Democratic House Appropriators Want Expanded Postal Banking Pilot

By David Baumann - June 28, 2022

Pilot program has struggled to gain traction and been opposed by credit union trade groups.


The House Appropriations Committee is pushing for an expansion of the pilot banking program being operated by the U.S. Postal Service (USPS).

“The Committee notes that USPS currently plays a major role in the financial services market,” the Appropriations Committee said, in the report accompanying the FY23 Financial Services spending bill.

The panel noted the Postal Service is the largest provider of money orders in the U.S. and offers electronic fund transfers and cashing of Treasury checks. However, the committee added that the current USPS offerings are outdated and do not reflect the needs of modern consumers.

“By updating its services to reflect new technological and financial trends, the USPS can offer an improved customer experience and expand its affordable non-bank financial services to tens of millions of unbanked and underbanked Americans,” the committee stated.

Background to the Program

The USPS has been operating a pilot program in four locations; that program allows a consumer to cash a paycheck up to $500 in exchange for a gift card. However, few people have taken advantage of the program.

House Republicans have told the Postal Regulatory Commission that they believe the program violates federal law, which does not allow the USPS to offer banking services. The commission has said it is monitoring the program.

The House Appropriations Committee report calls for the Postal Service to test a program in at least five rural areas as well as five urban ones. The pilot would include surcharge free automated teller machines, wire transfers, check cashing, and bill payment services. The committee calls for $6 million to operate the program.

The Appropriations Committee approved the appropriations bill on Friday. Republicans offered an amendment that deleted the postal banking plan, but that amendment did not pass. The postal banking program is outlined in the Democrats’ report accompanying the bill.

The House has included an expanded postal banking pilot in spending measures in the past, but the Senate has not, and the plan has not been included in House-Senate conference agreements that were eventually settled upon.

Serving Underserved Areas

Some congressional Democrats and consumer groups have called on Congress to allow the USPS to provide banking services at post offices in an effort to eliminate the number of areas in which traditional financial services are not available.

Financial services trades, including credit union groups, have opposed postal banking. Credit union trade groups have also said that if allowed, credit unions would expand services in underserved areas.

The House has passed legislation that would allow all credit unions to expand services to underserved areas. The future of that legislation is uncertain since it is not clear if or when the Senate will consider the bill.

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