Democratic Lawmakers Want Expanded Postal Banking Test

In a move that could impact credit unions, Democrats are pushing for increased postal banking services at USPS pilot program locations. Learn why.

David Baumann


Apr 6



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David Baumann

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David Baumann

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Increasing postal banking services at USPS locations is a move that could impact credit unions.

Democratic members of Congress are pressing Postmaster General Louis DeJoy to expand a pilot program that is offering limited banking services at Post Offices in four locations.

“We are writing to ask USPS (U.S. Postal Service) to expand and improve the services they are offering in the pilot, under their current legal authority, so that more of the needs of the unbanked and underbanked can be addressed, and so that lessons can be learned that can be applied to making postal banking more universal through legislative efforts,” the lawmakers wrote in a letter to DeJoy.

The House members and senators signing the letter are longtime supporters of postal banking: Sens. Kirsten Gillibrand of New York, Bernie Sanders of Vermont, and Jeff Merkley of Oregon and Reps. Marcy Kaptur of Ohio, Alexandria Ocasio-Cortez of New York and Bill Pascrell of New Jersey.

How the Postal Banking Program Works

The Postal Service began the pilot program at USPS retail locations on September 13 in the Washington, DC; Falls Church, VA; Baltimore, MD; and Bronx, NY areas. Customers in these locations can cash a paycheck to purchase a single-use gift card for up to $500. Checks larger than that are not accepted, and no cash is disbursed.

The Postal Service did not make a formal announcement of the pilot program, but officials said it was part of the service’s ten-year improvement plan.

Opposition from Credit Unions and Other Groups

The Postal Regulatory Commission has questioned whether the Postal Service has the authority to perform any banking services and Republican lawmakers have asked the commission to step in and stop it.

Additionally, trade groups representing both credit unions and banks have been longtime opponents of postal banking.

Potential Changes to the Program

In their letter, the Democrats said that each transaction in the four locations requires a processing fee of $5.95. They said that is almost $2 more than Walmart charges for a much larger gift card.

The lawmakers asked DeJoy to significantly expand the test site locations to reach more people, to test the concept in more diverse geographical areas and to make the products more affordable.

They also wrote that the types of services should be broadened to allow the purchase of larger gift cards, as well as expanded check-cashing, and domestic and expanded wire services.

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