New York City U.S. Post Office branch. New York City U.S. Post Office branch (Image: Shutterstock).

Under the radar and with very little public notice, the United States Postal Service began a check-cashing pilot program on Sept. 13 at four urban post offices. Nearly a month later, credit union and banking trade groups, as well as the national media, discovered what has been going on.

Reaction from the trade groups has been, to put it mildly, aggressively against the program.

"NAFCU urges policymakers to take steps to end the USPS' pilot program offering paycheck-cashing services to consumers. Last week, USPS informed American consumers that it cannot manage its current mission of delivering mail on time," NAFCU President/CEO Dan Berger said. "Now, it has come to light that USPS is quietly expanding its reach into financial services without providing much clarity on how it plans to balance its current duties alongside this new undertaking."

From what has been explained by the USPS, this new undertaking appears to be small in scope, for now. The program is isolated to four USPS locations in Falls Church, Va., Baltimore, the Bronx, N.Y., and Washington, D.C.

USPS customers can use payroll or business checks to purchase single-use gift cards worth up to $500. Customers can also pay bills, and get access to ATMs as well as money orders and wire transfers.

This pilot program is the first potential move toward a return to postal banking. While postal banking was considered a successful feature of the USPS for decades beginning in the early 1900s, it ended more than 50 years ago after the system collapsed due to banking competition in the late 1960s.

If the USPS were to get back into the postal banking business, it would require an act of Congress.

In a statement, Berger said if the USPS is attempting to serve the underserved and unbanked, there are better ways to do that.

"This program stretches the bounds of the postal service's statutory authority and allows the underfunded and understaffed USPS to unfairly compete with credit unions who are already meeting the needs of low- to moderate-income individuals," Berger added. "To better help the underbanked and underserved, Congress should instead allow all credit unions, as community-based financial institutions that prioritize consumers over generating profits, the ability to add underserved areas to their fields of memberships. The USPS already has its hands full with its current mission and lacks the bandwidth needed to run such a large and complex operation."

The American Bankers Association released a statement calling the USPS "ill-suited to manage" the project and full-on postal banking efforts, if it leads to that.

"The solution to high retail check-cashing fees is a banking relationship, not a government-subsidized service through the post office," the ABA commented.

In addition, NAFCU Vice President of Legislative Affairs Brad Thaler wrote a letter to both the Senate Banking Committee and House Financial Services Committee Monday to outline the credit union industry's issues with the expansion of financial services and postal banking by the USPS.

"An expanded foray into financial services would both go beyond the USPS's purpose and powers and add responsibilities in which the USPS has no expertise and does not currently have the infrastructure and capacity to manage," Thaler wrote.

The USPS has not provided many details about the pilot program, or a timeline of how long it will go on or if the program will be expanded into other markets.

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Michael Ogden

Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.