Face to Face with Inequality

Postal Banking: A Once and Future Good Idea

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Is Postal Banking an idea whose time has come (again)?

One problem we encountered time and again in our initial project was the lack of banking options open to many of those who participated in our study. Left outside the banking system (and the reasons for this varied) many participants turned to money orders and pre-paid debit cards to pay their bills. Saving, when it was possible, was ad hoc and often involved storing or carrying cash. Hence, transaction fees for basic financial services were much higher than necessary and the logistical worries and safety concerns that come with cash were omnipresent.

However, a recent resurgence of interest in postal and public banks hold the hope of positive change. As the first paragraph of this USPS sponsored history of Postal Banking in the US makes clear, it has certain advantages that no other financial institution can match:

An Act of Congress of June 25, 1910, established the Postal Savings System in designated Post Offices, effective January 1, 1911. The legislation aimed to get money out of hiding, attract the savings of immigrants accustomed to saving at Post Offices in their native countries, provide safe depositories for people who had lost confidence in banks, and furnish more convenient depositories for working people. Although bankers first viewed the Postal Savings System as competition, they later were convinced that the Postal Savings System brought a considerable amount of money out of hiding from mattresses and cookie jars.


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