January 27, 2014 (RARC-WP-14-007)

More than a quarter of Americans live partially or completely without access to mainstream financial services and are often forced to rely on costly services like payday loans or check cashing to cover their everyday expenses. These households spent $89 billion in 2012 just on fees and interest – an average of almost 10 percent of their income.

A new Postal Service Office of Inspector General white paper explores how the U.S. Postal Service could offer a suite of non-bank financial services to help the financially underserved gain more financial stability and stay connected to the emerging digital economy. The paper examines how the Postal Service could partner with banks and other organizations to develop such services, which could help banks connect with new customers. The Postal Service already provides non-bank financial services like money orders and international money transfers, and many American families could benefit if the Postal Service expanded its offerings.

Around the world, financial services are the single biggest driver for new revenue for postal operators, and the conditions may be ripe for similar success for the U.S. Postal Service. If just 10 percent of the money underserved Americans currently spend on alternative financial services were instead spent on more affordable products from the Postal Service, it could generate some $8.9 billion in new revenue.