Detailed Analysis Shows Ambitious USPS Financial-Services Plans
In this report, FedFin expands on our initial client alert to assess the strategic impact of the USPS’s plans to enter financial services. In contrast to its prior proposals (see Client Reports in the POSTAL series), the USPS now would in part collaborate with financial institutions, perhaps significantly expanding the reach of large card-service providers to now under-served markets through use of the USPS’s formidable distribution system. These cards would, the USPS says, also be potent mobile instruments, accessed for cash through surcharge-free ATMs (thus creating a possible opportunity for community banks). On its own or in partnership with bank and non-bank lenders, the USPS also posits that its cards would replace payday lending, suggesting a product in partnership with the Treasury that would limit borrower risk and, FedFin notes, bypass existing products, likely including many overdraft options. On its own, the USPS could also cash checks and, in essence, become a retail-banking delivery system or, still more ambitiously enter e-commerce and the business-payment space. The USPS faces an urgent financial crisis so far unaddressed by Congress that may well propel it to use what it describes as its existing authority to go as far and as fast into financial services as possible.
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