By Tim Cook
The House of Representatives’ 2022 Financial Services appropriations bill includes $6 million for a pilot project to see if the United States Postal Service can fill the gap between the banked and unbanked.
Favored by financial reformers and Congressional Democrats, the plan proposes five urban post offices and five rural post offices across the country offering services to customers such as free-to-use ATMs, wire transfers, bill payment, and check cashing in addition to the already-offered service of money orders available at post offices.
In 2019, the Federal Deposit Insurance Corporation (FDIC) conducted a survey of Americans to measure their usage of bank accounts, nonbank financial services, and credit. It found that 7.1 million Americans were “unbanked,” having no checking or savings account at any bank in that year.
While this is the lowest number of unbanked people and households the FDIC has surveyed since beginning their studies in 2009, it still leaves many households without bank services.
Advocates for postal banking argue that the services offered must be inexpensive enough for Americans to be incentivized to use them. Proponents of the new pilot program said that along with affordable services, the sheer number of post offices could help reduce “financial deserts” or areas with no bank branch within a reasonable range.
Others in Congress pushed back against the new proposal, citing the 2019 FDIC study, which found that though the first reason respondents gave for not having a bank account was a lack of sufficient funds to open one, the second most-given reason was mistrust of banks and banking institutions. The lack of a nearby branch was only the eight-most given reason.
Congressional Republicans found issue in how the USPS conducted its first pilot program. The required purchase of a gift card allowed the USPS to get around a 2006 limit to offering non-postal products without first obtaining regulatory approval. Republicans urged the Postal Service to make a more gradual entry into banking to avoid violating existing statutes.
Existing institutions oppose the initial proposal as well. The National Association of Federally-Insured Credit Unions expressed its opposition to postal banking in general, instead preferring Congress to allow credit unions to expand their services to the unbanked and under-banked to close the gap in banking services.
