He and his technical staff have been meeting regularly with the APWU on the project. "They listened, they didn't shut us down,” an APWU source involved in the negotiations told the Prospect. "They have made the analysis that the future of the USPS lies not in letters but in packages, and they see the expansion of financial services as a companion to the package market." Getting the USPS out of the delivery business and putting it into fully private hands—including some of the companies he's had his own financial interests in—has been a hallmark of DeJoy's tenure so far. So it's not too much skin off his personal nose to see the USPS succeed under his watch in the financial sector—one in which he doesn't seem to have a personal financial interest.
A few officials involved in the program spoke to The Washington Post about the project, anonymously, "to discuss sensitive business strategy." They told the Post that the USPS expects to expand the program into more locations and to provide more products, potentially including bill-paying services and ATMs inside post offices for ease of use. That would go a long way to fully realizing postal banking, a program offered by the USPS into the 1960s, when it dropped all of the banking programs other than providing money orders.
One of the officials was cautious in talking about the future of the program. "To be honest, these are pretty modest steps," the official said. "It's a small toe in the water. I think [the Postal Service] is just trying to see what kind of bite they're going to get. It's the symbolism that matters." The same official did suggest that top leadership of the organization is open to the idea, but there are concerns about the needed technology and staffing upgrades.
The APWU, however, is bullish on the program. "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," Mark Dimondstein, APWU president, told the Post. "New services will not just have the post office doing well by the people, but will bring in needed revenue." Other union officials told the Post they expect to see the program expand into post offices around the country after the holiday season, after an advertising push by the agency for the paycheck-cashing service. They'll use it to gauge customer interest and to help determine where to set fees.
One advocate for a return to full-on postal banking, New York Democratic Sen. Kirsten Gillibrand, is all for the program, but she's not stopping her calls for DeJoy's firing. "The reason why they’re having difficulty delivering mail is because they are severely underfunded and under Postmaster DeJoy, he's tried to slash funding even further and slash delivery days and slash availability and slash routes, close different centers around New York. I mean, he's been a straight-up disaster," she told the Post. She's all for postal banking to restore the institution, saying it "creates the revenue stream, and with that kind of revenue stream, they can hire the right number of employees." She continued, "They can have the right number of delivery days. They can create a service that is more commensurate with their charter and what they’re asked to do. And I think once we get rid of DeJoy, you’ll also have a better leader to lead the Postal Service in a better direction."
More than 7 million households in America are unbanked, which is about 5.4% of households. The most common reason reported for not having a bank or credit union account: not having enough money to meet minimum balance requirements to avoid bank fees. That means millions of people having to rely on check-cashing services, often the same payday loan shops, or stores like Walmart.
Walmart, as of right now, is cheaper than the USPS, charging $4 to cash a check up to $1,000, and $8 for amounts over that. They have a proprietary debit card the funds can be placed on. One postal banking expert, Mehrsa Baradaran, a law professor at the University of California, Irvine told the Prospect that the USPS program is "incredibly safe legally … you have all the authority you need." For it to be successful, she stressed it needs to be cheaper than Walmart. "The post office has way more locations than Walmart," Baradaran noted.
She also cautioned that the USPS needs to build security into the program, protections for the cards in the case they are lost or stolen by creating some kind of app where the cards can be managed and tracked. "It's important down the road to establish the proof of concept of an app," Baradaran said. "Do it well or don't do it at all."
David Dayen at The American Prospect reports that the pilot program allows customers to cash business or payroll checks at participating post offices, transferring the funds to gift cards. It's in just four buildings in this test in Washington, D.C.; Falls Church, Virginia; Baltimore, Maryland; and the Bronx, New York. The art director for Prospect, Janos Rothstein, tried out the process at the Falls Church location. "At first, [the postal worker] said she didn’t think she could take the check," Rothstein reported. "But she read the check into her scanner and it went through." Rothstein was charged a flat fee of $5.95, the charge for cashing a check for any amount less than $500. Rothstein didn't have to provide identification or endorse the check.
