Is the Alternative to ‘Going Postal’ ‘Going Mobile?’

As banks close underperforming branches in sparsely populated rural areas and low-income inner cities, the United States Postal Service (USPS) and several presidential candidates are calling for a revival of postal banking.

“Being unbanked or underbanked can cost a lot — estimates range up to $2,400 a year for money orders, late fees, NSF charges, check cashing fees and payday loans,” said American Postal Workers Union President Mark Dimondstein. “Postal banking is a way to cut costs and put money back into the pockets of working people.”

Postal banking would allow anyone to open small checking and savings accounts, and perhaps take out small loans (the details vary by proposals). Senators Kristen Gillibrand, Bernie Sanders, and Elizabeth Warren have endorsed the idea of postal banking

USPS Has More Storefronts Than Any Other Retailer

USPS is in a unique position to provide basic, affordable, consumer-driven financial services to these underserved communities and individuals who live in what are often called “bank deserts,” according to the union.

“USPS has more storefronts than any other retailer. A third of the nation’s ZIP codes have access to a post office but lack a traditional bank,” also according to the union.

On the Other End of the Spectrum . . .

But mobile banking may provide an alternative to postal banking, with no fees and an even broader reach.

Colin Walsh, the CEO of Varo, a no-fee digital banking app, said it will help people who are getting crushed by bank fees and charges.

With Varo, they can see all their accounts, get notifications, and get access to paychecks two days early. That solves a lot of the underlying problems postal banking is also supposed to address.

“As the world is changing and you have branches leaving smaller towns, you could have a bank like Varo become the bank in town through CVS or Walgreens. You don’t need a physical branch,” he said.

Varo offers free withdrawals through 55,000 Allpoint ATMs located in drug stores and convenience stores throughout the country, he added.

Smartphones Not A Universal Solution

But smartphones might not work well for everyone, especially older adults or people with disabilities.

Timothy Flacke, executive director of Commonwealth, a mission-driven organization that builds solutions to make people financially secure, said that while 75% of the population has a smartphone, that still leaves a large number of people — probably older or poorer — who don’t own one.

“And having a smartphone doesn’t necessarily mean you are comfortable using it for financial services, according to the Fed’s most recent survey on consumers and mobile financial services,” he said.

The survey found that many consumers still want or need the services of other channels, like branches and ATMs.

“Indeed, among general mobile banking users in the 2015 mobile survey, 51 percent listed branch and 62 percent listed ATM among the three most important ways they interact with their bank,” noted the study.