USPS Begins Postal Banking Pilot Program

[TexasTowelie]

The United States Postal Service (USPS) has taken the most dramatic step in a half-century to re-establish a postal banking system in America. In four pilot cities, customers can now cash payroll or business checks of up to $500 at post office locations, and have the money put onto a single-use gift card. It’s the most far-reaching executive action that the Biden administration has taken since Inauguration Day.

The move puts the USPS in direct competition with the multibillion-dollar check-cashing industry, which operates storefronts to allow unbanked or underbanked residents to cash their paychecks.

According to USPS spokesperson Tatiana Roy, the pilot launched on September 13 in four locations: Washington, D.C.; Falls Church, Virginia; Baltimore; and the Bronx, New York. To test the system, Prospect art director Jandos Rothstein visited a post office in Falls Church on Saturday and successfully cashed a business check onto a Visa gift card.

“At first, [the postal worker] said she didn’t think she could take the check,” Rothstein said. “But she read the check into her scanner and it went through.” He didn’t need to show identification or endorse the check. The post office charged Rothstein a flat fee of $5.95, for any amount up to $500.

Read more: https://prospect.org/economy/usps-begins-postal-banking-pilot-program/
(American Prospect)

[CaliforniaPeggy]

1. Finally, a program that gives life to our Postal Service. About time. n/t

[msongs]

2. great now the crummy long slow lines will be much longer and slower nt

[DFW]

10. Many countries in Europe have had this for decades

Here in Germany, anyway, there is a separate counter and area for banking services, completely set apart from normal postal operations. Knowing DeJoy, he would probably not institute anything that practical, but here, it works.

[Haggard Celine]

3. He didn't need to show ID or endorse the check?

That doesn't seem like a good idea to me. Seems like it would encourage theft and fraud. I know that not everyone has ID, but it should nevertheless be required to cash a check. Maybe we should make an effort to help people get an ID. They're probably going to need it to vote, anyway.

[usaf-vet]

4. What is the catch? With DeJoyster at the helm this has to be part of some grift.

The grifters will take away millions if not billions from the USPS reasoning they will make up the difference with the $5.95 fees.

[DFW]

12. A $5.95 fee for a transaction of $500 or less seems high

That's 1.2%, and way more if it's a flat fee for all transactions less than that.

Plus, I'd never deposit a cent in an institution where someone like DeJoy could wipe out ten million depositors with a keystroke of a computer, transfer the whole sum to his account in the Caymans, and go buy Belize to retire.

[usaf-vet]

15. Exactly!

[druidity33]

18. A Check cashing business...

will often take as much as 10%. Sometimes too, those are the only places for the unbanked to cash their checks.

This seems like a better deal. And i would doubt that DeJoy has access to the funds in the way you suggest... unless of course you are being facetious.

[DFW]

21. Ten per cent is robbery. Sounds like a hell of a business to be in, though.

Only half-way facetious about accessing funds. It can be done if one has the proper technical help.

A few years back, the government of Cyprus found itself in a budget crisis. They went in and, by computer, legally raided every bank account in the country with a balance of over €100,000 and helped themselves to 10% of every such balance. I don't know how the 10% figure was decided upon. Maybe they had a Mormon hacker working for them, or something. The citizens could do nothing about it. Had the government wanted to take 25%, 50%, 75% or 100%, the procedure would have been the same, though they would have been well-advised to have a jet on the tarmac with both engines running if they tried for one of the higher numbers.

[druidity33]

26. Yes 10% is robbery...

payday loan places are worse. And credit card interest rates can be in the mid-high 20's range. Democrats have tried in numerous iterations to put limits on payday loan and check cashing establishments. But i guess they have a powerful lobby, because nothing much has changed. Postal Banking would alleviate most of that.... assuming of course the local PO has not been shuttered. As for the ID issue the folk in this thread seem worried about... meh, it was a business check, so they knew the money was there. Kinks get worked out, this is a pilot program, and of course this is just one recorded instance.

