>> The post office charged Rothstein a flat fee of $5.95, for any amount up to $500.
That is still an insanely high rate for a small check. At 500$ it might seem a small percent but I think many checks in this program will be far smaller.
It sounds like the clerk was not terribly familiar with the system. It is possible that the correct procedure was not followed. I would be very surprised if you are allowed to cash cheques long term without showing ID. Otherwise, how do they know they are giving the money to the correct person?
That's true. I was only pointing out that if this is meant to serve people in legal grey areas due to immigration (which may be a significant portion), that section of society may have some IDs although not necessarily a US license.
> Otherwise, how do they know they are giving the money to the correct person?
I guess all those cameras in the post office can be connected to databases containing the necessary information. I am sure the federal government probably has at least a scrap of data about any person who spends enough time in the country to have a paycheck issued to them. Maybe they're using all the spying and tracking data for something good this time?
(I don't really believe it, but it is possible. If someone in the federal government wanted to do ID-less check cashing, I bet they could scrounge together the necessary data and software contracts.)
"Postal banking systems are also ubiquitous in other countries, where their long record of safe and profitable public banking has proved the viability of the model.... The leader today is Japan Post Bank (JPB), now the largest depository bank in the world.... Rather than using its deposits to back commercial loans as most banks do, Japan Post invests them in government securities."
It's not unique in that respect. National parks, TSA precheck, and every version of the DMV are selling goods and services back to the public that bought them into existence.
Education related spending in the US is at its highest ever level as a percentage of GDP. Defense spending has been going down on a GDP basis for decades.
If I pay you less than what you need by 1000 dollars every month, but then raise your pay by 200 dollars, your pay "is at the highest ever level". Conversely, if I overpay you by 1000 dollars every month but make you take a 2 cent pay cut every year, my spending on you "will be going down for decades".
Ratios are great except when they obscure what problem they're supposed to address.
Aggregate US educational spending across federal, state, and local governments has been higher than DoD (plus DoE) spending for as long as I can remember.
Our schools (probably) have all the money they need.
They have the wrong set of policies and practices in many cases, but “more money” is a simpler thing to ask for that specific improvements to educational practices.
Americans seems to have an aversion to your idea. Clearly, if it doesn’t make a profit, a private company would provide a better service at lower cost.
If public Company A has costs greater than revenue and is therefore losing money, private Company B will therefore (?) be able to provide a better service at lower cost? On what basis?
There is no private company today that does what the USPS does. It's easy to forget while living in the metro areas most of us live in, but Fedex, UPS, and DHL often contract out to deliver to rural addresses, because they don't offer universal delivery. The contract out to the USPS, which does because it's required to.
So no, I absolutely dispute that a private company would or could provide a better service than the USPS at lower cost. The USPS would be fine if not repeatedly and continually hamstrung by Congress, and no competitor comes close even so.
I mean, have you compared prices recently? Today, right now, private companies are providing arguably worse services (again, more limited delivery area) at higher cost[0].
The Post Office has a requirement to be self-funding and also has been saddled with a ridiculous pre-funding requirement for retiree health care that applies to no other entity.
Both of these could be eliminated by congress, but there doesn't seem to be the will (and in fact, there is an ideological faction in congress that would eliminate the postal service or privatize it for their donors' benefit if they could).
By pre-funding, you mean funding. They are required to pay today for the liabilities they incur today (the promises of future healthcare). Today's liabilities (the promises) have a very real cost. Ignoring that cost elsewhere is it's own hazard. Adopting pay-as-you-go might work for governments which can loot people later or just unilaterally change the rules. Or it might work for a company while things are good, but is catastrophic when it goes bad. Actually funding things is the proper way to do it.
> As things stand now, retiree healthcare, pensions, and workers’ compensation are unfunded by about $86.6 billion.
USPS pensions etc. were extremely underfunded for a long time. The size, scope, and quasi-governmental nature of USPS meant that ignoring the problem was more likely to involve a bailout than responsible operations.
IMO, the only unreasonable pension expectation levied on USPS is that for veterans: They’re required to pay some amount of veteran retirement benefits for some reason that I haven’t been able to make sense of.
Again, putting aside money to meet the obligations you will incur for having an employee today is funding. It is not prefunding by any stretch.
I haven't seen any mention of setting aside money for people who don't work there yet, including in your link.
Asking to be treated like the government so that you can hire someone now, with promises of future payments, then pull in those payments based upon the revenue produced by future employees is analogous to a ponzi scheme. The federal government gets away with pay-as-you-go because they can set taxes, devalue money, change payment plans, etc...
How much the government should be investing in providing a quality mail system is a different discussion entirely. But this discussion is basically "should pensions be funded or not". Calling it prefunding is a rhetorical device only, and doesn't stand up to actuarial scrutiny.
The stereotype of check cashing places as loan-shark-esque is generally wrong - I recommend reading The Unbanking of America by Lisa Servon to get a real understanding of the industry.
For a poor person, a check-cashing place is generally the cheapest and most straightforward way to cash checks (and receive other basic financial services) with clear, reasonable pricing. If you're poor, acquiring the same services from a bank is not only vastly more expensive, it's also much less transparent in terms of how and when fees will be assessed.
Often this confusion stems from people who aren't that familiar thinking they're the same as payday loan places, which are just legal loan sharks and designed to trap people in an endless cycle of debt.
None of this is anything against postal banking, which I'm hugely supportive of.
That's a problem, but it in no way makes them sharks as the post that I was responding to said. There is a structural issue in banking, and they arose to fill a need that results from that structural issue. They do so in a fair and transparent way at reasonable prices, though, so it's unfair to describe them in predatory terms. The fact is that poor people are better off because they exist.
I think it's very far from clear that the Japan Post Bank example is a purely positive story.
JPB was for much of its history not subject to the same financial oversight through the FSA that other banks were; instead benefiting from a laxer regime under a different regulator and then subsequently from a separate supervision office within the FSA.
This unusual regulatory position is not limited to oversight. Up until 2011, JPB was not even required to pay into the Japanese deposit insurance system and is allowed to offer higher deposit limits than commercial banks. Japan Post Holdings continues to benefit from a unique position of being allowed to own both a bank (JPB) and an insurance company (JPI).
The investment policies of JPB and JPI directly subsidize Japanese government debt (which is ... not a great asset, rated A+ by S&P and on a worsening trajectory of outlook) in preference to performing the fundamental job of banks elsewhere and lending money to private enterprise.
Interesting that the article refers to prepaid debit cards as “gift cards”. At first I thought USPS was only allowing checks to be transferred to Starbucks gift cards etc, which isn’t nearby as significant of a step.
Maybe a dumb question, but why is the government getting into banking? Is this desirable? IMHO most consumer facing services they roll out are pretty poor. And for what it's worth, seems like Walmart and other companies already offer a service like this -- and for a lower price! See: https://www.walmart.com/cp/check-cashing/632047
For example in Chile checking accounts were quite difficult to get for the poor until the state's bank [1] started issuing a bank account to anyone who requested it at $0 fixed cost, at a loss.
This bank also:
- Gives mortgages to sectors of the population in which banks are not interested.
- Partners with small shops to offer financial transactions in low-income or very remote areas [2] or where opening a branch does not make economic sense.
The social benefits are big and out-weight the costs/risks that would not have been taken by a private party. The bank even has healthy profits of around 350 MUSD per year that go back to the chilean state.
Considering that access to financial services is fundamental to participate in the economy, I find it to be an excellent government goal.
In this case it looks more to me a bit similar to the Deutsche Post's Postbank in Germany, that leverages their Post offices to offer financial services.
Same in France with the Banque Postale arm of La Poste - you have bank branches in most post offices, so it's got great national coverage, fees are low, etc.
> Maybe a dumb question, but why is the government getting into banking?
I think all you need to do is considering banking as a basic human right, which can include everything. In addition, you can use race / gender / xx difference to make it an inequality issue, which again can include everything.
One reason many postal services are interested in this is that they tend to have a very wide physical footprint in a time where banks are increasingly closing branches.
In many countries post offices act as a generalised "service provider" where third parties can contract to have in-person transactions done.
Often they are processing various transactions for existing banks anyway.
I'm not in the U.S. but yes I expect that Walmart would be a direct competitor in providing these sorts of services.
Why does it matter that Walmart offers it at a lower price? No one is forcing you to go to USPS. All that suggests is that USPS set the service at a price where it should be profitable.
Walmart may subsidize the service assuming you’ll spend money in store and they’ll get several more dollars out of the transaction. Even less expensive, grocery stores have long done cash checking for free when you check out at the store.
It is hard for me to be upset about a new service that is less expensive than the set of companies gouging people, but has some competitors that are cheaper. I don’t get up in arms over price differences between target and Walmart, why should I between USPS and Walmart?
First, the government does force you to use USPS for some things. The USPS has a monopoly on the delivery of certain types of mail.
Second, we all pay for USPS as taxpayers regardless of whether we use its ancillary services. Well, we won't pay if check cashing is a profitable program, but we will if it's not -- and I'm skeptical that it will be profitable given you have fraud costs, training costs, etc.
> Walmart may subsidize the service assuming you’ll spend money in store and they’ll get several more dollars out of the transaction. Even less expensive, grocery stores have long done cash checking for free when you check out at the store.
To me these are both reasons for the government not to get into this business. If Walmart offers a lower price, whether that's a loss leader or not, it's great for consumers.
IMHO govt services make sense when private industry can't provide them effectively. That doesn't seem like the case here.
