5 ms·

The Post Office Should Just Become a Bank

21 points by nreece 12y ago

braum 12y ago
No it shouldn't.
- techsupporter 12y ago
  Why not? It's getting quite difficult to live in our society if someone isn't "perfect." Perfect credit, or virtually everything is more expensive, even non-credit stuff like insurance; perfect criminal history, so you can forget getting a job at a lot of companies if you smoked pot or, FSM-forbid, are released from jail; perfect banking history; perfect social media presence; and on and on. The free market isn't willing to address this, so how do we do it as a group?
  - JWLong 12y ago
    The free market is perfectly willing to address this. It will do so by offering them less than minimum wage, once it is allowed to do so. Until then, "free market" is a misnomer.
    - logicchains 12y ago
      Brings to mind the point that "the minimum wage is always zero".
    - phaet0n 12y ago
      Okay, so how does the "free market" address a growing underclass that can't afford to live outside poverty? How does the "free market" address social issues caused as a result of this poverty? Inconveniently, for the "free market", these people will not go quietly, and when things get really bad, violence will become an issue. So the "free market" incarcerates them, hoping they don't reproduce, unless they accept their slavery. Then afterwards, everyone is happy, living in paradise.
      - Yetanfou 12y ago
        Why, the free market already addresses these issues: commercial prison services, commercial security forces - mostly used outside of the country of origin, for now - and bail bond companies and and and... a whole industry is based around services tailored to the growing underclass.
_delirium 12y ago
A relatively minor move could just be to update the traditional money order to a modern, card-based form. Traditionally the money-order served as a sort-of equivalent to the personal check, but not tied to your personal bank account (which means that they shouldn't bounce, you don't need a bank account in the first place to write one, you don't give out your bank account number by paying with it, etc.). But as personal checks get less and less commonly used, the utility of a money order as a check-like form of payment also declines. The modern personal check is the debit card, so a modern money order should probably function similarly.
- VLM 12y ago
  "the utility of a money order as a check-like form of payment" ... is extremely high and growing over time with poor people. People don't pay high M.O. fees because they're ignorant or stubborn but because they can't open a bank account without having the contents seized legally (child support, debt collectors, maybe on the run who knows), or more likely the bank will refuse to open an account and offer then credit (which is what a checking account is) until they pay off past due debts A, B, and C. This becomes a problem with the "P.O. is a bank" concept because large segments of the population need an anonymous payment system of some sort and I suspect the P.O. will be extremely interested in all your demographic information especially id documents and postal addresses.
  - mschuster91 12y ago
    > because they can't open a bank account without having the contents seized legally (child support, debt collectors, maybe on the run who knows) I have experienced the latter two situations. If you have debt collectors hunting you, in Germany you can ask for a so-called "P-Konto" (Pfändungsschutzkonto, a bank account with a certain level that may not be seized by ANYONE. This amount gets higher e.g. if you have a family). If you're on the run... well, most banks let you keep your account as long as you don't manage to let it dry up, because then the notification letters will bounce. Also, if you're on the run, remember that cards on your name may get flagged - if used, cops are silently alerted to arrest you. Or the CCTV footage might be used for mugshots, or your data mined to predict your behaviour.
concerned_user 12y ago
That is exactly the problem Russian Post is experiencing. It does offer all sorts of services ranging from money transfers (like Western union but countrywide only), payments (you can pay your utilities bill ex.), selling stuff ranging from seeds and plants to bread and sugar. The issues this is causing: immense queues, mail being delivered FROM Moscow TO Moscow (yes same city) in 7 days (yes, a week) and it is not uncommon, you are lucky if your mail makes it in 3 days. What is amusing that same letter going to, say, Vladivostok will take roughly same 3-4 days. Want that post from hell in your country? Go ahead, make it a bank, but it will be a bank not a post office anymore.
- mschuster91 12y ago
  Germany also has this problem, but in another way: most of the queues originate from understaffing. Our postal service also sells china-made headphones, batteries, emergency birthday gifts and other totally not postal or money-related shit. And I bet that a huge chunk of the profits originate from the side-selling business, just like gas stations where the main good (here: gas) is sold as a loss leader and the real profit is made with the stuff people buy by random...
  - concerned_user 12y ago
    Yes biggest part of the problem in russia is that post is understaffed, but wages are laughable nobody wants to work there, and those that do work there do not care since there is constant shortage. So quality of service is poor.
- song 12y ago
  That might be the case in Russia, but, as a counterexample, the Chinese post offers banking services and is rather efficient. Likewise for the Japan Post.
- haraball 12y ago
  Norway has Post-in-shops, which is basically the opposite of what you describe here. You can do your post duties while shopping groceries, with the benefit of more flexible opening times, usually no queue and no need to go to a separate building just to post a package.
sschueller 12y ago
The Swiss post[1] office has been offering banking services for a very long time and I consider them one of the best banking service providers. If you have only ever used a US bank you have no idea what you are missing. [1] http://en.wikipedia.org/wiki/PostFinance http://en.wikipedia.org/wiki/PostFinance
netcan 12y ago
