Postal banking and liquor delivery could save the US Postal Service, experts say
When US Post Minister Louis DeJoy presented his plans on Tuesday for the future of the post, he underlined higher postage rates and slower first class mail as a means of stemming the losses of postal services, according to him, they could reach 160 billion dollars.
But lacking his new 10-year plan According to economists, members of Congress and consumer advocates, two ideas could generate billions of dollars for the besieged service and bring the post into the 21st century: a return to postal banking and the entry of the post into the 21st century. the lucrative alcohol delivery industry.
“We don’t expect the post office of the 21st century to be the same as the post office of the 20th century,” said Rakim Brooks, senior campaign strategist for the American Civil Liberties Union. “People use mail less and we believe the institution needs to provide new services.”
Postal banking, he said, is one of the new services that the post office of the 21st century could – and should – provide. This would include basic banking services, including cashing checks, providing low and no-fee checking accounts, installing low-cost ATMs, and providing bank transfer and bill payment services.
“Postal banking is a win-win solution: it can contribute to the post office’s bottom line and serve the millions of Americans who are currently underbanked and unbanked,” Brooks said, referring to the over 30 millions of Americans who do not have sufficient access to the general public. financial services or have no bank account at all, often due to fees associated with traditional commercial banking services.
Postal banking is not a new concept. Banking services were part of the menu of services offered by the post office for decades, starting in 1910, when Congress established the Postal Savings System to encourage people to invest their money in financial services. In 1947, the postal banking system had $ 3.4 billion in deposits. But in the 1960s interest in the program waned as commercial banks began offering higher interest rates, and in 1967 postal banking services were phased out.
Porter McConnell, who heads the Save the Post Office Coalition, says now is the time for postal banking to return.
She points to a 2014 report by the Inspector General’s Office of Postal Services which indicates that postal banking services could generate $ 9 billion in new revenue for the post office.
“I’ve been working on postal banking for three years,” McConnell said. “The idea is definitely gaining ground. Now the discussion with officials has shifted from whether postal banking will work, how it will work, and how we can design it to have maximum impact. “
The postal service lost money in recent years, due to a combination of factors, primarily the high cost of executing a mandate to prepay pension benefits decades in advance, as well as the reduction in mail volume from first class, increasing competition and rising pay and benefit costs.
McConnell said postal banking could help generate critical revenue and serve the public, noting that consumer advocates would find it particularly appealing to have a post office capable of providing consumers with digital wallets, ATMs to low cost and the ability to cash checks without paying the often exorbitant fees charged by check cashing establishments.
Also in favor of postal banking: a growing number of economists, including Melanie Long, assistant professor of economics at the College of Wooster in Wooster, Ohio.
“Postal banking services have been used in other parts of the world to democratize services,” she said, noting that the postal services of 139 countries around the world offer some form of financial services.
Long said it made sense for post offices to become banks, especially given the growing number of “banking deserts” in the United States, communities where there are no commercial banks.
Between 2008 and 2020, more than 13,000 bank branches closed in the United States, representing 14% of all branches, according to the National Coalition for Community Reinvestment.
Many of these bank closures have taken place in rural and socio-economically disadvantaged communities, she said.
“Many commercial banks claim that it is not profitable to operate branches in these areas,” Long said.
Congress takes note of postal banking services. Last year, Sen. Kirsten Gillibrand, DN.Y., and Sen. Bernie Sanders, I-Vt., Introduced the Postal Banking Act, aimed at providing consumers with bank accounts and mobile banking services.
In a statement, Gillibrand noted, “Postal banking is an elegant solution that would provide the USPS with more than $ 9 billion in revenue per year and solve America’s high cost of poverty by eliminating payday loans, check cashing and other financial predators. some products.
“Instead of trying to gut the USPS… DeJoy should recognize the unique opportunity he has to reach millions of American workers.”
According to David Partenheimer, spokesperson for the Postal Service, he is open to exploring the possibility of postal banking, “as our research concludes that we can legally provide additional services while making a positive contribution to our finances and without distracting from our core business. “
The American Postal Workers Union supports postal banking, calling it a “win-win-win proposition.”
“Adding additional financial services would bring much needed new revenue to the USPS, while leveraging the skills of postal workers and their place of trust in communities, and providing an essential public service,” he said. stated in a press release.
In 2019, the union called for the launch of a pilot program, whereby postal banking services could be tested at four sites. Suggested locations included Cleveland and the Bronx neighborhood in New York City.
Just as McConnell believes postal banking could provide additional revenue to the Postal Service, she notes that shipping alcohol could generate money for it as well.
FedEx and UPS are currently licensed to ship wine, beer, and spirits, but due to Prohibition-era law, postal service is not.
According to the Congressional Budget Office, the Postal Service could earn an additional $ 50 million per year if it were able to ship alcohol.
Online alcohol sales have grown exponentially in recent years. According to an IBISWorld report, the online beer, wine and spirits industry in the United States is a $ 1.2 billion business, growing 8% per year.
In 2019, Representative Jackie Speier, D-California, introduced the USPS Shipping Equity Act, a bill that would allow the Postal Service to ship alcohol.
“In most states, private carriers like FedEx and UPS already deliver alcoholic beverages,” she said at the time. “It makes no sense to create a competitive disadvantage for the USPS by prohibiting them from this type of shipment, especially given the dire financial situation of the Postal Service.”
McConnell added that “microbrewery owners in particular are really hopeful that the post office can start shipping their products in the near future.”
In a statement, the American Postal Workers Union said it supports the expansion of the agency’s services to include alcohol delivery. “Allowing the USPS to ship beer and wine is a common sense step that gives customers better access to this growing trend… There is no good reason why beer and wine cannot. not be included with other couriers and parcels. “
As the post office contemplates its future, post advocates like McConnell hope it will be empowered to take on new services and take on new roles in the communities it serves.
“There’s a story of Congress playing around with the post office and saying, ‘Look – it’s broken, you need to fix it.’ The post office is not broken. It can be fixed. Allowing the post office to evolve and expand its services can help remedy this. “