> It is hard for me to be upset about a new service that is less expensive than the set of companies gouging people, but has some competitors that are cheaper.
Zero qualms about other companies offering new services. If they work well, those companies will succeed, and if not, they will fail. And success is based on making customers happier than competitors do. That's not the case with government services. If they work well, great, and if not, everyone subsidizes them. For example if a startup launches check cashing and loses $10m because of fraud, they go under. If the USPS ends up losing $1b due to check fraud next year, I'm guessing they'll just ask for $1b more in funding the following year.
And if check cashing seems like a good direction, should the government develop its own reward credit cards? Buy now, pay later? Crypto exchanges? Etc.
> First, the government does force you to use USPS for some things.
The person you were replying to was referring to USPS's upcoming banking services, not their mail services.
> we all pay for USPS as taxpayers regardless of whether we use its ancillary services
We do not. USPS has its own books and does not receive taxpayer funds directly[1][2].
> To me these are both reasons for the government not to get into this business. If Walmart offers a lower price, whether that's a loss leader or not, it's great for consumers.
The problem is not that banking services are unavailable or that Walmart isn't offering them cheaply. It's that Walmart isn't guaranteed to continue to offer them cheaply, and it doesn't serve nearly as many rural places as post offices do.
There are post offices absolutely everywhere in the US. The same is not true of Walmarts.
> IMHO govt services make sense when private industry can't provide them effectively. That doesn't seem like the case here.
25% of Americans are underserved by banking as of a few years ago, so obviously something is wrong that the free market has not been able to solve[3]. Retail banking is not very profitable, so there isn't much incentive for existing banks to do a good job of it.
> I'm guessing they'll just ask for $1b more in funding the following year
Again, that's not how USPS works.
> And if check cashing seems like a good direction, should the government develop its own reward credit cards? Buy now, pay later? Crypto exchanges? Etc.
Ah, so we get to the "what about the slippery slope?!" part of the argument.
It's not black and white. We need to assess each case based on real data, not based on theory. No one is saying the government should compete in every industry just because it wants to cash checks for people who have been exploited by payday lenders.
We have nationalized libraries and schools, but somehow we haven't slipped down the slope to nationalized grocery stores. I think we'll be OK if USPS offers a very simple service that isn't far off from things they already do (like cashier's checks).
I've heard that the post office doesn't receive taxpayer funds directly, but tbh even after googling around I don't understand how that works. For example https://www.brookings.edu/blog/up-front/2020/08/26/how-is-th... says the post office lost $70b between 2008 and 2018. If it lost that much money but is still around, who covered that $70b? (Honest question. I'd guess taxpayers are where the buck eventually stops?)
First, USPS is a viable business, even at current low (set by Congress) prices[1]. That's how it gets its funding[2]. If it has a loss during a certain year, it dips into its cash or sells assets, like any other business.
The reason it sometimes looks badly unprofitable is because of an attempt by Republicans to kill it by imposing unique and crushing financial obligations on it that don't apply to any other business[3][4].
By making it look unprofitable, they can argue that it's costing taxpayers money and then propose privatizing it[5]. It's part of a long-term strategize to run government organizations into the ground in order to justify dismantling them.
From Barron's:
> The USPS loses money, but cash flow has been more stable. That is because as mentioned above, the USPS has some unusual expenses, imposed by Congress, that artificially depress earnings.
> In 2006, Congress essentially told the post office to set aside $110 billion over 10 years. That, by our math, is $11 billion a year. The annual free cash flow reported by UPS, for comparison, was about $6.4 billion in 2018.
> The requirement hit cash flow until the post office could deal with the expense no longer. Now the Postal Service just records the cost on its books, cutting into the bottom line, but without setting aside any cash.[3]
> IMHO govt services make sense when private industry can't provide them effectively. That doesn't seem like the case here.
Since your whole argument depends on this, I think you need more than a "seems".
Britain, which I'm most familiar with as I lived there before everything could be done electronically, and Europe in general, has/had several services like this available from post offices.
You could pay most bills by taking the bill and cash/cheque to the post office (called "giro"), or transferring from a bank account. A while ago, you could open a Post Office bank account there; nowadays you can make deposits and withdrawals to any UK current account. You could pay fees, taxes and fines, renew a driving license, apply for a passport, and probably 50 other things.
Oh, and send letters and parcels.
Together, all this means the staff have to know how to check someone's identity, and are used to handling cash.
50+ years ago, this was probably a great way to help the economy. Bills paid faster, government services available in every village.
The USA seems about 50 years late for that, so presumably the target is the poorest and/or most rural communities.
Britain is several steps ahead of the USA on privatising government services. Nowadays, many rural or small post offices are just a counter in a convenience shop or small supermarket, as seen here: https://www.cheshire-live.co.uk/news/local-news/little-sutto... (and the whole "Post Office" company is privatized, like in many European countries).
>IMHO govt services make sense when private industry can't provide them effectively. That doesn't seem like the case here.
If cash is legal tender, how is it that you can be paid in cheques that nobody would cash for free ? Isn't it the government's job to a) Either cash them for free, or b) Require employers to pay in cash if the employee asks for it ?
I find the fee for cashing a cheque, and most other fees in the US banking system, quite ridiculous.
I think that allowing companies to pay in cash is seen as dangerously close to paying "under the table" and not properly documenting for taxation purposes - governments like a money trail.
Not saying that's an unsolvable problem, but I can understand the reluctance.
What is the cost of this service anyway ? Why isn't it close to 0 ? The $5+ fee quoted in this article seems absurd when letter delivery is in cents and $5 will get your stuff delivered across the country with priority mail in under 2 days.
Not everything needs to be about profit, but the USPS is self-funded. It doesn't use tax money for its operations so it does need to try to break even at least on the services it provides.
Commercial banking has been steadily declining for quite some time, it's a long term trend that this is just continuing: https://fred.stlouisfed.org/series/USNUM
1. There are people who can't get a bank account. (There is no federal law that guarantees a bank account.)
2. These people have to rely on Payday rip-off services. (Why give a bank money to cash a federal/state/local check?)
3. The fees that banks are charging are deleterious to the poor. My bank charges $15/month for under $1500.00. (I'm going to close my account in a few months. Why give them $170 a year? I'll use cash, or MO.
The USPS is not "the government". It has certain government mandates, and postal workers are classed as federal employees but to just call it "the government" is not quite right.
They're facing financial difficulties because of pensions and health care plans from another (more civilized) era and not because of bad service.
I don't know if banking is going to work out for the USPS. It makes sense that it's a "pilot program". If it puts slimy check-cashing and payday-loan joints out of business, that would certainly be a good thing.
The idea of the USPS becoming a third party identity service provider has been tossed around before, and they could certainly provide other miscellaneous bureaucratic services. Whatever happens USPS will need to make deep changes, I think, in order to survive.
How is the USPS not "the government"? Unless we're playing British English games where "the government" means the party in control of Parliment and there's some other word for things the State does.
The USPS exists to serve a constitutional mandate, has its operations overseen by Congress, and 9 out of 11 board seats are appointed by the president. It is a government agency. Or you can read the establishment law, which states it's an establishment of the Executive branch https://www.law.cornell.edu/uscode/text/39/201
Because you shouldn't have to pay $2 or whatever to get every paycheck you have cashed. Banks often have minimums in the hundreds to thousands of dollars for checking accounts.
Except in the biggest of cities, Walmarts tend to be outside the downtown and poorer areas that need this service. Those areas do have walkable post offices. Some people don't understand how expensive it is to be poor. In lots of this country, the best shopping option people have is a dollar store.
Modernising the US banking system into the 19th century.
> The move puts the USPS in direct competition with the multibillion-dollar check-cashing industry, which operates storefronts to allow unbanked or underbanked residents to cash their paychecks.
I mean, great, but why are there all these unbanked people in the first place? Why are they having to pay a whole six dollars for something that could be a free instant direct deposit?
Edit: I've just realised that the magic word may be resident. Let me guess, there's a significant fraction of (mostly nonwhite) US residents who can't produce enough proof of nationality to get bank accounts?
You also run into the situation where banks check your credit/banking history and may deny you an account based on that. My partner couldn't open a bank account for years because they forgot to stop an auto payment after they closed the account and moved.
Those payments bounced, leading to fees, which kept compounding and even after taking care of that, it took a long time to figure out how to clear the mark on the report (I don't know if we did, or it just eventually fell off due to time)
If it's a regular checking account, with no overdraft, the bank loses nothing from having a person like that as a customer. The only money they can use is their own that they deposited there.
In US banking, many customers are relatively costly, with low balances, requiring branches with expensive people to service them. Overdraft happens often with them, and is a cost to the bank. They cannot be given credit, and are not otherwise candidates for other services by which banks make money. So fees- overdraft, deposit, withdrawal, desk usage, account- it is.
It is an optional service, one that is highly profitable ($billions per year for each of the large banks), and one also that arguably best serves the customer's interest, as not making a payment in most cases is far worse for many reasons for the user than making the payment and getting charged a service fee.
The EU solution for this was legislation that mandates that banks can not refuse a basic payment account. Being able to participate in electronic settlement is necessary to participate in modern society, so even a bankrupt person convicted of felony fraud should have a right to a bank account somewhere, and it's the duty of the society/government to ensure that they can obtain one.
It also expands the USPS Postal Banking capabilities and mandate.
