Editor's Note: This article were first published by InsideMicrofinance.com in November 2012. Reprinted with permission. All rights reserved; © 2012 by Patti Murphy.
Postal banking isn't new. Post offices have been outlets for financial services in European countries for generations. Consumers there use "postal giros" in lieu of bank accounts for a range of financial transactions. In the United States, postal money orders are used by millions of consumers; the United States Postal Service also provides a remittance service that covers 10 Central and South American nations.
However, the USPS operates deeply in the red. (It was recently reported that it has a $9 billion operating deficit.) Yet nonbank financial services are big business: underbanked Americans spent nearly $9 billion last year in fees for prepaid cards, money orders, bill payments and other payment products.
By embracing this population, the USPS could provide needed financial services while increasing its revenues.
The notion of post offices facilitating financial inclusion is addressed in Global Panorama on Postal Financial Inclusion: Business Models and Key Issues, a new report by the United Nations Universal Postal Union (UPU). The report was released at the 25th Universal Postal Congress recently held in Doha, Qatar.
According to the report, over 1 billion people, worldwide, use financial services offered through postal offices, and they spend $304 billion a year for those services. In some countries, financial services generate more than 50 percent of postal service revenues. "The postal network offers tremendous potential for fostering financial inclusion," Alexandre Berhaud, a co-author of the UPU report, said in a press release. In fact, the report noted that during the financial crisis, postal services in several countries that offer financial services saw increases in customer and account numbers.
The report also identifies five business models that are being used by postal operators to foster financial inclusion. These models range from being cash merchants for governments to full-blown banks.
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