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Postal Banking. There has been a resurgence in interest among certain lawmakers in allowing the United States Postal Service (USPS) to offer retail banking services. In 2021, the USPS quietly launched an ICBA-opposed pilot to offer check cashing, bill paying, ATM access, and expanded money orders and wire transfers in Washington, DC; Falls Church, VA; Baltimore, MD; and the Bronx, NY. USPS reported that, across all locations, just six checks were cashed for a total value of $548.46, resulting in just over $35 in revenue for the cash-strapped USPS.
It would be a serious mistake for the USPS to enter a highly competitive, complex new industry with the potential to ruin itself and its core function and put American taxpayers at further risk. Effective banking management requires years if not decades to master.
FedAccounts. Proponents would make “FedAccounts” available to all citizens, residents, and nonfinancial businesses at taxpayers’ expense. These accounts would offer the same services as commercial bank accounts including the issuance of debit cards, ATM access, direct deposit and online bill pay services. They would also support internet and mobile banking.
These features put FedAccounts in direct competition with checking and savings accounts offered by community banks. Moreover, the possibility that such accounts could be used by the government to track an individual’s financial transactions creates serious privacy concerns.
The Fed has repeatedly said it is not suited to offer direct accounts to consumers and is not legally permitted to do so. For instance, proposals for no-fee FedAccounts would not provide for adequate cost recovery as required by the Monetary Control Act.
June 10, 2021
ICBA told Congress that postal banking is not the solution to reaching more unbanked Americans and lawmakers should reject such proposals.
Issue Brief: In the first issue brief in a three-part series, ICBA said community banks are committed to bringing all members of their communities into the banking system, but postal banking would merely jeopardize the U.S. Postal Service’s core mission.
Pushing Back: ICBA has consistently opposed postal banking, including in an open letter to Congress earlier this year.
Making News: A recent Pennsylvania Association of Community Bankers letter to the editor of the Pittsburgh Post-Gazette notes that postal banking would neither increase financial inclusion nor improve USPS financial stability.
Next: Future ICBA issue briefs will focus on how the USPS is unfit for the inherent risk of financial services and how more realistic alternatives to postal banking would more successfully reach the unbanked.