Edit: The Federal Reserve's FedNow instant payment system going live in 2023 should also eliminate the need for check cashing in its entirety: https://news.ycombinator.com/item?id=28393576
Those are not the same thing. Banks will deny you an account based on your history with bank accounts, sure. But not “credit history”, which is entirely separate.
It can be surprisingly difficult to get an account in the US between KYC rules, credit checks, balance requirements, and limitations on funding sources. The fees banks charge can be really significant to a low income and it’s often not worth risking your food or rent budget. The fees are often tailored to be very aggressive in low income or heavily minority areas. Even if you get an account open, many banks are super aggressive about closing accounts with low or no activity.
There are “millennial” banks which are very customer focused but to get accounts there you have to have a computer or a phone with a data plan — and believe it or not those are still luxury items for many in the US.
Living in rural areas where you only have a post office box or rural route address often excludes you from credit and banking products.
The benefits of a bank account are also pretty small... There used to be great interest rates, but now a bank account for many is just an easy way to get into debt by accidentally going overdrawn, or doing things with a high fee attached.
For those who can get paid cash and spend cash, the downsides of a bank account probably outweigh the upsides.
I know people who deal with thousands in cash every month. They have no account and really never should. I am not even going to suggest to them to get one. They have extremely poor money management skills. Banks can be quite merciless if you are riding the line. They need the physicality of cash in hand to see they are spending too much. To me a 30 dollar fee is 'well that sucks'. To someone who is riding the line 30 bucks can mean a cascade of borrow from peter to pay paul, or 'well skip the power bill this month'. Which then makes the problem worse.
This is not even a 'class' thing I have seen many highly paid, very smart people who just do not grok less out than in. Also do not spend it before you have it (I am getting paid tomorrow so I can borrow X and pay it off), one way ticket to massive credit card debt that old gem is.
I had an account with Chase that I only used to cash paychecks drawn on Chase. The money was then wired to my actual bank [0].
Someone managed to get my ATM card details and ran up a $100 overdraft. Chase didn’t care, charged me another $500 or so.
[0] Paycheck was from a shady employer who frequently made “mistakes” in the amount of the check. Had I given them direct deposit access, they could have yanked money out of my pay with the excuse of accidental overpayment. By wiring the money I firewalled it somewhat.
Modernizing how? I've lived in multiple other countries and they all had pretty strict regulations around opening a bank account, even as a legal resident.
There are at least a handful of countries that offer services like this (basic check cashing, and in some cases, accounts with balances) via the post office. Italy, France, and Japan come to mind as examples, I'm sure there are more.
(The company that I work for is a fintech that deals a lot with unbanked/underbanked communities)
Yeah, good point - I can't say what the ID requirements are for those banks. I know that for international remittances (my line of work) we need things like a national ID or passport, so it seems like it'd be along the same lines, perhaps even a little less strict because there are fewer concerns w/r/t money laundering or terrorist funding.
While living overseas, I had the option of postal banking and commercial.
My employer had a relationship with the commercial bank, vouched for me, and generally made it easy. Had I used the postal bank I would have had to jump through more hoops, bring a translator at every visit, and wouldn’t have had access to all the same services.
If you owe money to a bank for example have your financial life crash during one of the many fiscal disasters in the last 20 years and end up with an account closed with a negative balance either because you are overdrawn or because you accidentally had an auto payment drafted from it it can become impossible to get a bank account with another institution.
In addition to the other administrative burden related explanations, there's at least some fraction that are cultural.
Ages ago, I read a "Nickel and Dimed" style long form article about check cashing services where the author tried to understand your very question: why do some customers continue to use these services when cheaper alternatives exist?
IIRC, some preferred the accessible, high touch in person aspects of the services. Much like some people connect with their regular barista, I suppose. Vs the intimating experience of a bank, the impersonal ATM, whatever.
In that way, putting on my UX and ethnographer hat, I keep thinking of the long tail of late adopters, as first detailed in Diffusion of Innovations. People are just people and have all sorts of nonobvious reasons and factors guiding their choices. We just have to meet them where they're at. Especially with social policy.
Any way, it's important to ask why people don't take advantage of apparent benefits, like you've done, and then figure out catalysts for making adoption more likely.
Edit: Oops, I forgot my two concluding points.
For accessibility, sociability aspects, I think the USPS branches will be great for community banking. Every branch I've ever visited is like its own community hub.
It's not enough to ask people why. A lot of the time, people can't articulate their rationale. This is normal. Just like with usability testing, would-be policy makers have to actually be present and observe.
I grew up in poor Appalachia where there are countless poor citizens but they still struggle with bank accounts. You might be looking for a negative reason but a lot of them just like having cash in hand and don't want to deal with accounts that can overdraw or be penalized in any way. It's just an old world way of thinking. My money in my pocket consequences or no.
You're more than welcome to keep your cash under your mattress if appeasing your own paranoia is of paramount importance in your own financial decisions. That doesn't mean it's a generally good idea, though.
I think its perfectly reasonable to be opposed to a government's growing and seemingly insatiable need to inspect, surveil, and judge every aspect of our lives. And yes, I understand that "its just money". But ... at what point do even your feathers begin to get ruffled? And when they do - would you describe that as a paranoia?
Hahaha, if you think that combating money laundering is beyond the scope of what government should do, you might just be an idiot. I hear Somalia is great for "freedom"; perhaps you could immigrate?
As someone in the fintech industry, this isn't accurate. There are a sizable number of services that offer no-monthly-fee, no-minimum-balance accounts. The real reason people are often unbanked is that these types of accounts tend to have extremely high fraud (or at least attempted fraud) rates. As such, their KYC requirements as well as their fraud systems will kick out people, for example, who have a substantial past history of overdrafts.
I'll be blunt: it is extremely difficult to service this population of users profitably. Their balances are low, they're more likely to use less "automatable" forms of service (e.g. no direct deposit but instead sending in physical checks or cash), and their fraud rates are much higher. Which, given that, is why I'm very much in favor of a government service that would provide banking services to this population at cost.
At the low end, bank accounts come with fees, and more importantly, the risk of fees. Many young people just starting out struggle, at least briefly, with keeping a balance above zero, and that's assuming they have an account that doesn't charge a monthly fee for existing below a certain minimum balance.
For those of us who have no trouble keeping positive balances, these issues might seem silly, but to people living at or near the edge, these are reasons enough to not even try to have a bank account. The check cashing place may be a ripoff, but they're never going to take my balance below zero. They will only take a piece of my income.
One large portion of the unbanked have a low socioeconomic status. Banks tend not to operate in the areas they live. Banks also have limited hours, so if you happen to work during those hours and can't take a day off, when are you going to go? Many banks don't have anyone to speak Spanish.
Another is people with poor health and limited
cognitive ability. This includes the elderly.
You have to love all the replies to this carefully explaining how banks prey on the poor and that’s why they go to check cashing services, but nobody seems to realize that instead of putting the check cashing services out of business by competing with a government subsidized service, maybe we should fix the banks?
It’s a more practical solution to the problem. At the fringes of society, USPS is a closer to being an equitable and accessible bank than Wells Fargo is. Even if you did require Wells Fargo to serve unprofitable customers, they’re still not going to build a branch in the underserved areas where these services are needed.
Equitability will always be at odds with the profit motive of commercial banks. If anything, requiring banks to offer unprofitable services might just lead to more branches closing to avoid the losses.
There’s a reason you can’t send a letter for $0.58 via FedEx or UPS.
The USPS doesn't need more money. It is broken from the inside. It is the last organization I'd trust keeping my financial information safe. Heck, if they offered email hosting they'd sell your data to spammers for next to nothing cause that is already what they do with postal mail.
Mind elaborating on that one? A postal service that delivers 47% of all mail on the planet and serves millions of Americans that are unserved or underserved by other services. They did this for decades as a self-sufficient service that funded itself, and its current deficit 100% caused by Congress forcing them to pre-fund the health and retirement benefits of all of its employees for at least a half century in the future, something literally no other company or business has to do. Of course it was actually a plan to use that money to reduce the federal deficit.
>literally no other company or business has to do.
Actually every other company and business HAS to do this. Ever wonder why private pensions went away?
I also am always amazed at how people point to this funding requirement as a bad thing. So it is now bad...to actually set money aside for benefits you are promising????
The USPS needs to pre-fund their medical promises for retirees, but can't cancel those benefits without an act of congress... this is actually one of the unique bits. The private sector can just cancel those medical benefits at any time. Really those benefits should be shifted to Medicare and the burden should be taken off of the USPS.
Also, private companies need to pre-fund these retirement benefits too (with fewer general restrictions so they can change if they're having financial issues) but no other government agency other than the USPS has to.
The timing of the pre-funding legislation was also a little problematic because they had to rapidly catch up... this hamstringed their capital for about a decade so they put a lot of modernization initiatives on hold.
Then toss in a pandemic and the fact we're stuck with a sycophantic postmaster general and you've got a screwed postal system.
Normally pensions are funded by investing, not by setting aside cash for the retirement of people who haven't even been hired yet. Even worse, they have to borrow to meet this requirement to hold cash they won't need for years, so now they're paying interest instead of earning it.
>Normally pensions are funded by investing, not by setting aside cash for the retirement of people who haven't even been hired yet
If that's meant to be a description of the USPS situation then it's not at all accurate.
The USPS is required to calculate its actuarial liability for its retirement fund by considering both current and future liabilities for the next 75 years (I think that's the part where I think you're getting 'setting aside cash for the retirement of people who haven't even been hired yet'). That is true.