This is the bones of the argument, I think: Instead of banks, these mostly low-income individuals use check-cashing stores, pawnshops, payday lenders, and other unscrupulous financial services providers who gouged their customers to the tune of $89 billion in interest and fees in 2012, according to the IG report. Post offices could deliver the same services at a 90 percent discount, saving the average underserved household over $2,000 a year and still providing the USPS with $8.9 billion in new annual profits, significantly improving its troubled balance sheet. I agree with two points: (1) embrace rather than chase away payday lenders. Part of the reason this sector is so scummy is because of the bad reputation it carries. Reputable players want to stay out of it. (2) Create simple financial services (possibly subsidised) aimed at the poor. But... the idea that they are going to wipe out an industry, cut the revenues by 90% and make a 100% of the remaining 10% those revenue in profit is idiotic. The reason payday loans have high interest rates is because they have a high default rate and they are for small amounts/time, and therefore have high "transaction costs." It can be improved, but this kind of math is really stupid.
- NateDad 12y ago
  The fees are not based on risk, they're based on market forces. This article[0] states the median APR on payday loans is 322%. There's no way defaults are that bad. The loan shops are just taking advantage of people who have no other choice, and don't know any better. [0] http://consumerist.com/2013/04/26/the-average-payday-loan-borrower-spends-more-than-half-the-year-in-debt-to-lender/ http://consumerist.com/2013/04/26/the-average-payday-loan-bo...
  - peteretep 12y ago
    Market forces should correct that via competition, if true.
    - jnbiche 12y ago
      Yeah, little problem there. It's almost impossible for non-incumbents to enter the sector now due to the huge regulatory compliance cost. Between the burden of Banking Secrecy Act and the challenge of regulatory capture, only very wealthy individuals and companies can enter the sector. And they have little incentive to do so, given the sector's schlep factor and poor reputation.
deleted 12y ago
[deleted]
- NateDad 12y ago
  The whole point is to help the poor, who have no bank, and likely no computer. As the article said, there's 68 million of those in the US.
rm445 12y ago
UK post offices have been offering banking services for decades, in the form of savings accounts, current accounts and access to financial services. It has even entered the argot, with people likely to refer to the concept of cash savings as 'having a few quid in the post office'. Please note that it hasn't saved the world, or even prevented post offices from closing. But it does provide widespread access to banking, both for people who might otherwise be un-banked and elderly people who might have trouble travelling to the nearest branch of a high-street bank. It would seem to run against the grain for the USA, stepping in to an industry that already has strong private services and competition. As a way to provide a social good it seems to work reasonably, but isn't the Internet going to leapfrog the need for most in-person financial services anyway?
DanBC 12y ago
The UK had something similar. Royal Mail was the delivery of postal mail, and the counters at post offices that did post office services (sold stamps, weighed parcels, did some government forms, did 'postal orders' etc). They got split out into separate businesses to allow competition in both spaces while making sure that postal mail was treated the same on mainland UK. Part of the PO couters service was to convert some benefit recipients "giros" into cash. The giros were subject to masssive amounts of fraud and theft. To solve this PO counters started offering "basic accounts" - money could be paid in and benefits would be paid directly into the account. You got an ATM card with no debt facility at all. This concept was expanded and all banks now offer something called "basic accounts" - these allow BACS transfer but do not allow overdraf at all. They are fantastically useful. I have no idea how they're paid for from the banks point of view. No debt and small account balances means not much bank income. UK banks didn't have much choice. They are pretty unpopular in the UK and they need to do some better PR to avoid extra regulation. There's also a gently rumbling problem of the conflict between "protecting peoe from fraud" and "allowing people to hae their cash". One of the banks has been asking people who withdraw a few thousand pounds what it's going to be used for. Obviously this causes outrage. But then other people clear out tens of thousands of pounds from six different accounts (including the max overdraft limit of a business account) because they are he victims of fraud and the bank fraud control doesn't spot it and those people ask (while acceptig their responsibility) why the bank didn't step in.
- nknighthb 12y ago
  If you want to proffer advice to someone withdrawing large amounts of cash, that's fine. The incidents I've heard about, however, involved the banks outright denying access to funds that the person was legally entitled to demand, even after the bank's "suggestions" were explicitly rejected. That's not acceptable, no matter the purpose, and no sane person would proceed to blame the banks for any unfortunate results.
- lostcolony 12y ago
  They're paid for from the fact that the amount of service that needs to be provided is small, and that in aggregate it could be a decent amount of change that the bank can choose to invest in low risk sectors, or can turn around to offer it as a loan with interest. In general there is money to be made amidst the fluctuations of deposits and withdrawals, so long as you have additional capital to cover it in case too many withdrawals happen at once.
pessimizer 12y ago
This proposal has been kicked around for years (because the post office once did this), but seems to be starting to expand in an ugly way. Speculative loans should not be an element of any USPS banking proposal - USPS should be a place to keep money and cash checks, not a new opportunity for eventually privatized graft with federal guarantees. It should just be another government debt dispenser, not the basis for some new kickback bureaucracy. Checking accounts don't pay any interest worth discussing - the incentive for people to use them, an act that carries significant management risk (although that's been socialized through the FDIC), is because the only alternative is the mattress. I'd gladly move my checking to the USPS if they started offering it. It's got a lot more locations than my credit union.
swatkat 12y ago
India Post offers a whole lot of financial/banking services[1] apart from usual money orders/transfers; they're very popular too. [1]http://www.indiapost.gov.in/financial_services.aspx http://www.indiapost.gov.in/financial_services.aspx
deleted 12y ago
[deleted]
jenhsun 12y ago
Taiwan Post Office has full banking service for a very long time because of the availability on the scale.

