Post Offices and the Unbanked in the US

Post offices are often proposed as a solution to providing access to cash. The US Center for Monetary and Financial Alternatives have argued that this is to fundamentally misunderstand the case of the unbanked.

The US Postal Service (USPS) has run a trial in four locations, allowing customers to transfer business and payroll cheques up to $500 to gift cards for a flat fee of $5.95. It is reported that no one has chosen to use the service in its first two months in the Bronx location. For the trial to be turned into a full-scale programme, Congress would have to pass new legislation.

Given that Walmart cashes cheques up to $1,000 for a fee of $4 and Check Cash Depot cashes cheques for a fee of 1%, $5 on a $500 cheque, perhaps this is not surprising.

The FIDC 2019 financial services survey estimates 5.4% of US households are unbanked, 7.1 million households without cheque or saving accounts. When asked why they don’t have a bank account, inconvenient bank locations rank nearly last, but this is one of the key arguments for using post offices.

The big issue is maintaining a minimum balance in their accounts, followed by people’s lack of trust in institutions and their wish for financial privacy. Again, post offices don’t address these concerns.