But it also deducts from that liability the expected future accruals (i.e. the contributions to the pension fund that those people who haven't been hired yet will make).
I think you can probably agree that you need to do both of these things when considering the sustainability of a pension fund, no?
I'm sorry, this is just mis-information. A couple of points:
- The USPS lost money literally every year between 1960 and 1988. (Tab T30800-A), and then they lost billions more in the 1990s before a few years of mixed profitability and then back to billions in losses. Their total profit and loss since 1960 is in the negative hundreds of billions.
- The pre-funding period lasted 10 years, from 2006 to 2016. It's been half a decade since the pre-funding requirement ended. If you look at their financials, their total pension billing in 2019 was $3.8 billion. They lost $8.8 billion on operations. There is no mathematically possible way their pensions are to blame for this.
The USPS is a government service, it can't "lose money". Does the fire department lose money? It doesn't make any sense. The USPS is a revenue generator and a budget item, but those two things are not linked.
They have a literal monopoly on the deliver of letters. They have a monopoly on the use of mailboxes. Profitability is a gauge of efficiency, and the USPS is a funds incinerator. Having a monopoly on the delivery of letters should be a self sufficient operation.
I'm for removal of the monopoly entirely. Most other countries like Japan, Germany, the UK, Netherlands, and others have privatised post with great success. There is no reason the government should continue to run it in the US.
You can deliver documents via for-profit couriers in the US. They're going to charge you profitable rates, though -- not necessarily rates that are accessible for poor citizens.
Those countries you've listed that have privatized (or partially, in the case of some of them) are subject to strict regulations so that they continue to provide basic levels of service to keep their countries moving smoothly.
If you want to see what Deutsche Post would do without those government regulations they're subject to domestically, look no further than the price to send a document across the US via DHL.
The bottom line is, many of the mail services that countries need to operate smoothly are not profitable. The only difference between any of the mail services in any country on the planet is the mechanism by which the government forces them to provide those services.
Even if FedEx did fold your 8.5x11 document into thirds, they still couldn't profitably send it across the country for 58 cents. Nor do any of those other privatized mail services in their smaller home countries.
Yes because the law mandates they charges higher rates than the USPS. If FedEx could sell first class mail (envelopes) in volume, they could do it profitably.
Japan, Germany, the UK, Netherlands can’t do it either. They have higher rates than the USPS, smaller service areas, and beg regulators to let them charge more because they struggle to make it profitable.
They are legally required to charge more than the USPS. Even if they could charge less they couldn't legally do it. When a private company was allowed to compete it drove the price of stamps down until it was outlawed.
Yes, when the rates at the post office were ~16x higher than they are now, adjusted for inflation, it was possible for a private company to compete. But, the USPS doesn't charge $9.12 to send a letter from Boston to DC anymore.
Yeah, most of those problems (with the arguable exception of the food deserts, at least in urban areas) exist down under too, or at least did until the banking Royal Commission a couple of years back.
That video reminds me too much of my wife's experience before we got settled down.
I think part of it is that we've had near-zero interest rates for the last dozen or so years. So banks can't make any money from small balance checking accounts, hence the ubiquity of minimum account balances. The traditional business model of factional reserve retail banking just doesn't work that well with super-low interest rates.
>You can extend this thought to poverty in general. Very little would need to change to eliminate it entirely.
To be fair, many of the "rough edges" of poverty have been sanded down over the past 100 years or so in most developed countries.
Poor people no longer face debtor's prison, starvation, lack of access to health care (with the exception of one notable country), a complete lack of education, lack of plumbing/utilities etc.
In addition to this, much of Asia and parts of Africa and South America have graduated from dirt poor to middle or high income nations.
That's not to say we couldn't do more, but the trend seems to be favouring the elimination or at least a sharp reduction in (absolute) poverty for the forseeable future, both in developing and developed nations.
The US ‘banking’ system is incredibly regressive. Poor people pay for check cashing, while rich people get free bank accounts and 2% off everything by using free ‘rewards’ credit cards.
To many people, the overall system feels to be designed as a whole to extract wealth from the masses and funnel it upwards towards those already capable of funding their continued existence. To those people, the idea that "obtaining the money you are owed from your job costs you a fee" is a gross abuse of the system. Penalizing poor people doesn't seem great.
Downvote this to oblivion, but I would love to see the USPS adopt some type of dollar backed crypto and put it into place with this. From inside their own processes it would be easy to implement and not as burdensome for their infrastructure as some other monetary software, and for the end users, any wallet app that would support whatever crypto would work, so that USPS didn't have to build their own.
Congress has a shameful record of completely failing to regulate the check cashing industry. Even when they went after predatory credit card practices during the Obama admin, check cashers were somehow spared. It's reminiscent of how despite massively overwhelming public support, there never seem to be enough votes to reduce prescription drug prices. It would seem some lobbies are just too powerful to be overcome by compassion, sense or even mass public support.
In light of those difficulties, this seems like an excellent back door solution to bury a corrosive industry that preys on the poor.
It's like the sugar tariff in the US. Just a complete garbage policy that imposes a small individual cost on everyone who buys sugar but benefits like 4 companies with massive profits who lavishly lobby to keep the price floor in place.
The sugar tariff is indirectly responsible for the deaths of many Americans because high fructose corn syrup is used in lieu of regular sugar in many foods and beverages instead. Fructose is extremely damaging to the body because the liver can barely metabolize it and most of the excess goes to liponeogenesis which ultimately manifests itself in tremendous buildup of visceral fat, with all the implications that carries. Meanwhile glucose is typically mostly stored alongside muscles as glycogen, and the human body can store far more glucose effectively than fructose.
The most common forms of high fructose corn syrup are HFCS-42 and HFCS-55. HFCS-42 has 42 percent fructose and HFCS-55 has 55 percent fructose, with the remaining sugars being primarily glucose. As a comparison, common table sugar (sucrose) is 50% fructose and 50% glucose. While there are public health problems caused by over consumption of sugar, simply switching to sucrose is not really a solution.
They are all bad when consumed in large quantities because the human body can only metabolize a small amount of fructose per day. One fruit contains little total sugar and also contains fiber which is an important fermentation substrate which aids in reducing the quantity of fructose entering the body.
"Should" in the moral sense, absolutely! "Should" in the logical or probabilistic sense - "Would" - is more a question of power than of fairness or moral rightness. An evil despot should always lose against a righteous hero, but that doesn't mean they always do.
The number one priority of all voters should be getting money out of politics. We've legalized bribery, so politicians represent donors, not voters. We've got it backwards. Nothing significant can be accomplished until you stop letting politicians take bribes.
I've often thought about just setting up a table in front of a check cashing store and offering to cash checks for free with my mobile banking app. I HATE how expensive it is to be poor. Yeah I'd end up ripped off at some point but whatever.
People can endorse the check over to you on the back, but most banks won't accept it on mobile. And then if you want to deposit it in person at the bank, they may require everyone involved to be present because there is the risk of fraud. Last year someone stole a check from my mail, forged the signature and endorsed it to themselves and it got cashed successfully.
you will get ripped off before the sun goes down. there is a reason why these places charge such crazy fees. writing a bad check is as simple as it gets and poor neighborhoods are full of desperate people.
I replied to another comment further down but will say it here again - the stereotype of check cashing as a predatory industry is wrong, and it comes largely from people who have never used a check cashing service and conflate it with payday lending, which is a totally different (and extremely predatory) service.
For most poor people, checking cashing businesses are both cheaper and more transparent than any other way of getting their checks cashed. This has been studied - they would pay more (and in much less transparent fashion via a series of fees) if they went to actual banks.
I recommend reading The Unbanking of America by Lisa Servon to get a real understanding of the industry.
I admit I'm combining payday loans and check cashing into one bucket (since it is one industry providing these different services), and although check cashing rates are much lower than payday loan rates, the average of 2-3% to simply cash a check is still egregious and to me, absolutely unacceptable.
What is the one industry you're speaking of? Financial services? If so, how can you not include banks, which charge vastly more than the 2-3% that check cashing places do after all their fees are included?
Sorry that it's not acceptable to you, but in most places check cashing places are the cheapest and best option for the people they serve. Should people be able to cash checks for free? Yes, I think they should, but that's not reality right now.
It would be great if check cashing places could cash them well under 2-3% of the cost of the checks, but they're often small checks. These are businesses with rent to pay - they're not making insane profits despite what you may believe. If you put them all out of business because you think they're predatory, then you make all of the people they serve meaningfully worse off.
It's fine to acknowledge that there's a problem with banking but not to call check cashing predatory while they're providing the cheapest, most user-friendly solution to that problem. 2-3% is egregious, but if you want to get rid of that you need to actually fix the structural problem, not just criticize companies that are often doing the best job they can given the constraints of a bad system.
"...but in most places check cashing places are the cheapest and best option for the people they serve"
Yes, this is one-hundred percent precisely the problem! Cashing a check for me costs $0.00 because I have a bank account. The unbanked do not have this luxury, yet they are in much greater need in keeping every penny than I am. The USPS offering a cheaper way to cash checks would be a vast improvement. That fixes the problem (but then again, so would legislation setting a max check cashing fee of $3.00 or something similar - moves like that were made to reign in ridiculous credit card fees and the world kept turning).
Yes, that is the problem, and yes, USPS banking would solve it. I haven't disagreed with either of those things.
But here, again, you're talking about the check cashing industry, and to be blunt you have no idea what you're talking about.