21 points by nreece 12y ago

braum 12y ago

No it shouldn't.

techsupporter 12y ago
Why not? It's getting quite difficult to live in our society if someone isn't "perfect." Perfect credit, or virtually everything is more expensive, even non-credit stuff like insurance; perfect criminal history, so you can forget getting a job at a lot of companies if you smoked pot or, FSM-forbid, are released from jail; perfect banking history; perfect social media presence; and on and on. The free market isn't willing to address this, so how do we do it as a group?
- JWLong 12y ago
  The free market is perfectly willing to address this. It will do so by offering them less than minimum wage, once it is allowed to do so. Until then, "free market" is a misnomer.
  - logicchains 12y ago
    Brings to mind the point that "the minimum wage is always zero".
  - phaet0n 12y ago
    Okay, so how does the "free market" address a growing underclass that can't afford to live outside poverty? How does the "free market" address social issues caused as a result of this poverty? Inconveniently, for the "free market", these people will not go quietly, and when things get really bad, violence will become an issue. So the "free market" incarcerates them, hoping they don't reproduce, unless they accept their slavery. Then afterwards, everyone is happy, living in paradise.
    - Yetanfou 12y ago
      Why, the free market already addresses these issues: commercial prison services, commercial security forces - mostly used outside of the country of origin, for now - and bail bond companies and and and... a whole industry is based around services tailored to the growing underclass.

_delirium 12y ago

A relatively minor move could just be to update the traditional money order to a modern, card-based form. Traditionally the money-order served as a sort-of equivalent to the personal check, but not tied to your personal bank account (which means that they shouldn't bounce, you don't need a bank account in the first place to write one, you don't give out your bank account number by paying with it, etc.). But as personal checks get less and less commonly used, the utility of a money order as a check-like form of payment also declines. The modern personal check is the debit card, so a modern money order should probably function similarly.

