Today, U.S. Senators Kirsten Gillibrand (D-NY), Bernie Sanders (I-VT) and Jeff Merkley (D-OR), and Representatives Marcy Kaptur (D-OH), Alexandria Ocasio-Cortez (D-NY) and Bill Pascrell (D-NJ) sent a letter to Postmaster General Louis DeJoy pressing him to improve the postal banking pilot programs that the United States Postal Service launched last September. Last spring, Gillibrand, Sanders, Kaptur, Ocasio-Cortez and Pascrell had sent a letter to appropriators pushing for the pilot programs.
The pilot programs launched in four cities—Washington D.C., Falls Church, Virginia, Baltimore, MD, and Bronx, NY—to offer customers the ability to convert cash payroll or business checks up to $500 onto a prepaid Visa gift card. However, the lack of marketing of the program has led to very few reported transactions.
In the letter, the officials pressed DeJoy to improve marketing of the program, to expand test site locations, price the products more affordably, expand the available services and increase the value of the service it already provides.
The lawmakers wrote, “We are writing to ask USPS to expand and improve the services they are offering in the pilot, under their current legal authority, so that more of the needs of the unbanked and underbanked can be addressed, and so that lessons can be learned that can be applied to making postal banking more universal through legislative efforts.”
Millions of Americans live in “bank deserts” — regions without immediate access to a brick and mortar bank — and approximately 46 million Americans are considered unbanked or underbanked. Nearly ninety percent of the zip codes lacking a bank or credit union are in rural areas, and low-income communities and communities of color are also historically underserved by mainstream financial services — approximately 30% of Hispanic adults and 40% of Black adults are underbanked or unbanked, and 84% of all unbanked adults have a family income below $25,000.
Additionally, establishing permanent postal banking services would strengthen the Postal Service by creating a nonprofit bank that offers low-cost checking and savings accounts, ATMs, mobile banking, and low-interest loans. According to a report from Gillibrand’s office, this proposal would create nearly $19 billion in revenue for the Postal Service each year.
Senators Gillibrand, Merkley and Sanders are the lead Senate sponsors of the Postal Banking Act, legislation that would establish permanent essential financial services in post offices in every community.
Full text of the letter can be found below.
Dear Postmaster General DeJoy,
We are writing with regard to the postal banking pilot that the United States Postal Service launched on September 13th in four locations – Washington D.C., Falls Church, Virginia, Baltimore, MD, and Bronx, NY. In these four pilot cities, customers can now convert cash payroll or business checks up to $500 onto a prepaid Visa gift card.
While we commend the postal service for taking these actions as first steps, there are several areas that we believe USPS can take right away to improve the pilot. Currently, the transaction has a very high process fee of $5.95. That is nearly $2 more than Walmart charges to convert a $1,000 check onto a similar card.
In addition, USPS has done very little marketing or advertising of the expanded service which has led to very few reported transactions. For example, according to postal employees at Baychester Station in the Bronx, not a single business or payroll check transaction was made between September 13, when the pilot launched, and October 31.
A study by the University of Michigan found that sixty-nine percent of census tracts with a post office retail location do not have a community bank branch – that is 14,938 census tracts representing 60 million people. Seventy-five percent of tracts with a post office retail location do not have a credit union branch.
We are writing to ask USPS to expand and improve the services they are offering in the pilot, under their current legal authority, so that more of the needs of the unbanked and underbanked can be addressed, and so that lessons can be learned that can be applied to making postal banking more universal through legislative efforts. The USPS Office of Inspector General (OIG) released a study in 2015 that found that USPS could expand its current offering of financial products under its existing legal authority. This can include expanding check cashing, bill payment services, electronic money transfers, and international money transfers. Furthermore, in addition to this being a critical need for millions of Americans across the country and in rural and urban communities, the USPS OIG estimated that this approach could generate $1.1 billion in annual revenue after 5 years, while covering costs and contributing profits.
First, we ask for USPS to significantly expand the test site locations, both to reach more people to achieve greater density in a given geography and to test the service in more diverse geographic areas, including rural, urban and suburban locations.
Second, if the idea is to offer services in an affordable way to expand the number of people who can access them, the pricing of the products must be made more affordable.
Third, the services provided should be expanded. This should include both expanding the maximum value on the card to $2,000 to serve more Americans who need to be able to cash their paychecks. If an employee is paid bi-weekly at a $15 minimum wage working 40 hours a week, their paycheck will be more than the $500 amount currently allowable.
And, finally, USPS should test out other services in a pilot so that we can learn more about what is needed and its impact on serving the unbanked and underbanked. Services should include expanded check cashing and domestic and expanded international wire services.
Thank you for your consideration.