The U.S. Postal Service is best known for delivering the mail. But did you know it’s also the number one seller of the most widely used type of alternative financial service in the United States? We’re talking about money orders, which function like prepaid checks. The Postal Service sold a whopping 97 million of them with a face value of $21 billion in fiscal year 2014.
The Postal Service also offers international money transfers, prepaid gift cards, and limited check cashing. From 1911 to 1967, it even offered savings accounts through the Postal Savings System, which prompted millions of Americans to move a portion of their nest eggs from under the mattress into savings accounts.
In our recent white paper, The Road Ahead for Postal Financial Services, we explore how the Postal Service could expand its financial offerings to benefit Americans and generate much needed new revenue. (This is a follow-up to our January 2014 paper, Providing Non-Bank Financial Services for the Underserved.) We hired financial consultancy Mercator Advisory Group to help us look at the pros and cons of several different approaches the Postal Service could take. But we dove deepest into what it probably is allowed to do under current law; namely, beef up and improve existing products and expand into adjacent, related services like payroll check cashing, domestic electronic money transfers between post offices, and walk-up bill paying. Our analysis shows that – assuming Postal Regulatory Commission approval – a suite of these potentially allowable products could, after a 5-year ramp-up, bring in $1.1 billion in annual revenue while covering costs and contributing profits.
We welcome your input.
- Should the Postal Service look at new business lines that are not directly related to mail and delivery?
- Which financial products do you think the Postal Service should provide?
- What do you think are the biggest barriers to success in postal financial services?