Post Offices Are Testing Check-Cashing Service; NAFCU Says End It

Postal banking has arrived.

At least in a small way.

The U.S. Postal Service is testing a pilot program in four locations that allows customers to use payroll checks and business checks to purchase gift cards, a Postal Service spokesperson said Monday.

B. Dan Berger, president/CEO of the National Association of Federally-Insured Credit Unions, called for an immediate end to the program.

The pilot began at USPS retail locations on Sept. 13 in the Washington, DC; Falls Church, VA; Baltimore, MD; and Bronx, NY, areas. Customers in these locations can purchase a single-use gift card for up to $500. Checks larger than that will not be accepted and no cash will be disbursed.

The pilot program, which tests a controversial expansion of Postal Service programs, was begun without much fanfare. The Washington Post reported on the pilot Monday.

Postal banking has been debated for several years, with many Democrats saying that it would be a way to provide financial services to the unbanked. Financial services trade groups have opposed the idea, saying that if Congress wanted to expand services to the unbanked, policymakers could expand credit union fields of membership to do that.

The House version of the FY22 Financial Services spending bill includes $6 million for a pilot program. The Senate has not passed its version of the spending bill. Congress has extended government funding until Dec. 3, so the fate of the $6 million project remains unclear.

In FY21, the House included a pilot program in its Financial Services spending bill, but the Senate did not include it and it died in a House-Senate conference.

The Postal Service said it has undertaken the project in collaboration with the American Postal Workers Union, adding that it is “an example of how the Postal Service is leveraging its vast retail footprint and resources to innovate. Offering new products and services that are affordable, convenient and secure aligns with the Postal Service’s Delivering for America 10-year plan to achieve financial sustainability and service excellence.”

The Credit Union National Association’s Chief Advocacy Officer Ryan Donovan was not swayed. “It is surely a coincidence that the postal service is launching this pilot program—using existing authority that has gone largely unused for 55 years—at the same time that it is slowing the delivery of mail across the country,” he said. “Lawmakers interested in financial inclusion and affordable access to financial services should work to break down the statutory and regulatory barriers that keep credit unions from doing more to improve their members’ financial well-being and advance the communities they serve.”

Berger also said the pilot program is a bad idea, noting that the USPS last week said that it cannot manage its mission of delivering mail on time.

“Now, it has come to light that USPS is quietly expanding its reach into financial services without providing much clarity on how it plans to balance its current duties alongside this new undertaking,” Berger said.

He said the program stretches the bounds of the USPS’s statutory authority and allows the Postal Service to unfairly compete with credit unions. 

“To better help the underbanked and underserved, Congress should instead allow all credit unions, as community-based financial institutions that prioritize consumers over generating profits, the ability to add underserved areas to their fields of memberships,” he said. “The USPS already admits it has its hands full with its current mission and lacks the bandwidth needed to run such a large and complex operation.”

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