About 8% of
Americans are "unbanked," in addition to take away keep no banking concern account, while some other 21% are "underbanked," which agency that they take away keep a banking concern account, but besides occupation choice financial services like
payday loans, pawnshops, non-bank banking concern check cashing in addition to coin orders. The Office of Inspector General of the U.S. Postal Service has published a study squall for if the Post Office powerfulness live on a useful machinery inward
"Providing Non-Bank Financial Services for the Underserved." The report points out that the average unbanked or underbanked family household spends $2,412 each twelvemonth but on involvement in addition to fees for choice financial services, or almost $89 billion annually.
I acknowledge that, at kickoff glance, this proposal gives me a sinking feeling. The postal service is facing severe financial difficulties inward large portion because of
the collapse inward splendid mail, in addition to it has been scrambling to
consider alternatives. After watching the tremors in addition to collapses inward the U.S. financial scheme inward recent years, providing financial services seems similar a shaky railing to grasp.
But every bit the Inspector General study points out, a connectedness from the post portion to financial services isn't brand-new. For example, "The Postal Service has played a longstanding purpose inward providing domestic in addition to international coin orders. The Postal Service is genuinely the leader inward the U.S. domestic newspaper coin social club market, with an around seventy per centum marketplace position share. This is a lucrative concern trouble in addition to demonstrates that the Postal Service already has a direct connectedness to the underserved, who purchased 109 1000000 coin orders inward financial twelvemonth (FY) 2012. ... While its domestic in addition to international coin orders are currently paper-based, the Postal Service does offering electronic coin transfers to ix Latin American countries through the Dinero Seguro® (Spanish for “sure money”) service." For several years now, the Post Office has been selling debit cards, both for American Express in addition to for specific retailers like Amazon, Barnes & Noble, Subway, in addition to Macy’s.
In many countries, the postal service takes deposits in addition to provides financial services. The Universal Postal Union published a study inward March 2013 yesteryear Alexandre Berthaud and Gisela Davico, "
Global Panorama on Postal Financial Inclusion: Key Issues in addition to Business Models," which alongside to a greater extent than detailed findings notes that 1 billion people about the Earth inward 50 countries create at to the lowest degree some of their banking through postal banking systems. The Universal Postal Union besides oversees the International Financial System, which is software that allows a diverseness of fund transfers across postal operators inward to a greater extent than than threescore countries.The U.S. Postal Service is non currently a member. Indeed, the U.S. Inspector General study notes that alongside high-income countries, the postal services earn on average almost 14% of their income from financial services.
The U.S. Postal Service fifty-fifty used to accept deposits inward the past: "[F]rom 1911 to 1967, the Postal Savings System gave people the chance to build savings deposits at designated Post Offices nationwide. The scheme hitting its altitude inward 1947 with nearly $3.4 billion inward savings deposits from to a greater extent than than iv 1000000 customers using to a greater extent than than 8,100 postal units. The scheme was discontinued inward 1967 afterwards a long refuse inward usage." Essentially, the post portion collected deposits in addition to and thence loaned them along to local banks, taking a minor cutting of the interest.
There's of course of study a vision that inward the future, everyone volition create their banking over the web, frequently through their cellphones. But peculiarly for people with a weak or nonexistent link to the banking system, the web-based financial futurity is all the same some years away. Until then, they volition live on turning to to cash in addition to physical checks, exchanged at physical locations. However, every bit the Inspector General study notes, "Banks are closing branches across the Earth (nearly 2,300 inward 2012). ... The closings are heavily hitting low-income communities, including rural in addition to inner-city areas — the places where many of the underserved live. In fact, an astounding 93 per centum of the banking concern branch closings since piece of cake 2008 take away keep been inward ZIP Codes with below-national median family income levels." Conversely, at that topographic point are 35,000 Post Offices, stations, branches, in addition to contract units, in addition to "59 per centum of Post Offices are inward ZIP Codes with ane or no banking concern branches."
There are at to the lowest degree 2 primary challenges inward the vision of having the U.S. Postal Service supply nonbank financial services. First, the USPS should create everything on a fee basis. It should non inward whatsoever way, shape or cast live on direct making investment or loans--just treatment payments. However, it could take away keep partners to supply other kinds of financial services, which leads to the minute challenge. There is an anticompetitive temptation when an scheme similar the Post Office creates partnerships to supply exterior services. Potential partners volition live on willing to pay the Post Office to a greater extent than if they take away keep an exclusive correct to sell certainly services. Of course, the exclusive correct besides gives them an powerfulness to accuse higher fees, which is why they tin dismiss pay the Post Office to a greater extent than in addition to all the same earn higher profits. But the intended beneficiaries of the financial services cease upward paying higher fees. Thus, if the U.S. Postal Service is going to build infinite for ATM machines, or selling in addition to reloading debit cards, or cashing checks, it should ever live on seeking to offering a pick betwixt iii or to a greater extent than providers of such services, non but a unmarried financial services partner. To seat it some other way, if the Postal Service is linked to a unmarried provider of financial services, in addition to thence the reputation of the Postal Service is hostage to how the provider performs. It's much improve if the Postal Service acts every bit an honest broker, collecting its fees for facilitating payments in addition to transactions inward a setting where people tin dismiss ever switch betwixt multiple providers.
Finally, at that topographic point is at to the lowest degree ane additional create goodness worth noting. Many communities lack prophylactic spaces: prophylactic for play, prophylactic for walking downward the street, prophylactic for carrying out a financial transaction with minimal fearfulness of fraud or assault. Having post offices supply financial services could live on ane portion of an overall social endeavour for adding to the issue of prophylactic spaces inward these communities.
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