on Oct 3rd, 2011 in Finances: Cost & Revenue | 18 comments
 

When you buy your groceries, how do you pay for them? What about when you go to the gas station or neighborhood restaurant? How do you buy items online? Cash may still be king, but in everyday life, it is being eclipsed by newer digital payment methods such as credit cards, debit cards, and electronic transfers. These payment methods are often more convenient than carrying around lots of cash, but they are not equally available to everyone. People who don't have bank accounts or credit cards cannot access the full-range of digital currency products. One option that is available is prepaid payment cards. Prepaid cards are preloaded with funds and then can be used like a credit or debit card. They are the fastest growing form of digital currency. More and more people are receiving their pay through prepaid cards. Unfortunately, customers sometimes must pay predatory fees to redeem the cards for cash or reload them. Is this an opportunity for the Postal Service? The Postal Service has the trusted brand and a vast retail network to ensure national coverage. It has experience helping the unbanked and the underbanked. It has sold postal money orders for about 150 years. In certain areas, the Postal Service offers wire transfer service. Should the Postal Service look into upgrading its payment offerings for the digital age? A new OIG white paper Digital Currency: Opportunity for the Postal Service examines whether there is a role for the Postal Service in the world of digital payments. The paper finds that the Postal Service is well positioned to expand into new digital currency products such as prepaid cards because of its widespread network, trustworthy reputation, and longstanding experience in providing payment services. The paper also provides some suggestions for an implementation strategy. Click here to read the Digital Currency: Opportunity for the Postal Service white paper. What do you think? Are prepaid cards a good opportunity for the Postal Service? This blog is hosted by the OIG’s Risk Analysis Research Center.

Comments

What an interesting article and comment on American spending habits.

Gift cards could work for you, as long as transferability of funds
(account replenishment) can be linked to sender and recipient's accounts.

Linked to their accounts??? But the gist of the paper is that the Postal Service should be offering these services as public services to the unbanked. What accounts do they have? If they had accounts, they wouldn't need this service!

Hmm...the banks don't see any way to make money at this so the Postal Service should take on another money-losing project? Doesn't the post office already lose enough money?

The Postal Service is on track to lose $8 to $10 billion annually, which can be covered by a new $80 billion business with a 10% profit margin. For reference, Google is a $30-$35 billion business. And the Postal Service is supposed to develop a significant revenue base from focusing on just the unbanked?

Historically, the Postal Service has provided services supported by its natural monopoly, a physical network that no one can match. It has not engaged in nor has it won competitive free-for-alls. In the digital world, its physical network won't matter. Physical items like gift cards and other stored-value cards won't matter, either. The cell phone or something else will serve as a very nice wallet.

The appeal to foreign posts is a false one. Italian Post may not have a "banking license," but it has been accepting deposits from the public for decades. The same may be said for the other European posts that supposedly recently diversified into banking. Their customers have been banking with them for decades. The American public has no comparable experience with its post offices. The Postal Service's money order business is declining, too.

Through its various white papers, the OIG is either providing false hope or distractions.

Makes sense to me. USPS should offer some sort of savings mechanism a well -- maybe a "holiday club" type account.

The only problem is, the waves of post office closings in my area appear to be disproportionately targeting urban areas. Folks who need this sort of service often don't have access to cars and suburban post offices.

Good work, interesting article

Another program for the Postal Service to develop a specific position just to monitor the sales of these "cards", just as all the other program have their own paid "monitors" in each district. The funds from the sales will never cover the costs of the administration of the program. They may be hidden costs, but believe me--or any employee, who has ever not met their quota of greeting cards or delivery confirmation or numbered insured parcels, and has to sit through weekly telecons being berated by the "monitors". It is all in vain.

Another program for the Postal Service to develop a specific position just to monitor the sales of these “cards”, just as all the other program have their own paid “monitors” in each district. The funds from the sales will never cover the costs of the administration of the program. They may be hidden costs, but believe me–or any employee, who has ever not met their quota of greeting cards or delivery confirmation or numbered insured parcels, and has to sit through weekly telecons being berated by the “monitors”.

It's a sad sad day when a person has to insure a regular package that is not breakable to make sure it gets from point A to point B without a post office worker "stealing" the contents of the package and then sending it on to be delivered.... I think all the post office employees needs a "pay decrease", then maybe just maybe they will appreciate having a dang job and then try doing their jobs without "stealing or purposely braking" the contents to make people purchase insurance that should not be needed to mail a package!!

Just like all the government run businesses, their all a dang joke! The government can't run anything and its time to shut them all down and turn them over to privately owned businesses that can make sure people are doing their job right and not "stealing" peoples contents from their packages just to make them scared that if they don't purchase insurance, their package wont' get delivered without something being wrong with it... Its a sad thing that the people who are paying the post office workers wages to begin with has to pay out more money to purchase the insurance on top of paying for a service to be done, to make sure what they are sending out is going to make it there!!!

