A recent report from the Government Accounting Office (GAO) examined the potential benefits of expanding banking services through the U.S. Postal Service (USPS).
The report looked into non-postal products and services that have been offered at retail facilities for more than a decade, and asked postmasters about the potential impact of expanding services, particularly in rural areas.
“Offering additional non-postal products and services at USPS retail facilities could provide consumer, government, or community benefits, but viability may be limited,” the report stated.
In 2018, retail facilities such as post offices were profitable, generating about $10.5 billion in revenue with about $5 billion in expenses.
USPS data show that the non-postal products and services for which USPS captures revenue data, such as money orders, generated about $431 million in total revenue in fiscal year 2018 and were profitable overall. Stakeholders said many of these non-postal products and services also provided other benefits, such as enhanced convenience for customers, and postmasters GAO surveyed said some offerings, such as passport services, were highly valued in their communities.
The report found that stakeholders said new offerings, such as expanded financial products or government services could enhance consumers’ access and government efficiencies, and provide a viable banking alternative for those lacking banking services.
“However, USPS officials, postmasters GAO surveyed, and stakeholders GAO interviewed said that additional offerings may generate minimal revenue and that USPS may face factors limiting the viability of these offerings,” the report stated. “Given such concerns, USPS and policy makers need to carefully weigh costs, benefits, and limitations of any new offerings.”
The report did find that there were some non-postal services which could provide benefits and increase revenues, and at the top of that list was notary services.
“In particular, about 40 percent of postmasters indicated that notary services would increase revenues or benefit the community to a great or very great extent, while 36 percent of postmasters indicated that driver’s license and other state license services would increase revenues or benefit the community to a great or very great extent,” the report found.
There were mixed views on whether there would be demand for any or all of these non-postal products and services. On the one hand, USPS officials, officials from other federal government entities, postmasters we surveyed, and stakeholders generally said that there was little demand for many of the additional non-postal products and services USPS could offer at its facilities.
However, the highest response for products and services in demand came in notary services, with about 36 percent of postmasters citing demand for those services. Printing and photocopying services was next at 33 percent.
On the other hand, GAO said based on studies it reviewed and interviews with representatives from consumer groups, there may be demand for certain offerings at retail facilities, such as check cashing and payday loan services, particularly if offered at a lower price than competitors.
“For example, in 2014, the Pew Charitable Trusts conducted a nationally representative survey of 1,626 adults and estimated that only around a quarter of American adults would be very likely or likely to use certain financial products, including check cashing, prepaid cards, bill pay, and small-dollar loans, if offered at USPS retail facilities,” the report stated. “However, for those surveyed who were already using such services, respondents indicated they would likely obtain these at USPS retail facilities if offered at a lower price.”
Postmasters indicated that displaying information about government programs and printing and photocopying services were the most feasible potential service, but grocery pick-up and public wifi services were the least feasible.
“A representative from one of the employee unions told us that the success of additional non-postal efforts would depend on the retail locations’ having adequate staffing levels,” the report stated. “The representative also said that any non-postal efforts should be designed to align with community needs and the work that retail facility employees already conduct.”
GAO provided the report to USPS for its feedback. USPS reiterated its legal constraints but noted that there were other limitations affecting its ability to expand its offering of nonpostal products and services.
“These limitations include low net revenue potential, low potential for significant market share, high operational costs, and limits on amounts that could be charged,” the report stated. “USPS noted, however, that it continues to explore partnerships with other federal agencies.”