According to a New York Times article, nearly 10 percent of Americans do not have bank accounts. These and other underbanked people may be taken advantage of by lenders, check cashing facilities, and pawnbrokers through excessive interest rates and fees. Fortunately, in this country, there are many options for consumers to choose, including prepaid debit cards.
What if the Postal Service explored partnering with prepaid debit card providers to sell prepaid debit cards at post offices, just as they are now sold at other retail outlets? While the Postal Service explored similar products in the past, the current economic climate calls for a reexamination of the product. The Postal Service’s current experience conducting financial transactions in the form of money orders and Dinero Seguro would aid in the introduction of prepaid debit card services. Offering the cards could create a new revenue stream for the Postal Service and earn interest on the cards’ float, the money residing in cardholder accounts. That money may be invested prior to its use by account holders. The Postal Service might also benefit from increased sales of other products due to an increase in store traffic.
The Postal Service has two core market advantages that would aid it in successfully offering prepaid debit cards. First, with the second-largest retail network in the country, the Postal Service could sell prepaid debit cards in areas with limited private sector retailers. Second, customers may be more likely to come to a Post Office to purchase prepaid debit card transactions because of their trust in the Postal Service brand.
Legal and regulatory constraints, however, currently prohibit the Postal Service from offering prepaid debit cards. Under the Postal Accountability and Enhancement Act of 2006, the Postal Service cannot offer new nonpostal products. Private sector interests may also work to prevent the Postal Service from competing against them by offering this product.
Finally consider that given the robust variety of financial institutions already in this country, the Postal Service should evaluate whether offering prepaid banking card services would provide valuable options to customers while making a profit for itself. What do you think? Why did you answer yes or no to the poll question?
This topic is hosted by the OIG’s Risk Analysis Research Center (RARC).