Nearly 28 percent of U.S. households (or 100 million people) are either unbanked or underbanked. This lack of access to affordable financial services drives the working poor to rely on costly, and often predatory, alternatives. But what if a trusted, accessible, and secure government agency (that receives no tax dollars for operating expenses) with the world’s largest retail network existed that could help fill this void? It does exist. It’s the U.S. Postal Service.
This post is an excerpt from UFE's Report, State of the Dream 2015: Underbanked and Overcharged.
1. Post offices are located in bank deserts.
Banks closed 2,300 branches in 2012 alone. Of the bank branch closings between late 2008 and 2012, 93 percent have been in zip codes with below-national median household levels. While banks may be abandoning locations where the underserved live, post offices are not. More than a third (38%) of post offices in the United States are in zip codes without a single bank. Almost a quarter more (21%) are in zip codes with only one bank.
2. Post offices have an established relationship with the unbanked.
Whereas many unbanked individuals have never stepped foot in a bank, post offices are familiar to many without a bank account. In unbanked neighborhoods, the most common transaction in post offices is money orders, which are especially beneficial to those without bank accounts. The Postal Service sold 109 million money orders in 2012, and is the leader in the U.S. domestic paper money order market. This product flourishes without any marketing strategy by the Post Service, simply because it fills a need.
3. Post offices are trusted.
A 2013 survey found that only 26 percent of the American public has “much confidence” in U.S. banks, contrasted with 68 percent agreeing that the postal service is reliable and trustworthy. The U.S. Postal Service was identified as the fourth most trusted company in the United States and the most trusted federal entity when it comes to privacy. And, in a November 2014 Gallup survey, 72 percent of Americans – and 81 percent of those 18 to 29 – say the U.S. Postal Service is doing an excellent or good job.
4. Post offices have experience with financial services.
Along with domestic and international money orders, the Postal Service offers electronic money transfers, and prepaid gift cards. Postal retail clerks receive significant classroom and on-the-job training as well as yearly certification. In addition to handling money orders, transfers, and debit cards, postal window clerks have experience cashing checks, processing refunds, renting post office boxes, preparing bank deposits, and maintaining business accounts.
5. Postal Service employees are unionized.
The U.S. Postal Service has long been a source of stable income and good benefits for its employees, which in turn benefits entire communities. In 2013, the median wage for a postal employee was $25.88 an hour.In contrast, bank tellers on average earned just $12.21 an hour.
6. Post offices have a history of offering a Postal Savings System.
From 1911 to 1967, the U.S. Post Office offered savings deposits accounts. Early on, the program was particularly popular with recent immigrants, many of whom came from countries with postal banking. During the Great Depression, the system grew in popularity as it was a safer place to save than unregulated, and failing, banks. At its peak in 1947, more than 4 million customers had accounts with deposits totaling $3.4 billion. Deposits declined as traditional banks increased interest rates, as a period of tighter regulation was ushered in, and as U.S. savings bonds (also with higher interest rates) grew in popularity.
7. Post offices in other countries do it.
Many postal systems around the world – including France, Germany, Japan, China, Brazil, India, and New Zealand – offer financial services and play important roles in advancing financial inclusion. In addition, financial services accounted for 14.5 percent of revenue for postal organizations in industrialized countries in 2012.
2013 FDIC National Survey of Unbanked and Underbanked Households. Washington, DC: FDIC, October 2014.
Providing Non-Bank Financial Services for the Underserved. Washington, DC: Office of Inspector General, United States Postal Service, January 27, 2014.
Warren, Elizabeth. “Coming to a Post Office Near You: Loans You Can Trust?” Huffington Post, 2/1/14. http://www.huffingtonpost.com/elizabeth-warren/coming-to-a-post-office-n_b_4709485.html
[Reason 1] Providing Non-Bank Financial Services, pps 5-6.
 Postal Facts 2013. Washington, DC: United States Postal Service, 2013. https://about.usps.com/who-we-are/postal-facts/postalfacts2013.pdf
 Providing Non-Bank Financial Services, p. 7.
 Ander, Steve and Art Swift. “Americans Rate Postal Service Highest of 13 Major Agencies,” Gallup US Daily, 11/21/14.
 “Occupational Employment and Wages: 43-5051 Postal Service Clerks.” Washington, DC: Bureau of Labor Statistics, United States Department of Labor, May 2013. http://www.bls.gov/oes/current/oes435051.htm
 “Occupational Employment and Wages: 43-3071 Tellers.” Washington, DC: Bureau of Labor Statistics, United States Department of Labor, May 2013. http://www.bls.gov/oes/current/oes433071.htm
 Providing Non-Bank Financial Services, pp 22-23.
 Providing Non-Bank Financial Services, p. 9, 25.