"so would legislation setting a max check cashing fee of $3.00 or something similar" - read this page carefully: https://www.walmart.com/cp/check-cashing/632047. Walmart's max fee for checks up to $1000 is $4. The problem is that a lot of people are cashing small checks - even if it only costs $2, somebody cashing a $50 check is still paying 4%. But what are check cashing places supposed to do? Charge pennies to cash small checks? They have fixed costs that aren't going to be covered by amounts that small.
So yes, it is a problem that people can't cash checks for free. But that's not a problem with the check cashing industry, it's a problem with the financial system as a whole. You should read the book I recommended before you keep criticizing - you're just being a keyboard warrior who's never set foot inside a check cashing business criticizing something you don't understand.
Here's an actual solution for you - the government requires all banks to cash all checks under a certain size, regardless of whether someone has an account at that bank. The government is then responsible for reimbursing any money lost to fraudulent checks (and prosecuting those who pass them).
That last bit is a possibly huge unintended consequence.
Crimes that would typically be a misdemeanor suddenly turn into federal charges when the USPS is involved. Would we see an increase in federal prosecutions for passing bad checks if postal banking is widespread?
I'm not sure what the significance of the fact that they would be federal prosecutions is. You say misdemeanors would turn into federal charges, but that's not how it works - they'd still be misdemeanors, just charged by the federal government instead of the government of an individual state.
Cashing checks is risky. The customer might not be who he says he is. The check might be fraudulent or it might simply bounce. By its nature the business has to keep lots of cash on-site, which means armored trucks to move it in (or risky trips to the bank) and insurance (or just taking the risk.) And of course there's rent to pay, salaries, etc.
Banks face these same risks but they have other things to make up for it: they've already identified their account holders and they have long-term relationships with them. They also have their account holders' money, and can simply seize it if the check has problems. Also, their customers do not actually cash most of the checks they deposit, so there's less need to move cash around.
All of that aside, if you think the check-cashing fees are so egregious and unacceptable, it seems there is a business opportunity waiting for you. Apparently if you open your own check-cashing place that charges fair fees that are so much lower than 2-3%, the business will come rushing in yet you'll still be profitable in light of the egregiousness of 2-3%, so what are you waiting for?
While I appreciate your brave defense of the status quo and how it harms poor people, I'd suggest you think outside of the box. There is no reason a check can't be verified almost instantly thanks to advances in technology, thereby reducing the risk to the check casher to zero. Perhaps regulations can allow exemptions for checks that cannot be verified. Or, better yet, the USPS can be used as this article discusses.
But the idea that the current system is the best we can hope for is ludicrous.
> There is no reason a check can't be verified almost instantly thanks to advances in technology, thereby reducing the risk to the check casher to zero.
How? How do you determine that the document hasn’t been altered or forged? How do you determine that the person is who they say they are?
He doesn't actually understand what he's talking about - he just thinks he can hand-wave away structural problems of the financial system by shaking his fist at companies that he perceives to be the problem because he doesn't understand them.
If you're paid weekly and make 12 bucks an hour, your paycheck will be about 350 bucks after taxes.
BofA charges $6 or $8 (sources vary) to cash a non-customer check drawn on them, paychecks might be waived, or might not be.
Wells Fargo charges $7.50 again, paychecks might be waived, or might not be.
Chase charges $6 or $8 (sources vary) again, paychecks might be waived, or might not be.
Citibank is free for checks under $5000, Capital One is also free, SunTrust is free for Personal Checks, but $7 for business checks.
US Bank is $5, again paychecks might be waived, or might not be.
PNC Bank is a whopping $10, again paychecks might be waived, or might not be.
This is on top of having to get to the bank during 'Bankers Hours' if you have a service job, or are working poor, thats a hard proposition sometimes. While I'm no fan of Payday lenders, their rates are usurious and prey on the poor, for the underbanked, they provide a vital service. I got lucky, even though I was in ChexSystems and couldn't open an account anywhere, I had an account with BofA so I could do banking.
2-3% plus a small service fee seems like a pretty good deal comparatively.
It's a good impulse to want to crack down on these practices, but until you fix the supply side issues of making banking available to everyone, you're just hurting poor people.
Thats the issue often these days, we target the symptoms of the problems in society without targeting any of the root causes, so we just end up squeezing the poor tighter and tighter. You can only ratchet up the misery so much before something gives.
The head of the DNC during the Obama years was one of the top recipients of payday loan company lobbying checks and specifically saw to it that this income stream remained uninterrupted. They will certainly kill off this attempt as well. The only ones really at odds with this industry might be organized crime, since it's hard to compete with legal loan sharking.
But to clarify, DNC doesn't play a legislative role in the party. It's a bigger deal that the Congresswoman is currently one of several Chief Deputy Whips in the House.
DNC doesn't do candidate recruitment, either. This is mostly done by state (and local) parties. Sometimes leaders of DSCC and DCCC, or the Majority Leader, get involved, too. The DNC doesn't get involved in Congressional primaries, either. These committees and their leaders are territorial!
It's just not something the DNC would have anything to do with. Leverage on these votes sits firmly with Congressional leadership, which is why I mentioned her leadership role in Congress as being the only thing relevant. They're generally speaking not going to run a primary. What's more likely is messing with committee assignments. And carrots are more common than sticks.
I've seen successful postal banking running for decades in Taiwan, but this pilot looks extremely limited. In addition, the USPS has a hard enough time handling its core mission. It doesn't have enough staff, its budget is a constant state of crisis, and its technology is a kluged-together mess (as anyone who has used its website and app can attest). I really worry that this will be a distraction to counter staff and an additional bureaucratic and technology burden upon the agency itself.
It would do its core mission a lot better if it can get an income stream that's independent from what Congress can fuck with easily, so this could very well help instead of hurt.
Same here in Switzerland. The postal bank has existed for decades and works very well although constrained by law what it can do. Therefore you also don't hear their name in the news every time a tax evasion or some other financial scandal is in the news.
" (a) The closing date for the Postal Savings System is the thirtieth
day immediately following the date of the enactment of this Act. On
and after the closing date no deposits shall be accepted in existing
postal savings account and no new postal savings account shall be
opened. After the closing date the Board of Trustees of the Postal
Savings System shall not be required to maintain the 5 per centum
reserve of postal savings funds otherwise required to be maintained by
section 5214 of this title nor to apportion deposits in banks in accordance with sections 5215 and 5219 of this title.
"(b) Interest on deposits in the Postal Savings System shall cease to accrue on the anniversary dates of the respective certificates occurring in the twelve-month period starting with the closing date
I'll just give a for-example. I was one of those dumbass kids who thought that I was going to be fine racking up a bit of credit card debt in college because I'd get a nice, high paying job the second I walked off campus. Then the tech industry imploded and it took a couple years (Katrina also happened in the mean time) and I ended up having a cratered credit score and on the business end of a lawsuit.
So when I land my first dev job, I proudly walk into the local bank and ask to open an account. My credit score wasn't good enough. But I needed a place to store my money.
The answer for me was Netspend, company of choice for most check cashing places, who charges you to hold on to money for you. Now, it could very well be that Netspend needs to charge that amount because people who use their cards aren't really people who can save much, but it seems like an inadequate way to service the population given that people need a practical way to interface with electronic banking regardless of how much they have or what their credit score is.
I was in the post office the other day. Understaffed and security cameras bigger than a shoe box. I did see a newer WiFi enabled webcam there, but it looked out of place.
I think the Post Office makes an excellent choice (in theory) for banking. There’s almost one post office in every town, it can have better rates than traditional banks (through legislation or rules), and could be just as safe as a traditional bank.
Then again the government will kneecap this somehow and fail the program.
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[ 3.6 ms ] story [ 247 ms ] threadThat is still an insanely high rate for a small check. At 500$ it might seem a small percent but I think many checks in this program will be far smaller.
But I guess the USPS pilot system is more accessible if people without IDs can use it.
I guess all those cameras in the post office can be connected to databases containing the necessary information. I am sure the federal government probably has at least a scrap of data about any person who spends enough time in the country to have a paycheck issued to them. Maybe they're using all the spying and tracking data for something good this time?
(I don't really believe it, but it is possible. If someone in the federal government wanted to do ID-less check cashing, I bet they could scrounge together the necessary data and software contracts.)
This piece from 2013 [https://ellenbrown.com/2013/09/23/what-we-could-do-with-a-po...] showed up on HN just over a year ago. [https://news.ycombinator.com/item?id=23911696]
Edit: quote from Brown:
"Postal banking systems are also ubiquitous in other countries, where their long record of safe and profitable public banking has proved the viability of the model.... The leader today is Japan Post Bank (JPB), now the largest depository bank in the world.... Rather than using its deposits to back commercial loans as most banks do, Japan Post invests them in government securities."
The P.O. is a service, it doesn't have need of income.
Does the Department of Defence need income? Does Social Security need income? Does the EPA need income?
No, because they're services, not for-profit businesses.
no but it needs funding, has the funding been good over the last few decades?
Ratios are great except when they obscure what problem they're supposed to address.
They have the wrong set of policies and practices in many cases, but “more money” is a simpler thing to ask for that specific improvements to educational practices.
If public Company A has costs greater than revenue and is therefore losing money, private Company B will therefore (?) be able to provide a better service at lower cost? On what basis?
There is no private company today that does what the USPS does. It's easy to forget while living in the metro areas most of us live in, but Fedex, UPS, and DHL often contract out to deliver to rural addresses, because they don't offer universal delivery. The contract out to the USPS, which does because it's required to.