VLM 12y ago
"the utility of a money order as a check-like form of payment" ... is extremely high and growing over time with poor people. People don't pay high M.O. fees because they're ignorant or stubborn but because they can't open a bank account without having the contents seized legally (child support, debt collectors, maybe on the run who knows), or more likely the bank will refuse to open an account and offer then credit (which is what a checking account is) until they pay off past due debts A, B, and C. This becomes a problem with the "P.O. is a bank" concept because large segments of the population need an anonymous payment system of some sort and I suspect the P.O. will be extremely interested in all your demographic information especially id documents and postal addresses.
- mschuster91 12y ago
  > because they can't open a bank account without having the contents seized legally (child support, debt collectors, maybe on the run who knows) I have experienced the latter two situations. If you have debt collectors hunting you, in Germany you can ask for a so-called "P-Konto" (Pfändungsschutzkonto, a bank account with a certain level that may not be seized by ANYONE. This amount gets higher e.g. if you have a family). If you're on the run... well, most banks let you keep your account as long as you don't manage to let it dry up, because then the notification letters will bounce. Also, if you're on the run, remember that cards on your name may get flagged - if used, cops are silently alerted to arrest you. Or the CCTV footage might be used for mugshots, or your data mined to predict your behaviour.

concerned_user 12y ago

That is exactly the problem Russian Post is experiencing. It does offer all sorts of services ranging from money transfers (like Western union but countrywide only), payments (you can pay your utilities bill ex.), selling stuff ranging from seeds and plants to bread and sugar. The issues this is causing: immense queues, mail being delivered FROM Moscow TO Moscow (yes same city) in 7 days (yes, a week) and it is not uncommon, you are lucky if your mail makes it in 3 days. What is amusing that same letter going to, say, Vladivostok will take roughly same 3-4 days. Want that post from hell in your country? Go ahead, make it a bank, but it will be a bank not a post office anymore.

mschuster91 12y ago
Germany also has this problem, but in another way: most of the queues originate from understaffing. Our postal service also sells china-made headphones, batteries, emergency birthday gifts and other totally not postal or money-related shit. And I bet that a huge chunk of the profits originate from the side-selling business, just like gas stations where the main good (here: gas) is sold as a loss leader and the real profit is made with the stuff people buy by random...
- concerned_user 12y ago
  Yes biggest part of the problem in russia is that post is understaffed, but wages are laughable nobody wants to work there, and those that do work there do not care since there is constant shortage. So quality of service is poor.
song 12y ago
That might be the case in Russia, but, as a counterexample, the Chinese post offers banking services and is rather efficient. Likewise for the Japan Post.
haraball 12y ago
Norway has Post-in-shops, which is basically the opposite of what you describe here. You can do your post duties while shopping groceries, with the benefit of more flexible opening times, usually no queue and no need to go to a separate building just to post a package.

sschueller 12y ago

The Swiss post[1] office has been offering banking services for a very long time and I consider them one of the best banking service providers. If you have only ever used a US bank you have no idea what you are missing. [1] http://en.wikipedia.org/wiki/PostFinance http://en.wikipedia.org/wiki/PostFinance

netcan 12y ago

This is the bones of the argument, I think: Instead of banks, these mostly low-income individuals use check-cashing stores, pawnshops, payday lenders, and other unscrupulous financial services providers who gouged their customers to the tune of $89 billion in interest and fees in 2012, according to the IG report. Post offices could deliver the same services at a 90 percent discount, saving the average underserved household over $2,000 a year and still providing the USPS with $8.9 billion in new annual profits, significantly improving its troubled balance sheet. I agree with two points: (1) embrace rather than chase away payday lenders. Part of the reason this sector is so scummy is because of the bad reputation it carries. Reputable players want to stay out of it. (2) Create simple financial services (possibly subsidised) aimed at the poor. But... the idea that they are going to wipe out an industry, cut the revenues by 90% and make a 100% of the remaining 10% those revenue in profit is idiotic. The reason payday loans have high interest rates is because they have a high default rate and they are for small amounts/time, and therefore have high "transaction costs." It can be improved, but this kind of math is really stupid.

