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.
July 18, 2022
The U.S. Postal Service defended its decision to launch an ICBA-opposed postal banking pilot program without first consulting the Postal Regulatory Commission.
USPS Defense: In a recent court filing to the commission, the Postal Service said the banking program it quietly rolled out last year to accept payroll and business checks as payment options for open-loop gift cards is not a departure from its existing greeting card, gift card, and stationery product lines.
Legal Questions: The PRC has asked the USPS why it didn’t seek the commission’s approval before launching the pilot last year, citing federal law requiring the USPS to get the commission’s approval for any “market test” for an experimental product. It has also asked how the USPS plans to proceed with the banking pilot given its lackluster performance.
Background: The USPS program offers check cashing, bill paying, ATM access, and expanded money orders and wire transfers at four locations. Customers may cash payroll or business checks to buy single-use gift cards worth up to $500 for a $5.95 fee.
ICBA Messages: ICBA has repeatedly pushed back against postal banking in a recent letter to Congress, LinkedIn op-ed, and three-part series of issue briefs to policymakers.