As the United States Post Office continues to be plagued by shipping delays and rising prices, agency officials are looking for ways to increase revenue and ensure financial stability . And that is why, for the third time since 2008, there is Serious conversation on the provision of banking services at the post office.

Only this time it actually happens, at least in the context of a small pilot program offer the cashing of paychecks. As an alternative to payday lenders who often charge a high percentage, customers can pay a reasonable flat fee to redeem their paychecks for Visa gift cards of up to $ 500.

Currently, the service is only available in four of the USPS More than 31,000 locations– in Baltimore, Maryland; the Bronx, New York; Falls Church, Virginia; and Washington DC. Eventually, the trial will expand to include bill payment services and access to ATMs. But even the mere existence of the pilot program is exciting for promoters postal banking services, which were commonplace in the first half of the last century.

“This is the first real step towards reviving postal banking services since the program ended in the 1960s,” notes Christopher Shaw, historian and author of Money, Power, and the People: America’s Struggle to Make Banking Democratic.

A 2014 report from the Office of the Inspector General of the USPS discovered that postal banking could generate up to $ 9 billion in annual revenue. US Senator Kirsten Gillibrand of New York argued earlier this year that offering banking services at USPS outlets could be the answer to the agency’s financial woes while easing the financial burdens on households owed to lenders predatory payday. She and Senator Bernie Sanders of Vermont introduced the Postal Banking Act (pdf) in 2020 with the aim of helping the 7.1 million American unbanked households obtain services such as checking accounts and low-cost ATMs.

There is research and precedent that shows postal banking can provide financial services to low-income Americans, help fund the USPS, and ease the financial burden on unbanked households. So why isn’t the USPS already a bank?

Who is against postal banking?

?? Banks and bankers

The strong opposition to postal banking comes from the banks and bankers themselves. Since the United States Congress established the Postal Savings System in 1910, banks have strongly criticized postal banking, resisting attempts to expand the program. By the 1960s, use of the services had declined and lobbies from various groups of banks and savings and loan associations were able to get rid of them, says Shaw.

“There was no longer an organized movement to defend it, as it had existed for all these decades. And so at that time, the policy was in favor of the banking lobby, ”he says.

Organizations such as the Independent Community Bankers Association have strongly opposed efforts to revive postal banking services. A spokesperson for the business group told Quartz that complex financial service offerings are best provided “in a competitive, private and open market that openly and effectively benefits customers.”

A spokesperson for the American Bankers Association, meanwhile, said the solution to high check-cashing fees is a “banking relationship” and not “a government-subsidized service through the mail.”

?? The ccollection industry

Postal banking industry most at risk is $ 18.2 billion check cashing and personal loan industry. There are thousands of such storefronts in the United States that cash checks without the customer needing a bank account. Some of these companies also offer payday loans, a practice that is often considered a predatory practice based on the high interest rate of the loans and the generally low incomes of the customers targeted by these companies.

Under the Trump administration, the United States canceled regulation of predatory payday lenders, an issue postal banking would address as part of their service line. At the four USPS pilot sites, customers are required to pay a fee of $ 5.95 per check up to $ 500, a figure according to Shaw that is lower than most check cashing services.

?? Congress Republicans

Historically, postal banking has been a popular issue among progressive Democrats. Contemporary postal banking supporters include the aforementioned Sanders as well as Congressman Alexandria Ocasio-Cortez of New York, Marcy Kaptur from Ohio and Bill Pascrell from New Jersey.

Republicans weren’t so supportive. In 2014, Republican Representative to Congress Darrell Issa of California spoke against postal banking, arguing that USPS workers are not equipped to handle financial services on top of money orders, a service the agency has long provided. In 2020, a provision to test a pilot program for USPS financial services was fall by the Senate under Republican control.

In response to the current USPS pilot program, Republican Senator Pat Toomey of Pennsylvania said, “[Y]You have to work really hard to come up with a worse idea than making the government a national bank run by the post office.

Shaw, however, does not anticipate this issue to be strictly partisan..“There is actually decent support for the postal service among Republicans, especially those who represent a rural district because the postal service is so important in rural America,” he says.

Rural customers are also believed to be the primary beneficiaries of extended USPS banking services, but the pilot program so far has only involved post offices in densely populated areas. The American Postal Workers Union, which worked with the USPS to set up the pilot, recommended expanding it to a rural area, Government Executive reports.