Special Delivery? Agency Says Postal Service Should Consider Prepaid (Jan. 28, 2014)
The United States Postal Service’s Office of Inspector General has once again suggested that the Postal Service should consider providing financial products, including prepaid cards. According to a new white paper, offering such products would help the Postal Service shore up its ailing balance sheet, while providing a pathway to financial services for the 68 million American adults who currently are underserved by the banking industry. With the average underserved household spending $2,412 each year on interest and fees for alternative financial services, serving the underbanked could be worth up to $8.9 billion annually for the USPS, the report found. The Inspector General’s latest white paper follows its 2011 study that encouraged the Postal Service to incorporate prepaid cards into its existing money transfer process.
Among the factors that make the USPS well-positioned to provide financial services are its high level of trust in the eyes of the American public, along with its wide-ranging physical network—especially at a time when many banks are contracting their branches. But the white paper does not suggest the USPS compete directly with banks; rather that “the Postal Service could help financial institutions fill the gaps in their efforts to reach the underserved.” Among the financial products and services the paper said the USPS could provide were reloadable prepaid cards with features that encourage smart money management, domestic and international money transfer services, and small loans. “As society becomes increasingly cashless, the Postal Service’s ability to provide a physical link to the new economy will become more and more vital,” the report said.
While the concept hasn’t taken off in the U.S., many international postal services currently provide financial services products—and reap considerable gains for doing so. Among the leaders are Switzerland, where revenue from such services comprises 71 percent of the post’s operating profits, New Zealand (70 percent) and Italy (67 percent), according to the white paper.