[DFW]

27. This is all foreign to me, of course

Europe is so densely populated that one is never far from a financial institution, and I don't know of anyone who is still paid by check. When I moved over here, I told my employer in Dallas to move to a direct deposit plan, as I wasn't about to run over there to deposit my paycheck every two weeks, and sending them to Düsseldorf for my endorsement and then my sending them back for deposit was more than a little impractical.

Of course, to have direct deposit, you need somewhere to direct deposit into. I don't think they do direct deposits of cash to mattresses any more.........

[druidity33]

28. The working poor...

often suffer from a lack of documentation, or have been booted from banking due to overdraft fees. Some banks will only let you open an account if you make a deposit of significant funds. Minority neighborhoods often have very little choice in where to bank and of course internet access can affect how you bank... and that is often pretty bad in poor areas. The share of unbanked households in the US is around 6%... i'm not sure if that includes our undocumented population, which is of course significant. It's a sticky wicket for sure. But i know Postal Banking has been a solid proposal to help with these issues for a long time. Elizabeth Warren talked about it frequently in her Presidential campaign. Unfortunately i know too many people whose bank is their mattress. When i worked in restaurants at least half the staff got paid via check and some had weekly troubles getting them cashed.

[DFW]

34. Sounds like a depressing situation for sure.

6% of the US population is something like 20 million people--a staggering number for a first-world nation, although my wife, a social worker here in Germany worked with people like that all the time. They would run their bank accounts down to below zero, go into debt toward the end of the month (usually alcohol, tobacco, and gambling), and start out ever worse at the start of the following month. She spent a good amount of her time pleading with banks, landlords and welfare offices to go easy on people, some of who deserved the break, as well as those who didn't (and thus made things harder for those who did). Hers was a thankless job. I don't know how she lasted as long as she did.

[druidity33]

42. This is a decent article from Bloomberg...

about the unbanked and Postal Banking as a solution (if you can get past the paywall):

https://www.bloomberg.com/opinion/articles/2021-05-13/the-case-for-postal-banking-how-usps-and-fintechs-can-help-the-unbanked

"Many people in America lack access to decent, fairly priced financial services. As of 2019, an estimated 7.1 million households had no bank accounts. About 14% of Black households and 12% of Hispanic households are in this position. A constellation of businesses — payday lenders, check cashers, tax preparers, auto dealers and so on — acts to fill the gap, but often at excessive cost. A study in 2011 found that paying for these services can eat up almost a tenth of an unbanked household’s income."

snip

"This is where the postal service comes in. Its network of 30,000 branches dwarfs those of even the largest banks, with a presence in some of the most neglected places, both urban and rural. Most countries use their postal networks to deliver banking services — and so did the U.S. from 1911 to 1966. Despite its financial and operational difficulties, the post office remains popular with users."

[appalachiablue]

35. +1

[Irish_Dem]

19. I agree. DeJoy is not going to do anything unless it benefits himself in some way.

[twin_ghost]

43. When you use the gift card the USPS will get a portion of each 3% transaction fee.

[secondwind]

6. I thought the same thing. Not good!

[Klaralven]

16. The post office will be the place to deposit stolen checks

[ancianita]

5. Idk something doesn't seem right about a program under DeJoy. Let it stay a pilot 'til he's gone.

[secondwind]

7. They get your money and give you a gift card.

The money sits there, day in and day out, this can be abused easily.

[ancianita]

8. Pretty sure the money has to go to VISA, regardless. The real problem is

It's a corporate currency exchange incursion into a government service. I don't want government outsourced to corporations. That's fascism.

If it were connected to a regional credit union, perhaps, I wouldn't distrust the setup.

[RVN VET71]

14. There's always a darned camel's nose, isn't there?

Under an earlier (pre-GriftingDonnie) era, I would have thought you’r comment about fascism extreme. Not any longer. Once the camel’s nose intrudes into the tent, its neck and body are soon coming in with it!

