The 2020 elections put the U.S. Postal Service to the extreme, putting pressure on the institution at a time when it has become a potential catalyst for financial inclusion.
The Trump administration has alleged shortcomings in Mail-in votingwhich goes hand in hand with cuts in postal operations and political disputes. Two main highlights are those Vote of the house Giving the USPS $ 25 billion to shore up its finances and prohibit operational changes that have slowed mail delivery – a move that has no chance of getting past the GOP-controlled Senate or getting Trump’s signature. The other is reports that JPMorgan Chase is in discussion with the USPS to offer ATMs, cash assistance and other financial services by renting space in the postal network.
A USPS spokesman said the Post offered limited financial services such as money orders and cashing of U.S. financial checks, adding that the USPS would consider other services it can legally provide for a profit, but regulatory discussions need to be addressed beforehand . The bank did not return a request for comments in due time.
As online banking and e-commerce accelerate during the coronavirus pandemic, the cost of managing paper money has become a challenge for those around the world government, consumer and banks. For banks, cash incurs labor and distribution, maintenance and processing costs, according to McKinsey, and the rapid digitization of payment transactions increases these costs.
The postal service can offset some of these overheads and expenses, said Corey Stone, an entrepreneur at the Financial Health Network’s residence.
“Cash management is another part of bank branches that can be performed at a USPS location because they already accept cash for postage, money order and wire transfers,” said Stone.
There are examples of opportunities and challenges in using the postal network to address underserved markets or ATM deserts.
In the United Kingdom, Barclays After a disagreement in autumn 2019 about interbank tariffs, an agreement between Swiss Post and the banks on the provision of cash withdrawals in post offices was canceled for a short time. Post banking fees are higher than in branches or ATMs, and banks have to pay these fees as the service is free to consumers. In the UK, less than 3% of the population is reported to have no bank account Statista. About 6% of the US population do not have a bank account, they say Federal Reserve, but another 16% are understaffed, meaning they have a bank account but mostly use an alternative service.
the US has seen a similar trend as bank branch closings make it difficult to access ATMs and cash services that could be provided by the USPS – or higher fee options like cashing checks.
An agreement between banks and the USPS to support cash access could encourage banks to expand their consumer base without opening additional branches and could potentially benefit merchants who have not made the move to accept digital payments.
“UK postal money is a national model open to all banks that allows any consumer with an existing bank account to conduct basic personal and ATM transactions at UK post offices,” said Stone.
Channel partnerships, where banks and credit unions work with non-financial retailers, can reduce brick and mortar delivery costs by taking advantage of another party’s existing real estate and staff, Stone said. “Post offices are in virtually every zip code, including those that don’t have traditional bank branches,” he said.
The services can also add volumes and new business areas for the postal service.
In some markets, post banking has gone digital. In Italy, Postepay recently hired financial news company Volente Technologies to drive the Post’s transition to open banking, instant payments and a gateway to interbank networks. Post Italiane has more than 14 million accounts and is one of the largest e-money services in Italy with over 28 million cards in circulation.
In Australia, the national postal service has partnered with Mastercard on a digital ID project that combines information from a user’s mobile device with other authentication methods. the Australian Postal Service offers branch banking services through extension contracts with banks as well as the payment of bills.
While there hasn’t been much political support for post banking in the US, the economic crisis that accompanied the pandemic has exposed the shortcomings in the disbursement of bulk funds. Along with the discussions on a central bank digital currency, there is a possibility that the USPS may have a role – though there is disagreement about how to do this.
B. Dan Berger, President and CEO of the National Association of Federally-Insured Credit Unions, has advocated a stronger role for credit unions to provide a variety of cash support options with the USPS.
Eric Grover, a principal at Intrepid Ventures, said, “The post office rental space and / or the fees charged by private banks providing services at USPS locations would be an all-round benefit.”
Such a step would strengthen the shaky financial position of the Post, generate fees from partner banks and possibly generate additional traffic in post offices.
“Banks would have access to an additional distribution channel for retailers,” added Grover.