The world is getting smaller, and not just because viruses and bacteria from foreign countries are showing up here. We can buy something made halfway around the world and have it on our doorstep in a few days. We can also instantaneously send across national boundaries not only information, but money as well.
One way to send money abroad is through international money transfers. It’s a hot market, growing between 3 percent and 11 percent annually from 2010 to 2014, our recent audit report noted. And the United States is the number one sender of international money transfers, capturing 22 percent of the global market. In 2014 alone, U.S. residents sent $130 billion in money transfers to other countries.
Yet the U.S. Postal Service finds itself in the not-so-hot part of the market, continuing to offer primarily an old-fashioned version of international money transfers: the international paper money order (IPMO). The Postal Service has agreements with 27 foreign countries to accept and cash their money orders in the United States and those countries accept Postal Service money orders issued to recipients in their countries.
IPMO sales have declined drastically, from $60 million worth of money orders in fiscal year (FY) 2010 to $34 million worth in FY 2015, our report said. Sales reflect the face value of the money order, not the revenues earned on fees, which of course also decline with fewer sales. In FY 2015, the program generated only $500,000 in revenue from the fees on money orders. The decline certainly isn’t unanticipated. We have been seeing the same situation in the Postal Service’s domestic money order business.
Both markets face competition from providers that offer alternatives and broad shifts toward electronic forms of payment. Even the Postal Service’s limited electronic international money transfer service (Sure Money), available from the U.S. to 10 Latin American countries, has not performed well in recent years, failing to capitalize on the strong demand worldwide for international money transfer services.
We recommended the Postal Service remake its international paper money order program into an enhanced electronic international money transfer services program and improve the domestic money order program by adding digital technologies.
Tell us what you think. Do you use international money transfer services? Have you used an international paper money order in the past year? What ways could the Postal Service improve its money order services?