[Klaralven]

17. The gift card is an existing USPS product

A generic gift card, an existing product sold at post office locations, can be used like a bank debit card, either to take money out of an ATM (though that would, for now, incur fees), or pay for goods and services either online or at point-of-sale retail locations.

The money goes to whatever bank is the issuer behind the gift card. Visa processes the debit transactions between the merchant and the issuing institution and takes a cut.

Issuer might be MetaBank NA. https://en.wikipedia.org/wiki/MetaBank

[ancianita]

38. Okay, then. It still rests on third parties' profit, with no return to the government that paid USPS

overhead and all operational costs. It's not a win-win for consumers or tax payers -- the middle class pays taxes for the overhead and operations, then third parties take a cut of the fees charged the poor. I'm in the middle class. I want to help the poor have control over their budgets with participating in credit unions where members with bank accounts are shareholders. To me, that's how the USPS should operate, and not this corporate takeover crap.

If gift cards are big in the retail world, I'm happy to buy them as gifts, but to use gift cards costs poor people more and gives third parties money in advance that might never get spent on services because gift card companies know there's a predictable percentage of profit in lost cards, esp. if they have expiration dates.

[NurseJackie]

9. This is great news! It will benefit many communities.

[MichMan]

11. How do they know the checks are not stolen or fraudulent?

I have family who have worked in banks. They see them all the time; often from customers who want to believe they are real.

[DFW]

13. Randall Stephens is alive and well. He's Louis DeJoy's long lost cousin.

He left to live on Grand Cayman years ago, which is why no one but Louis DeJoy remembers him.

Well, him and Stephen King............

[Docreed2003]

23. Lol...excellent reference!

[MichMan]

20. Does this mean we will be able to pay for postal services with personal checks?

Mailing packages and buying stamps etc.?

[DFW]

22. If the check is drawn on their own bank, maybe

I don't see how they could refuse that. Checks not drawn on their own bank probably wouldn't by any more welcome than they are now.

[MichMan]

24. If they will cash a check with no ID or endorsement...

Why wouldn't they accept one as payment ?

[DFW]

25. If their banking and counter transactions are kept separate

They could easily institute separate rules for the services they provide.

[bcool]

29. How can you pay your bills (rent, utilities, etc) with a debit card??

And how many of the cards will get lost or stolen??

[appalachiablue]

36. Utilities maybe, but rent who knows. Good question.

[TexasTowelie]

39. I have the option to pay my rent online

through a third-party service that contracts with the owner of the apartment complex. A gift or debit card (or two or three) can be used to make payment. It's the first apartment complex that I've lived in which offered that option, but I can see it spreading in the future.

[appalachiablue]

40. Great, that's handy and good to know. I'm not there

with paying bills online yet but options are available and growing as you say.

[Vinca]

31. That's nice, but I'd rather have first class mail delivered in a timely fashion.

[leftyladyfrommo]

32. I wouldn't yrust the USPS with anything. nt

[viva la]

33. I hope they transition into Actual banking

So that people can have savings and checks and money safe in an account and not just on an easily lost or stolen card.

This should be just a start.

[yellowcanine]

37. I would just like them to deliver mail on time and have shorter lines to mail a package.

This won't help that a whole lot, in fact, will likely make it worse. And now we have to worry about the post office being held up on pay days to grab the extra cash they will have to have on hand?

[Xolodno]

41. ADP has a debit card for paychecks to be direct deposited.

Since commercial banks basically see your money and wonder how they can get in on that action. So bad credit, high fee's, etc. can make getting and maintaining an account a nightmare. On top of that, they cut down local branches, from closing a large office to putting them into a grocery store....to quietly closing them because they didn't get enough "sales".

But I think the ADP debit card has a fee as well. I'll stick to my credit union, I went on vacation to Mexico and informed them of it. While there, someone tried to use my "card" at a vending machine in Australia. They declined it as they knew I wasn't there, but kept it open until I got back. Killed the card and went to the branch for a new one. I wonder how that would play out with "gift cards".