NateDad 12y ago
The fees are not based on risk, they're based on market forces. This article[0] states the median APR on payday loans is 322%. There's no way defaults are that bad. The loan shops are just taking advantage of people who have no other choice, and don't know any better. [0] http://consumerist.com/2013/04/26/the-average-payday-loan-borrower-spends-more-than-half-the-year-in-debt-to-lender/ http://consumerist.com/2013/04/26/the-average-payday-loan-bo...
- peteretep 12y ago
  Market forces should correct that via competition, if true.
  - jnbiche 12y ago
    Yeah, little problem there. It's almost impossible for non-incumbents to enter the sector now due to the huge regulatory compliance cost. Between the burden of Banking Secrecy Act and the challenge of regulatory capture, only very wealthy individuals and companies can enter the sector. And they have little incentive to do so, given the sector's schlep factor and poor reputation.

deleted 12y ago

[deleted]

NateDad 12y ago
The whole point is to help the poor, who have no bank, and likely no computer. As the article said, there's 68 million of those in the US.

rm445 12y ago

UK post offices have been offering banking services for decades, in the form of savings accounts, current accounts and access to financial services. It has even entered the argot, with people likely to refer to the concept of cash savings as 'having a few quid in the post office'. Please note that it hasn't saved the world, or even prevented post offices from closing. But it does provide widespread access to banking, both for people who might otherwise be un-banked and elderly people who might have trouble travelling to the nearest branch of a high-street bank. It would seem to run against the grain for the USA, stepping in to an industry that already has strong private services and competition. As a way to provide a social good it seems to work reasonably, but isn't the Internet going to leapfrog the need for most in-person financial services anyway?

DanBC 12y ago

The UK had something similar. Royal Mail was the delivery of postal mail, and the counters at post offices that did post office services (sold stamps, weighed parcels, did some government forms, did 'postal orders' etc). They got split out into separate businesses to allow competition in both spaces while making sure that postal mail was treated the same on mainland UK. Part of the PO couters service was to convert some benefit recipients "giros" into cash. The giros were subject to masssive amounts of fraud and theft. To solve this PO counters started offering "basic accounts" - money could be paid in and benefits would be paid directly into the account. You got an ATM card with no debt facility at all. This concept was expanded and all banks now offer something called "basic accounts" - these allow BACS transfer but do not allow overdraf at all. They are fantastically useful. I have no idea how they're paid for from the banks point of view. No debt and small account balances means not much bank income. UK banks didn't have much choice. They are pretty unpopular in the UK and they need to do some better PR to avoid extra regulation. There's also a gently rumbling problem of the conflict between "protecting peoe from fraud" and "allowing people to hae their cash". One of the banks has been asking people who withdraw a few thousand pounds what it's going to be used for. Obviously this causes outrage. But then other people clear out tens of thousands of pounds from six different accounts (including the max overdraft limit of a business account) because they are he victims of fraud and the bank fraud control doesn't spot it and those people ask (while acceptig their responsibility) why the bank didn't step in.

nknighthb 12y ago
If you want to proffer advice to someone withdrawing large amounts of cash, that's fine. The incidents I've heard about, however, involved the banks outright denying access to funds that the person was legally entitled to demand, even after the bank's "suggestions" were explicitly rejected. That's not acceptable, no matter the purpose, and no sane person would proceed to blame the banks for any unfortunate results.
lostcolony 12y ago
They're paid for from the fact that the amount of service that needs to be provided is small, and that in aggregate it could be a decent amount of change that the bank can choose to invest in low risk sectors, or can turn around to offer it as a loan with interest. In general there is money to be made amidst the fluctuations of deposits and withdrawals, so long as you have additional capital to cover it in case too many withdrawals happen at once.

pessimizer 12y ago

This proposal has been kicked around for years (because the post office once did this), but seems to be starting to expand in an ugly way. Speculative loans should not be an element of any USPS banking proposal - USPS should be a place to keep money and cash checks, not a new opportunity for eventually privatized graft with federal guarantees. It should just be another government debt dispenser, not the basis for some new kickback bureaucracy. Checking accounts don't pay any interest worth discussing - the incentive for people to use them, an act that carries significant management risk (although that's been socialized through the FDIC), is because the only alternative is the mattress. I'd gladly move my checking to the USPS if they started offering it. It's got a lot more locations than my credit union.

swatkat 12y ago

India Post offers a whole lot of financial/banking services[1] apart from usual money orders/transfers; they're very popular too. [1]http://www.indiapost.gov.in/financial_services.aspx http://www.indiapost.gov.in/financial_services.aspx

deleted 12y ago

[deleted]

jenhsun 12y ago

Taiwan Post Office has full banking service for a very long time because of the availability on the scale.