After reading this blog now it makes sense why so many packages is getting it's contents stolen when in fact there should be no reason why a person should have to buy insurance on a package that is not breakable just to make sure someone at the post office is not going to get their greedy little hands on it and take what don't belong to them out of it.....

The post office managers that cry out for bonuses don't deserve a dang thing but to be fired for not watching their employees..... Every time a package gets stolen, broken, everyone who works in that facility should get docked from their pay including the managers, than just maybe you people would make sure nobody would steal contents because it would affect you all!! It's not like you dang people don't make good money for doing your job and its no difference than a regular person who works in a factory and has to put out a certain amount of parts a day to meet their quota, the only difference is, if they tried stealing from the people who was paying for their wages their butts would be out on the streets looking for another job!! IT'S TIME TO FIRE THE GOVERNMENT AND TURN THE POST OFFICE OVER TO A PRIVATELY OWNED COMPANY THAT CAN MAKE SURE PEOPLE'S CONTENTS DON'T GET BROKE, OR STOLEN, THEN JUST MAYBE WE THE PEOPLE CAN HAVE PEACE OF MIND AGAIN, GETTING OUR MAIL DELIVERED!!!

SEEMS TO ME THERE IS NOT ENOUGH MONITOR'S IN YOUR FACILITY!!

"What do you think? Are prepaid cards a good opportunity for the Postal Service?"

No.
Prepaid cards have an interesting growth but they are utilized by the banking customer. What interest would they have to utilize a product from the Post Office?
If they have a need to transfer funds to another party with the ease of the recipient in cashing they seek out Money orders. Paying that traffic ticket in another state, sending funds to family, etc.
Are we proposing to replace Money Orders? Is this more cost effective for the PO? . . . then maybe.
Then the question is will all those that buy Money orders want to use the Prepaid card instead? I doubt it, as most Money orders are purchased as the recipient has specified they want a Money order.
For that matter the use of Money orders is send the $$ without being present . . . so again, don't think it would replace Money Orders.

The unbanked? if I had cash, why would I want to purchase (spend more money) to spend my money????

Its an interesting concept but don't see the increase of Prepaid cards in being anything but a gift card for another individual.

Have you seen the trend in how people pay for their PO boxes?
Instead of paying for a years service,they are trending to a six month rental agreement, even with being advised they get a refund for their unpaid portion if they chose to close the box.

The unbanked don't extend out their PO box rental agreement and they certainly are not taking up the offer to have automatic payments come out of their account.

The unbanked deal in CASH. Period. They reluctantly purchase Money orders.

Interesting concept if we had the same demographics but wow, the concept is coming from someone that hasn't a clue that rural America is hurting. And trusting the Government with their funds is NOT happening.

I bank and I don't see the need for such a card. So not sure how much this concept would fly.

To whom it may concern we run a non-profit organization(CAPTS) that sends care pack over seas to the troops in Iraq and Afghanistan.We really on donations and our largest cost is the mailing.If you would issue gift card it would help take the scam factor out.People would know their intentions would be followed.It would help the groups that are out there that are doing good.It would also keep revenue in the USPS account. Thank you Mark from CAPTS

So you mean SNAP CARDS, CREDIT CARDS ISSUED BY UNEMPLOYMENT AGENCIES,
THE COMING NATIONAL HEALTH ENTITLEMENT CARD, (CHIPS), AKA Socialisim Cards. SOOOOOOOOOOOOOOOOOOOOOOOOO SINCE YOU BELIEVE THE USPS and it's affiliate services are the center of the American financisl universe, I suggest you invest heavily in this strategic vision.
BTW (By the way), ask any clerk what the reason is for the issuance of money orders represents?

Yes, the USPS could offer a custom version of the card for socialists entitled "I care about healthcard" or "Liberty or Healthcare?"

Offering prepaid debit cards at post offices may offer some conviences for the "underbanked" as well as other consumers but it will probably not be a high volume sales item. When comparing the layout of a typical post office to a convienience store that offers pre-paid debit cards, there would be logistic issues for placement of the displays for maximum exposure.
Consumers who don't have bank accounts or have access to credit do benefit from these prepaid cards. Having them available in a public locations would not be a bad idea.

Offering prepaid cards might provide a certain element of safety to the "unbanked" Remember unbanked could include children, displaced single parents, those unable to get a credit card or uncomfortable carrying cash and/or dealing with banks.

In my experience prepaid cards just do not work. They just add to the admin

Good work, interesting article

Offering prepaid debit cards at post offices may offer some conviences for the “underbanked” as well as other consumers but it will probably not be a high volume sales item. When comparing the layout of a typical post office to a convienience store that offers pre-paid debit cards, there would be logistic issues for placement of the displays for maximum exposure.
Consumers who don’t have bank accounts or have access to credit do benefit from these prepaid cards. Having them available in a public locations would not be a bad idea.

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