The U.S. Postal Service began offering paycheck-cashing services at several East Coast post offices last month with little fanfare, The Washington Post reported Monday.
The test system has the potential to transform how low-wage and underserved Americans access their money, experts say, the Post reported.
Postal customers in Washington, D.C., Baltimore, Falls Church, Virginia, and the Bronx, can now redeem paychecks for Visa gift cards topping out at $500, a USPS spokesperson said.
The service is expected to add locations, and expand financial products to include such items as bill-paying services and ATMs, according to three Post sources.
Activist and Democrats have supported postal banking as a way to boost USPS’s financial situation and simply how Americans can build wealth and access their money.
Sen. Bernie Sanders, I-Vt., made postal banking part of his 2016 and 2020 presidential platforms, the Post said. It also was adopted by the Biden-Sanders Unity Task Force as part of President Joe Biden’s 2020 campaign agenda.
The postal service's plan presents a government-backed alternative to paycheck cashing stores and payday lenders who target vulnerable populations — 14.1 million Americans are unbanked and underbanked — with outsized fees and interest rates.
Even some advocates, though, aren’t sure USPS can pull off a new line of business during the COVID-19 pandemic.
"The Postal Service processes and delivers billions of pieces of mail and packages. It is not a financial services firm," said Paul Steidler, who studies the agency at the Lexington Institute.
"It comes down to introducing a new business line at probably the worst time imaginable, when they’re struggling with profitability and struggling to get through the pandemic."
Some senior postal officials had been hesitant to start a new business line requiring significant technological and personnel upgrades.
"To be honest, these are pretty modest steps," an official told the Post. "It's a small toe in the water. I think [the postal service] is just trying to see what kind of bite they’re going to get. It’s the symbolism that matters."
The paycheck-cashing program is expected to reach other post offices in the country after the holiday season, union officials told the Post.
"The well-being of the postal service — that the people in the country so overwhelmingly support — in the future is partly going to rest on these kind of expanded services," American Postal Workers Union President Mark Dimondstein told the Post.
"New services will not just have the post office doing well by the people, but will bring in needed revenue."
The Postal Service soon will begin advertising the paycheck cashing service.
Although it sells money orders, USPS dropped most other banking services in 1966.
The Post said USPS service standards have fallen sharply in recent years. The mail service has $188.4 billion in liabilities and was projected to lose $160 billion in the next decade.
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