The USPS already sells generic gift cards, which can be used just like a debit card, so this pilot project is allowing customers to in essence purchase those gift cards with a third-party business or payroll check. That meant the pilot program required no authorization from Congress to start. "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," USPS spokesperson Tatiana Roy told the Prospect. "This pilot, which is in collaboration with the American Postal Workers Union (APWU), is an example of how the Postal Service is leveraging its vast retail footprint and resources to innovate."
That's where DeJoy's plans for the USPS come in. He and his technical staff have been meeting regularly with the APWU on the project. "They listened, they didn't shut us down,” an APWU source involved in the negotiations told the Prospect. "They have made the analysis that the future of the USPS lies not in letters but in packages, and they see the expansion of financial services as a companion to the package market." Getting the USPS out of the delivery business and putting it into fully private hands—including some of the companies he's had his own financial interests in—has been a hallmark of DeJoy's tenure so far. So it's not too much skin off his personal nose to see the USPS succeed under his watch in the financial sector—one in which he doesn't seem to have a personal financial interest.
A few officials involved in the program spoke to The Washington Post about the project, anonymously, "to discuss sensitive business strategy." They told the Post that the USPS expects to expand the program into more locations and to provide more products, potentially including bill-paying services and ATMs inside post offices for ease of use. That would go a long way to fully realizing postal banking, a program offered by the USPS into the 1960s, when it dropped all of the banking programs other than providing money orders.
One of the officials was cautious in talking about the future of the program. "To be honest, these are pretty modest steps," the official said. "It's a small toe in the water. I think [the Postal Service] is just trying to see what kind of bite they're going to get. It's the symbolism that matters." The same official did suggest that top leadership of the organization is open to the idea, but there are concerns about the needed technology and staffing upgrades.
The APWU, however, is bullish on the program. "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," Mark Dimondstein, APWU president, told the Post. "New services will not just have the post office doing well by the people, but will bring in needed revenue." Other union officials told the Post they expect to see the program expand into post offices around the country after the holiday season, after an advertising push by the agency for the paycheck-cashing service. They'll use it to gauge customer interest and to help determine where to set fees.
One advocate for a return to full-on postal banking, New York Democratic Sen. Kirsten Gillibrand, is all for the program, but she's not stopping her calls for DeJoy's firing. "The reason why they’re having difficulty delivering mail is because they are severely underfunded and under Postmaster DeJoy, he's tried to slash funding even further and slash delivery days and slash availability and slash routes, close different centers around New York. I mean, he's been a straight-up disaster," she told the Post. She's all for postal banking to restore the institution, saying it "creates the revenue stream, and with that kind of revenue stream, they can hire the right number of employees." She continued, "They can have the right number of delivery days. They can create a service that is more commensurate with their charter and what they’re asked to do. And I think once we get rid of DeJoy, you’ll also have a better leader to lead the Postal Service in a better direction."
More than 7 million households in America are unbanked, which is about 5.4% of households. The most common reason reported for not having a bank or credit union account: not having enough money to meet minimum balance requirements to avoid bank fees. That means millions of people having to rely on check-cashing services, often the same payday loan shops, or stores like Walmart.
Walmart, as of right now, is cheaper than the USPS, charging $4 to cash a check up to $1,000, and $8 for amounts over that. They have a proprietary debit card the funds can be placed on. One postal banking expert, Mehrsa Baradaran, a law professor at the University of California, Irvine told the Prospect that the USPS program is "incredibly safe legally … you have all the authority you need." For it to be successful, she stressed it needs to be cheaper than Walmart. "The post office has way more locations than Walmart," Baradaran noted.
She also cautioned that the USPS needs to build security into the program, protections for the cards in the case they are lost or stolen by creating some kind of app where the cards can be managed and tracked. "It's important down the road to establish the proof of concept of an app," Baradaran said. "Do it well or don't do it at all."