So no, I absolutely dispute that a private company would or could provide a better service than the USPS at lower cost. The USPS would be fine if not repeatedly and continually hamstrung by Congress, and no competitor comes close even so.
I mean, have you compared prices recently? Today, right now, private companies are providing arguably worse services (again, more limited delivery area) at higher cost[0].
0. https://goshippo.com/blog/which-is-cheaper-usps-vs-ups-vs-fe...
Both of these could be eliminated by congress, but there doesn't seem to be the will (and in fact, there is an ideological faction in congress that would eliminate the postal service or privatize it for their donors' benefit if they could).
USPS pensions etc. were extremely underfunded for a long time. The size, scope, and quasi-governmental nature of USPS meant that ignoring the problem was more likely to involve a bailout than responsible operations.
IMO, the only unreasonable pension expectation levied on USPS is that for veterans: They’re required to pay some amount of veteran retirement benefits for some reason that I haven’t been able to make sense of.
I haven't seen any mention of setting aside money for people who don't work there yet, including in your link.
Asking to be treated like the government so that you can hire someone now, with promises of future payments, then pull in those payments based upon the revenue produced by future employees is analogous to a ponzi scheme. The federal government gets away with pay-as-you-go because they can set taxes, devalue money, change payment plans, etc...
How much the government should be investing in providing a quality mail system is a different discussion entirely. But this discussion is basically "should pensions be funded or not". Calling it prefunding is a rhetorical device only, and doesn't stand up to actuarial scrutiny.
For a poor person, a check-cashing place is generally the cheapest and most straightforward way to cash checks (and receive other basic financial services) with clear, reasonable pricing. If you're poor, acquiring the same services from a bank is not only vastly more expensive, it's also much less transparent in terms of how and when fees will be assessed.
Often this confusion stems from people who aren't that familiar thinking they're the same as payday loan places, which are just legal loan sharks and designed to trap people in an endless cycle of debt.
None of this is anything against postal banking, which I'm hugely supportive of.
That's the problem, though. It doesn't matter how good or bad their service is because their business model should not exist.
JPB was for much of its history not subject to the same financial oversight through the FSA that other banks were; instead benefiting from a laxer regime under a different regulator and then subsequently from a separate supervision office within the FSA.
This unusual regulatory position is not limited to oversight. Up until 2011, JPB was not even required to pay into the Japanese deposit insurance system and is allowed to offer higher deposit limits than commercial banks. Japan Post Holdings continues to benefit from a unique position of being allowed to own both a bank (JPB) and an insurance company (JPI).
The investment policies of JPB and JPI directly subsidize Japanese government debt (which is ... not a great asset, rated A+ by S&P and on a worsening trajectory of outlook) in preference to performing the fundamental job of banks elsewhere and lending money to private enterprise.
For example in Chile checking accounts were quite difficult to get for the poor until the state's bank [1] started issuing a bank account to anyone who requested it at $0 fixed cost, at a loss.
This bank also:
- Gives mortgages to sectors of the population in which banks are not interested.
- Partners with small shops to offer financial transactions in low-income or very remote areas [2] or where opening a branch does not make economic sense.
The social benefits are big and out-weight the costs/risks that would not have been taken by a private party. The bank even has healthy profits of around 350 MUSD per year that go back to the chilean state.
Considering that access to financial services is fundamental to participate in the economy, I find it to be an excellent government goal.
In this case it looks more to me a bit similar to the Deutsche Post's Postbank in Germany, that leverages their Post offices to offer financial services.
[1] https://www.bancoestado.cl/
[2] https://goo.gl/maps/R22eAJd8B3LKnz8s7
I think all you need to do is considering banking as a basic human right, which can include everything. In addition, you can use race / gender / xx difference to make it an inequality issue, which again can include everything.
In many countries post offices act as a generalised "service provider" where third parties can contract to have in-person transactions done.
Often they are processing various transactions for existing banks anyway.
I'm not in the U.S. but yes I expect that Walmart would be a direct competitor in providing these sorts of services.
Walmart may subsidize the service assuming you’ll spend money in store and they’ll get several more dollars out of the transaction. Even less expensive, grocery stores have long done cash checking for free when you check out at the store.
It is hard for me to be upset about a new service that is less expensive than the set of companies gouging people, but has some competitors that are cheaper. I don’t get up in arms over price differences between target and Walmart, why should I between USPS and Walmart?
First, the government does force you to use USPS for some things. The USPS has a monopoly on the delivery of certain types of mail.
Second, we all pay for USPS as taxpayers regardless of whether we use its ancillary services. Well, we won't pay if check cashing is a profitable program, but we will if it's not -- and I'm skeptical that it will be profitable given you have fraud costs, training costs, etc.
> Walmart may subsidize the service assuming you’ll spend money in store and they’ll get several more dollars out of the transaction. Even less expensive, grocery stores have long done cash checking for free when you check out at the store.
To me these are both reasons for the government not to get into this business. If Walmart offers a lower price, whether that's a loss leader or not, it's great for consumers.
IMHO govt services make sense when private industry can't provide them effectively. That doesn't seem like the case here.
> It is hard for me to be upset about a new service that is less expensive than the set of companies gouging people, but has some competitors that are cheaper.
Zero qualms about other companies offering new services. If they work well, those companies will succeed, and if not, they will fail. And success is based on making customers happier than competitors do. That's not the case with government services. If they work well, great, and if not, everyone subsidizes them. For example if a startup launches check cashing and loses $10m because of fraud, they go under. If the USPS ends up losing $1b due to check fraud next year, I'm guessing they'll just ask for $1b more in funding the following year.
And if check cashing seems like a good direction, should the government develop its own reward credit cards? Buy now, pay later? Crypto exchanges? Etc.
The person you were replying to was referring to USPS's upcoming banking services, not their mail services.
> we all pay for USPS as taxpayers regardless of whether we use its ancillary services
We do not. USPS has its own books and does not receive taxpayer funds directly[1][2].
> To me these are both reasons for the government not to get into this business. If Walmart offers a lower price, whether that's a loss leader or not, it's great for consumers.
The problem is not that banking services are unavailable or that Walmart isn't offering them cheaply. It's that Walmart isn't guaranteed to continue to offer them cheaply, and it doesn't serve nearly as many rural places as post offices do.
There are post offices absolutely everywhere in the US. The same is not true of Walmarts.
> IMHO govt services make sense when private industry can't provide them effectively. That doesn't seem like the case here.
25% of Americans are underserved by banking as of a few years ago, so obviously something is wrong that the free market has not been able to solve[3]. Retail banking is not very profitable, so there isn't much incentive for existing banks to do a good job of it.
> I'm guessing they'll just ask for $1b more in funding the following year
Again, that's not how USPS works.
> And if check cashing seems like a good direction, should the government develop its own reward credit cards? Buy now, pay later? Crypto exchanges? Etc.
Ah, so we get to the "what about the slippery slope?!" part of the argument.
It's not black and white. We need to assess each case based on real data, not based on theory. No one is saying the government should compete in every industry just because it wants to cash checks for people who have been exploited by payday lenders.
We have nationalized libraries and schools, but somehow we haven't slipped down the slope to nationalized grocery stores. I think we'll be OK if USPS offers a very simple service that isn't far off from things they already do (like cashier's checks).
1. https://www.brookings.edu/blog/up-front/2020/08/26/how-is-th...
2. https://facts.usps.com/top-facts/
3. https://www.cnbc.com/2019/03/08/25percent-of-us-households-a...
The reason it sometimes looks badly unprofitable is because of an attempt by Republicans to kill it by imposing unique and crushing financial obligations on it that don't apply to any other business[3][4].
By making it look unprofitable, they can argue that it's costing taxpayers money and then propose privatizing it[5]. It's part of a long-term strategize to run government organizations into the ground in order to justify dismantling them.
From Barron's:
> The USPS loses money, but cash flow has been more stable. That is because as mentioned above, the USPS has some unusual expenses, imposed by Congress, that artificially depress earnings.
> In 2006, Congress essentially told the post office to set aside $110 billion over 10 years. That, by our math, is $11 billion a year. The annual free cash flow reported by UPS, for comparison, was about $6.4 billion in 2018.
> The requirement hit cash flow until the post office could deal with the expense no longer. Now the Postal Service just records the cost on its books, cutting into the bottom line, but without setting aside any cash.[3]
1. https://news.nd.edu/news/postal-service-losing-money-because...
2. https://www.nbcnews.com/business/economy/usps-funding-crisis...
3. https://www.barrons.com/articles/usps-louis-dejoy-post-offic...
4. https://en.wikipedia.org/wiki/United_States_Postal_Service#R...
5. https://www.npr.org/2020/08/16/902977021/the-history-of-poli...
Since your whole argument depends on this, I think you need more than a "seems".
Britain, which I'm most familiar with as I lived there before everything could be done electronically, and Europe in general, has/had several services like this available from post offices.
You could pay most bills by taking the bill and cash/cheque to the post office (called "giro"), or transferring from a bank account. A while ago, you could open a Post Office bank account there; nowadays you can make deposits and withdrawals to any UK current account. You could pay fees, taxes and fines, renew a driving license, apply for a passport, and probably 50 other things.
Oh, and send letters and parcels.
Together, all this means the staff have to know how to check someone's identity, and are used to handling cash.
50+ years ago, this was probably a great way to help the economy. Bills paid faster, government services available in every village.
The USA seems about 50 years late for that, so presumably the target is the poorest and/or most rural communities.
