The advent of high tech communications media like internet and e-mail have understandably taken a huge bite out of the use of traditional postal service around the globe.
Postal Service No Longer Profitable
The financial impact has been building for years. In Canada, for example, Canada Post has been running at a loss that had been growing annually, as revenues drastically declined but costs have remained mostly unchanged. They recently announced the unprecedented measure to restructuring their delivery workforce to a fraction of its existing size.
Mail will be delivered to newly instated community mailboxes serving each neighborhood from where residents can individually access their mail. Such a system is already in place in some neighborhoods and is mainstream in other parts of the world.
The scale of the plan is huge; it is expected to take several years to fully transition and should save hundreds of millions annually, helping the organization return toward break-even.
Postal Service’s Foray into Banking
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In the U.S., researchers are looking into the impacts of transforming the U.S. Postal Service (USPS) into a major financial services provider. This arrangement too has been around for some time in other countries. Until now, USPS has been lightly involved with such services, providing money orders, money transfers and prepaid debit cards. The new concept would see them provide a fuller suite of services traditionally offered only by banks and their ilk.
The plan actually aims to benefit two parties: USPS, who will profit from a new revenue stream, and Americans, over 50 million of which do not have access to banking services and/or cannot afford their high costs.
Many banks claim that servicing such clientele is unprofitable; some apparently abstain from setting up shop in areas with such potential clientele. One would expect them to embrace USPS with open arms for ridding them of this issue, yet the banks have protested the proposed measure, claiming the two worlds don’t belong together. Apparently, this segment of the American population is profitable for many, generating billions from various fees and interest from payday-like loan products.
Here’s where Bitcoin comes in (which as an aside, is the other major trend perceived by many as a threat to the banks): as pointed out by Megan Hughes in an interview on Bloomberg, USPS already has so much of the financial infrastructure set up. They already have a money transfer license, a recognized brand, and have over 36,000 brick-and-mortar locations that can be transformed into productive banking hubs. Such assets are highly coveted, yet rarely acquired to date, even by the biggest players in Bitcoin world. And the usage of Bitcoin would be attractive to those very users looking to avoid fees.
Hurdles and Regulation
The plan runs into several challenges. First, economists aren’t even sure how much money USPS stands to gain from getting involved with Bitcoin, especially when viewed in today’s climate where Bitcoin is far from universal usage and acceptance.
Talks of regulation are only beginning, and even those are only being held at the state level. A patchwork of individual state regulations will not be sufficient, and it will likely take several years for the federal version to come into being.