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USPS Pilot Program Could Lead to Restart of Agency’s Nationwide Banking Services

The postal service charges fees that are significantly lower than what payday lenders charge customers to cash checks.

People wait for service at a post office in New York City on August 19, 2020.

The United Postal Service (USPS) has begun providing banking services to customers in four cities, a pilot program that could lead to similar programs in cities across the U.S. in the coming months.

USPS customers are being given the opportunity to cash payroll or other types of checks, up to $500 in total, at single-branch post office locations in Washington, D.C., Falls Church, Virginia, Baltimore, Maryland, and the Bronx in New York City. Customers are also allowed the option to place their funds on a single-use gift card, which can be used like a debit or credit card.

The post office is charging a flat fee of $5.95 for customers to use the service, for any amount up to $500. That’s a much lower rate than what some private companies charge to cash checks, which can be as high as $15 or more.

The pilot program fulfills a promise from President Joe Biden, who touted the premise during the 2020 presidential general election campaign. Sen. Bernie Sanders (I-Vermont) ran on the idea during his primary campaigns in both 2016 and 2020, and pushed for it as part of the Biden-Sanders Unity Task Force following his concession to Biden in the 2020 primaries. Though most USPS banking services ceased in 1966, Democrats have been promoting the expansion of these services in recent years.

The ability for customers to cash checks using a government-run option will be incredibly beneficial, particularly to the 14 million Americans who are underbanked or unbanked, and who presently obtain such services through paycheck-cashing stores or payday lenders that charge high fees. The low fees charged by the USPS will help the embattled agency with the financial hardship it now faces, much of which is self-inflicted by outlandish policies and dubious management by Postmaster General Louis DeJoy, a holdover from the Trump administration.

“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 said in a recent interview. “New services will not just have the post office doing well by the people, but will bring in needed revenue.”

USPS expects to expand the pilot program to a number of other locations after the holiday season. The agency also has additional banking services in mind, including the use of bill-pay services and automatic teller machine (ATM) locations that can be used by those who get their checks cashed and converted into gift cards.

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