Britain is several steps ahead of the USA on privatising government services. Nowadays, many rural or small post offices are just a counter in a convenience shop or small supermarket, as seen here: https://www.cheshire-live.co.uk/news/local-news/little-sutto... (and the whole "Post Office" company is privatized, like in many European countries).
If cash is legal tender, how is it that you can be paid in cheques that nobody would cash for free ? Isn't it the government's job to a) Either cash them for free, or b) Require employers to pay in cash if the employee asks for it ?
I find the fee for cashing a cheque, and most other fees in the US banking system, quite ridiculous.
Not saying that's an unsolvable problem, but I can understand the reluctance.
What type of mail does the USPS deliver that you cannot pay FedEx, UPS, DHL, etc, to deliver?
What is the cost of this service anyway ? Why isn't it close to 0 ? The $5+ fee quoted in this article seems absurd when letter delivery is in cents and $5 will get your stuff delivered across the country with priority mail in under 2 days.
Why? Why does everything have to be about profit? Or even breaking even.
Can't the "profit" be the social good that the service provides?
There are ~ 5,000 Walmart locations in the US vs. more than 30,000 retail Post Office locations.
1. There are people who can't get a bank account. (There is no federal law that guarantees a bank account.)
2. These people have to rely on Payday rip-off services. (Why give a bank money to cash a federal/state/local check?)
3. The fees that banks are charging are deleterious to the poor. My bank charges $15/month for under $1500.00. (I'm going to close my account in a few months. Why give them $170 a year? I'll use cash, or MO.
4. It's about time government steps in.
Yes, you're right, it is a "dumb question".
The USPS is not "the government". It has certain government mandates, and postal workers are classed as federal employees but to just call it "the government" is not quite right.
They're facing financial difficulties because of pensions and health care plans from another (more civilized) era and not because of bad service.
I don't know if banking is going to work out for the USPS. It makes sense that it's a "pilot program". If it puts slimy check-cashing and payday-loan joints out of business, that would certainly be a good thing.
The idea of the USPS becoming a third party identity service provider has been tossed around before, and they could certainly provide other miscellaneous bureaucratic services. Whatever happens USPS will need to make deep changes, I think, in order to survive.
The USPS exists to serve a constitutional mandate, has its operations overseen by Congress, and 9 out of 11 board seats are appointed by the president. It is a government agency. Or you can read the establishment law, which states it's an establishment of the Executive branch https://www.law.cornell.edu/uscode/text/39/201
Because you shouldn't have to pay $2 or whatever to get every paycheck you have cashed. Banks often have minimums in the hundreds to thousands of dollars for checking accounts.
https://en.wikipedia.org/wiki/United_States_Postal_Savings_S...
> The move puts the USPS in direct competition with the multibillion-dollar check-cashing industry, which operates storefronts to allow unbanked or underbanked residents to cash their paychecks.
I mean, great, but why are there all these unbanked people in the first place? Why are they having to pay a whole six dollars for something that could be a free instant direct deposit?
Edit: I've just realised that the magic word may be resident. Let me guess, there's a significant fraction of (mostly nonwhite) US residents who can't produce enough proof of nationality to get bank accounts?
Those payments bounced, leading to fees, which kept compounding and even after taking care of that, it took a long time to figure out how to clear the mark on the report (I don't know if we did, or it just eventually fell off due to time)
https://www.congress.gov/bill/116th-congress/senate-bill/357... (S.3571 Banking for All Act)
It also expands the USPS Postal Banking capabilities and mandate.
Edit: The Federal Reserve's FedNow instant payment system going live in 2023 should also eliminate the need for check cashing in its entirety: https://news.ycombinator.com/item?id=28393576
Those are not the same thing. Banks will deny you an account based on your history with bank accounts, sure. But not “credit history”, which is entirely separate.
There are “millennial” banks which are very customer focused but to get accounts there you have to have a computer or a phone with a data plan — and believe it or not those are still luxury items for many in the US.
Living in rural areas where you only have a post office box or rural route address often excludes you from credit and banking products.
For those who can get paid cash and spend cash, the downsides of a bank account probably outweigh the upsides.
This is not even a 'class' thing I have seen many highly paid, very smart people who just do not grok less out than in. Also do not spend it before you have it (I am getting paid tomorrow so I can borrow X and pay it off), one way ticket to massive credit card debt that old gem is.
Someone managed to get my ATM card details and ran up a $100 overdraft. Chase didn’t care, charged me another $500 or so.
[0] Paycheck was from a shady employer who frequently made “mistakes” in the amount of the check. Had I given them direct deposit access, they could have yanked money out of my pay with the excuse of accidental overpayment. By wiring the money I firewalled it somewhat.
(The company that I work for is a fintech that deals a lot with unbanked/underbanked communities)
My employer had a relationship with the commercial bank, vouched for me, and generally made it easy. Had I used the postal bank I would have had to jump through more hoops, bring a translator at every visit, and wouldn’t have had access to all the same services.
Ages ago, I read a "Nickel and Dimed" style long form article about check cashing services where the author tried to understand your very question: why do some customers continue to use these services when cheaper alternatives exist?
IIRC, some preferred the accessible, high touch in person aspects of the services. Much like some people connect with their regular barista, I suppose. Vs the intimating experience of a bank, the impersonal ATM, whatever.
In that way, putting on my UX and ethnographer hat, I keep thinking of the long tail of late adopters, as first detailed in Diffusion of Innovations. People are just people and have all sorts of nonobvious reasons and factors guiding their choices. We just have to meet them where they're at. Especially with social policy.
Any way, it's important to ask why people don't take advantage of apparent benefits, like you've done, and then figure out catalysts for making adoption more likely.
Edit: Oops, I forgot my two concluding points.
For accessibility, sociability aspects, I think the USPS branches will be great for community banking. Every branch I've ever visited is like its own community hub.
It's not enough to ask people why. A lot of the time, people can't articulate their rationale. This is normal. Just like with usability testing, would-be policy makers have to actually be present and observe.
- Minimum balance requirement
- Direct deposit requirements
- Fees & penalties
People in poverty without steady incomes don't have the liquidity to open accounts and keep them open without incurring penalties.
I'll be blunt: it is extremely difficult to service this population of users profitably. Their balances are low, they're more likely to use less "automatable" forms of service (e.g. no direct deposit but instead sending in physical checks or cash), and their fraud rates are much higher. Which, given that, is why I'm very much in favor of a government service that would provide banking services to this population at cost.
For those of us who have no trouble keeping positive balances, these issues might seem silly, but to people living at or near the edge, these are reasons enough to not even try to have a bank account. The check cashing place may be a ripoff, but they're never going to take my balance below zero. They will only take a piece of my income.
There are a handful of reasons: https://www.fdic.gov/news/events/consumersymposium/2017/docu...
One large portion of the unbanked have a low socioeconomic status. Banks tend not to operate in the areas they live. Banks also have limited hours, so if you happen to work during those hours and can't take a day off, when are you going to go? Many banks don't have anyone to speak Spanish.
Another is people with poor health and limited cognitive ability. This includes the elderly.
Equitability will always be at odds with the profit motive of commercial banks. If anything, requiring banks to offer unprofitable services might just lead to more branches closing to avoid the losses.
There’s a reason you can’t send a letter for $0.58 via FedEx or UPS.
Mind elaborating on that one? A postal service that delivers 47% of all mail on the planet and serves millions of Americans that are unserved or underserved by other services. They did this for decades as a self-sufficient service that funded itself, and its current deficit 100% caused by Congress forcing them to pre-fund the health and retirement benefits of all of its employees for at least a half century in the future, something literally no other company or business has to do. Of course it was actually a plan to use that money to reduce the federal deficit.
Actually every other company and business HAS to do this. Ever wonder why private pensions went away?
I also am always amazed at how people point to this funding requirement as a bad thing. So it is now bad...to actually set money aside for benefits you are promising????
Also, private companies need to pre-fund these retirement benefits too (with fewer general restrictions so they can change if they're having financial issues) but no other government agency other than the USPS has to.
The timing of the pre-funding legislation was also a little problematic because they had to rapidly catch up... this hamstringed their capital for about a decade so they put a lot of modernization initiatives on hold.
Then toss in a pandemic and the fact we're stuck with a sycophantic postmaster general and you've got a screwed postal system.
If that's meant to be a description of the USPS situation then it's not at all accurate.
The USPS is required to calculate its actuarial liability for its retirement fund by considering both current and future liabilities for the next 75 years (I think that's the part where I think you're getting 'setting aside cash for the retirement of people who haven't even been hired yet'). That is true.
But it also deducts from that liability the expected future accruals (i.e. the contributions to the pension fund that those people who haven't been hired yet will make).
I think you can probably agree that you need to do both of these things when considering the sustainability of a pension fund, no?
- The USPS lost money literally every year between 1960 and 1988. (Tab T30800-A), and then they lost billions more in the 1990s before a few years of mixed profitability and then back to billions in losses. Their total profit and loss since 1960 is in the negative hundreds of billions.
https://www.bea.gov/national/Release/XLS/Survey/Section3All_...
- The pre-funding period lasted 10 years, from 2006 to 2016. It's been half a decade since the pre-funding requirement ended. If you look at their financials, their total pension billing in 2019 was $3.8 billion. They lost $8.8 billion on operations. There is no mathematically possible way their pensions are to blame for this.
