Instead of striving to improve basic mail services, though, postal leadership seems distracted with odd forays into financial services. Washington Post writer Jacob Bogage recently reported that the USPS “quietly began offering paycheck-cashing services at several East Coast post offices last month,” allowing consumers to trade their checks (worth up to $500) for Visa gift cards. While the agency is quick to point out that this is just a pilot program, the move to financial services makes little sense. A foray into postal banking will only cause the USPS greater hardship without delivering for low-income consumers.

It’s not all that surprising that the agency is testing out financial offerings. Lawmakers such as Sen. Kristen Gillibrand have long called for postal banking, claiming it would generate billions of dollars in revenue while providing “financial security to millions of Americans in low-income and rural communities.” Postal banking proponents such as Sen. Gillibrand believe that the USPS can walk the tight rope of making enough money off of its financial services to cover costs and then some, while providing a low-cost option for households struggling with traditional financial institutions. But it’s difficult to see how.

Consider the timely example of check-cashing. The government might claim they are entering the check-cashing business to save low-income Americans from the expense of converting funds in the private sector. This justification may have made sense a few years ago, before banks started offering accounts with low/minimal fees, zero required deposits, and easy check-cashing capabilities. According to the Cities for Financial Empowerment Fund, there are now more than 100 bank and credit union accounts that meet the low-fee national standards developed by the organization. Data from the Federal Deposit Insurance Corporation shows that the share of households without a bank account has declined by about 20% from 2015 to 2019, and the 5.4% of unbanked households have a variety of reasons for forgoing a bank account. But a majority of the underbanked minority do not cite bank fees or minimum balance requirements as the main reason for avoiding banks. It therefore seems unlikely that the USPS setting up a low-cost check cashing service would solve any pressing problem in the marketplace.