USPS launches pilot program for banking services sought by Warren and Left
IIf you live in four locations on the East Coast, you can now use the Postal Service to cash corporate and payroll checks and have the funds refunded in the form of a gift card.
The United States Postal Service launched the test program last month in Baltimore, Washington, DC, Falls Church, Virginia and the Bronx, New York. Customers at these locations can now bring their business or paychecks (up to $ 500) and deposit the money on a disposable gift card.
A USPS spokesperson confirmed to the Washington Examiner that the program began at all four outlets on September 13, and that funds will only be disbursed in the form of gift cards, not cash.
“This pilot, which is in conjunction with the American Postal Workers Union (APWU), is an example of how the Postal Service is leveraging its large business footprint and resources to innovate,” the Postal Service said in a statement.
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The United States had already implemented a postal banking system, known as the Postal Savings System, from 1911 until it was dissolved by Congress in 1966. Some liberal lawmakers pushed for rendering certain financial services to the USPS .
Democratic Senator Kirsten Gillibrand of New York announced a law in 2018 that would establish retail banking at all of the Postal Service’s 31,000 locations. Its goal was to put an end to “predatory practices in the payday lending industry” by giving low-income people access to basic banking services.
The notion was also championed by Senator Elizabeth Warren, who promoted it during her unsuccessful 2020 bid for president. The Massachusetts Democrat wanted the USPS to partner with community banks and credit unions to provide basic, low-cost banking services, such as checking and savings accounts.
They, along with other left-wing lawmakers, have put forward the idea of “banking deserts” where people do not have banks or credit unions in their immediate neighborhood. Supporters of the USPS offering financial services claim it would allow banking access to underserved and low-income people.
Gillibrand told Washington Examiner Monday that the pilot program is a “big first step” towards the creation of a postal bank.
“While the products it will offer will not be as extensive as those contained in my legislation, the Postal Banking Act, a pilot program will demonstrate value to these communities and show that the USPS can effectively serve urban and rural communities under -banked, ”she said. said in a statement.
Gillibrand called postal banking a “fancy solution” to the complex problem of those who are unbanked or underbanked and would generate around $ 9 billion in revenue for the postal service.
The USPS spokesperson said the testing program aligns with the Postal Service’s 10-year plan, which was announced earlier this year and designed to mitigate financial losses. An important part of the plan was to reduce expected delivery times and increase prices.
Target delivery times for first-class mail and periodicals are slowing by approximately 30% as of last Friday.
“Delivering affordable, convenient and secure new products and services aligns with Postal Service’s 10-year Delivering for America plan to achieve financial sustainability and service excellence,” USPS said of the Postal Banking Pilot.
Banks are likely to oppose the pilot program because it puts them in direct competition. Interest groups such as the American Bankers Association and the Independent Community Bankers of America have pushed back on lawmakers who have advocated for postal banking.
In a July 2020 letter to House leaders urging them to reject postal banking legislation, several banking groups said the USPS providing banking services would raise “a number of serious regulatory and consumer protection issues.” .
“Congress should encourage the postal service to focus on its core business, the physical delivery of mail, and not attempt to extend the mission to businesses outside the postal service’s area of expertise,” said they wrote. “Postal banking does not solve the main financial problems of the postal service and may well make them worse. ”
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Building postal banking beyond the pilot program rolled out last month would require Congress to pass legislation because the USPS cannot implement banking services in its thousands of offices without the approval of lawmakers. .