I'm for removal of the monopoly entirely. Most other countries like Japan, Germany, the UK, Netherlands, and others have privatised post with great success. There is no reason the government should continue to run it in the US.
Those countries you've listed that have privatized (or partially, in the case of some of them) are subject to strict regulations so that they continue to provide basic levels of service to keep their countries moving smoothly.
If you want to see what Deutsche Post would do without those government regulations they're subject to domestically, look no further than the price to send a document across the US via DHL.
The bottom line is, many of the mail services that countries need to operate smoothly are not profitable. The only difference between any of the mail services in any country on the planet is the mechanism by which the government forces them to provide those services.
Yes, you can put documents into a large manila envelope, or in a parcel, but you cannot mail an envelope using FedEx or UPS.
They are legally required to charge more than the USPS. Even if they could charge less they couldn't legally do it. When a private company was allowed to compete it drove the price of stamps down until it was outlawed.
https://en.m.wikipedia.org/wiki/American_Letter_Mail_Company
https://www.youtube.com/watch?v=aLwRZibUqL0
That video reminds me too much of my wife's experience before we got settled down.
I wonder why nobody's solved this problem by now.
You can extend this thought to poverty in general. Very little would need to change to eliminate it entirely.
To be fair, many of the "rough edges" of poverty have been sanded down over the past 100 years or so in most developed countries.
Poor people no longer face debtor's prison, starvation, lack of access to health care (with the exception of one notable country), a complete lack of education, lack of plumbing/utilities etc.
In addition to this, much of Asia and parts of Africa and South America have graduated from dirt poor to middle or high income nations.
That's not to say we couldn't do more, but the trend seems to be favouring the elimination or at least a sharp reduction in (absolute) poverty for the forseeable future, both in developing and developed nations.
It feels like such a poor fit. A digital central bank currency, sure, excellent. What do you gain from adding a distributed ledger to this?
In light of those difficulties, this seems like an excellent back door solution to bury a corrosive industry that preys on the poor.
Imagine regulations create an industry that pays 1000 people $100,000 a year, by charging 10,000,000 people $10 per year.
Who do you think will campaign harder - the supporters or the opponents of those regulations?
https://en.wikipedia.org/wiki/U.S._Sugar_Program
https://en.wikipedia.org/wiki/High-fructose_corn_syrup
can you deposit other people's checks?
I mean, that's why cashing checks has a fee attached, to cover that risk.
For most poor people, checking cashing businesses are both cheaper and more transparent than any other way of getting their checks cashed. This has been studied - they would pay more (and in much less transparent fashion via a series of fees) if they went to actual banks.
I recommend reading The Unbanking of America by Lisa Servon to get a real understanding of the industry.
Sorry that it's not acceptable to you, but in most places check cashing places are the cheapest and best option for the people they serve. Should people be able to cash checks for free? Yes, I think they should, but that's not reality right now.
It would be great if check cashing places could cash them well under 2-3% of the cost of the checks, but they're often small checks. These are businesses with rent to pay - they're not making insane profits despite what you may believe. If you put them all out of business because you think they're predatory, then you make all of the people they serve meaningfully worse off.
It's fine to acknowledge that there's a problem with banking but not to call check cashing predatory while they're providing the cheapest, most user-friendly solution to that problem. 2-3% is egregious, but if you want to get rid of that you need to actually fix the structural problem, not just criticize companies that are often doing the best job they can given the constraints of a bad system.
Yes, this is one-hundred percent precisely the problem! Cashing a check for me costs $0.00 because I have a bank account. The unbanked do not have this luxury, yet they are in much greater need in keeping every penny than I am. The USPS offering a cheaper way to cash checks would be a vast improvement. That fixes the problem (but then again, so would legislation setting a max check cashing fee of $3.00 or something similar - moves like that were made to reign in ridiculous credit card fees and the world kept turning).
But here, again, you're talking about the check cashing industry, and to be blunt you have no idea what you're talking about.
"so would legislation setting a max check cashing fee of $3.00 or something similar" - read this page carefully: https://www.walmart.com/cp/check-cashing/632047. Walmart's max fee for checks up to $1000 is $4. The problem is that a lot of people are cashing small checks - even if it only costs $2, somebody cashing a $50 check is still paying 4%. But what are check cashing places supposed to do? Charge pennies to cash small checks? They have fixed costs that aren't going to be covered by amounts that small.
So yes, it is a problem that people can't cash checks for free. But that's not a problem with the check cashing industry, it's a problem with the financial system as a whole. You should read the book I recommended before you keep criticizing - you're just being a keyboard warrior who's never set foot inside a check cashing business criticizing something you don't understand.
Here's an actual solution for you - the government requires all banks to cash all checks under a certain size, regardless of whether someone has an account at that bank. The government is then responsible for reimbursing any money lost to fraudulent checks (and prosecuting those who pass them).
Crimes that would typically be a misdemeanor suddenly turn into federal charges when the USPS is involved. Would we see an increase in federal prosecutions for passing bad checks if postal banking is widespread?
Banks face these same risks but they have other things to make up for it: they've already identified their account holders and they have long-term relationships with them. They also have their account holders' money, and can simply seize it if the check has problems. Also, their customers do not actually cash most of the checks they deposit, so there's less need to move cash around.
All of that aside, if you think the check-cashing fees are so egregious and unacceptable, it seems there is a business opportunity waiting for you. Apparently if you open your own check-cashing place that charges fair fees that are so much lower than 2-3%, the business will come rushing in yet you'll still be profitable in light of the egregiousness of 2-3%, so what are you waiting for?
But the idea that the current system is the best we can hope for is ludicrous.
How? How do you determine that the document hasn’t been altered or forged? How do you determine that the person is who they say they are?
This is what an EBT card is, which is why so many government payments have shifted to them...
BofA charges $6 or $8 (sources vary) to cash a non-customer check drawn on them, paychecks might be waived, or might not be.
Wells Fargo charges $7.50 again, paychecks might be waived, or might not be.
Chase charges $6 or $8 (sources vary) again, paychecks might be waived, or might not be.
Citibank is free for checks under $5000, Capital One is also free, SunTrust is free for Personal Checks, but $7 for business checks.
US Bank is $5, again paychecks might be waived, or might not be.
PNC Bank is a whopping $10, again paychecks might be waived, or might not be.
This is on top of having to get to the bank during 'Bankers Hours' if you have a service job, or are working poor, thats a hard proposition sometimes. While I'm no fan of Payday lenders, their rates are usurious and prey on the poor, for the underbanked, they provide a vital service. I got lucky, even though I was in ChexSystems and couldn't open an account anywhere, I had an account with BofA so I could do banking.
2-3% plus a small service fee seems like a pretty good deal comparatively.
It's a good impulse to want to crack down on these practices, but until you fix the supply side issues of making banking available to everyone, you're just hurting poor people.
Thats the issue often these days, we target the symptoms of the problems in society without targeting any of the root causes, so we just end up squeezing the poor tighter and tighter. You can only ratchet up the misery so much before something gives.
If you already need to go to Walmart it's probably cheaper than making a separate trip to the bank.
That's roughly the same as an out-of-network ATM fee or a credit card transaction fee.
But to clarify, DNC doesn't play a legislative role in the party. It's a bigger deal that the Congresswoman is currently one of several Chief Deputy Whips in the House.
Sure, you can cross the head of the DNC all you want. As long as you’re also okay with the DNC supporting you being primaried.
It's just not something the DNC would have anything to do with. Leverage on these votes sits firmly with Congressional leadership, which is why I mentioned her leadership role in Congress as being the only thing relevant. They're generally speaking not going to run a primary. What's more likely is messing with committee assignments. And carrots are more common than sticks.
1: https://uslaw.link/citation/stat/80/92
§5225. Discontinuance of Postal Savings System
" (a) The closing date for the Postal Savings System is the thirtieth day immediately following the date of the enactment of this Act. On and after the closing date no deposits shall be accepted in existing postal savings account and no new postal savings account shall be opened. After the closing date the Board of Trustees of the Postal Savings System shall not be required to maintain the 5 per centum reserve of postal savings funds otherwise required to be maintained by section 5214 of this title nor to apportion deposits in banks in accordance with sections 5215 and 5219 of this title.
"(b) Interest on deposits in the Postal Savings System shall cease to accrue on the anniversary dates of the respective certificates occurring in the twelve-month period starting with the closing date
I'll just give a for-example. I was one of those dumbass kids who thought that I was going to be fine racking up a bit of credit card debt in college because I'd get a nice, high paying job the second I walked off campus. Then the tech industry imploded and it took a couple years (Katrina also happened in the mean time) and I ended up having a cratered credit score and on the business end of a lawsuit.
So when I land my first dev job, I proudly walk into the local bank and ask to open an account. My credit score wasn't good enough. But I needed a place to store my money.
The answer for me was Netspend, company of choice for most check cashing places, who charges you to hold on to money for you. Now, it could very well be that Netspend needs to charge that amount because people who use their cards aren't really people who can save much, but it seems like an inadequate way to service the population given that people need a practical way to interface with electronic banking regardless of how much they have or what their credit score is.
I think the Post Office makes an excellent choice (in theory) for banking. There’s almost one post office in every town, it can have better rates than traditional banks (through legislation or rules), and could be just as safe as a traditional bank.
Then again the government will kneecap this somehow and fail the program.
Certain group of politicians: "Government never works and should be minimized!"
Same group of politicians: Completely kneecaps management and/or funding that would be needed to actually ensure government program works.
Also same group of politicians: "See, government programs never work!"