ALEXANDRIA OCASIO CORTEZ: Aid underserved areas. 

WILLIAM PASCRELL: A partner in congressional push.

A recent initiative by the Federal Reserve to provide access to real-time payments and check-clearing to all consumers is helping to make the case for the revival of the nation’s postal banking system, a long-time top priority of the American Postal Workers Union, according to union officials and two local Members of Congress.

In August, Federal Reserve Governor Lael Brainard announced the launch of the “FedNow Service, a real-time payment and settlement service for the future.”

‘Every Bank Can Use It'

“Everyone deserves the same ability to make and receive payments immediately and securely, and every bank deserves the same opportunity to offer that service to its community,” Mr. Brainard said. “FedNow will permit banks of every size in every community across the country to provide real-time payments to their customers.”

On-line digital-payment applications like Venmo, which offer instant money transfers person to person that are already popular with millennials, are making substantial inroads in the financial-services sector. According to Quartz, the business website, in 2018 Venmo posted a 79-percent jump in volume, with $62 billion in payments processed. The firm is on target to handle $100 billion this year.

The Fed initiative prompted one of the most-senior members of Congress, Rep. William Pascrell of New Jersey, and one of the chamber’s newest members, Rep. Alexandria Ocasio-Cortez, to write Federal Reserve Chair Jerome Powell and Postmaster General Megan Brennan supporting the revival of postal banking as a way to bring basic financial services to tens of millions of American households currently without them.

“A partnership between the Federal Reserve and the USPS could facilitate the FedNow service achieving universal access throughout the country,” Mr. Pascrell and Ms. Ocasio-Cortez stated in their letter. “Our underbanked, underserved communities deserve nothing less than our best efforts to make affordable financial services accessible to all Americans.”

Tailor Made for USPS

“A node-to-node partnership between United States Postal Service and FedNow could enable real-time electronic money transfer services between any USPS branch and any FedNow partner across the country,” according to Mr. Pascrell’s press statement released with the letter. “Indeed, the USPS is afforded wide latitude by statute to partner with executive branch agencies in furtherance of its services and products.”

According to the Federal Reserve, “Europe, Mexico, and Australia have already implemented real-time interbank clearing and settlement capabilities. In contrast, here in the United States, the gap between the transaction capabilities in the digital economy and the underlying payment and settlement capabilities continues to grow.”

For years, the APWU has been lobbying for the U.S. Postal Service to return to offering community-based banking services as a way to help balance the books, provide universal access to banking, and make up for the loss of revenue from the decline in the volume of first-class mail.

From 1911 until 1967, when it closed its bank, the USPS provided basic financial services for postal patrons. At its peak of popularity in 1947, it held $3.4 billion from more than 4 million depositors.

Could Reap $1.1B Annually

In 2015, the U.S. Postal Service Inspector projected that after five years of operation, a postal banking operation could add an additional $1.1 billion in annual revenue.

In 2017, the Federal Deposit Insurance Corporation reported that 63 million Americans lacked sufficient access to a bank, resulting in them having to rely on expensive check-cashing and pay-day-lender companies that cost 12 million consumers $7 billion in fees linked to pay-day loans.

“Ninety percent of zip codes lacking a bank or credit union are in rural areas,” according to a statement from Mr. Pascrell’s office. “Bank branches are also sparse in low-income urban areas, with approximately 46 percent of Latino and 49 percent of African American households underbanked. Many of these Americans are often forced to turn to predatory lenders who routinely charge customers obscene interest rates, shackling Americans into a cycle of poverty.”

“Postal workers proudly fulfill our mission to “bind the Nation together” every day, in every community across the country,” said APWU President Mark Dimondstein, who just won re-election. “The Postal Service is among the most-trusted institutions in the country. We welcome any opportunity to better serve the public, especially through expanded postal financial services.”

Metro: A ‘Win-Win-Win’

In a statement to this newspaper, Jonathan Smith, president of the New York Metro Area Postal Union, said he was particularly pleased with the collaboration between Mr. Pascrell and Ms. Ocasio-Cortez because they represent postal workers in both of their districts.

“NY Metro, the APWU and the Campaign for Postal Banking have realized that postal banking is a win-win-win,” Mr. Smith wrote. “It is a real solution for the people in areas that are unbanked and underbanked where people have been exploited by predatory financial actors; it is a means of bringing people into the brick-and-mortar post offices that exist in every part of the nation; and it will mean protection and expansion to the jobs of our members.”

In June, the House of Representatives passed Mr. Pascrell’s bipartisan amendment appropriating $1 million for seed money to revive the postal banking system.

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