As the United States Postal Service trudges slowly toward default, with billions in operating losses, perhaps they should look to our neighbors to the north for some guidance on how to stay competitive in an age when email and electronic billing have made them uncompetitive.
Canada’s government-owned mail carrier, Canada Post, functions much like our USPS in many ways: it’s a government-run monopoly on daily delivery mail, which also offers larger parcel services and has an expensive unionized labor force. Canada Post is not without its troubles stemming from competition with electronic communication and tense labor relations, like the USPS; unlike our mail carrier, they have done more to keep competitive in this business climate.
Last year, in a partnership with Visa, Canada Post began offering prepaid debit cards. The cards can be purchased at participating outlets, and users can put up to $10,000 on the card, using it wherever Visa is accepted, as well as at ATMs. For this service, Canada Post charges a one-time $15 activation fee, a $3 monthly fee, a $3 reload fee, and $2 for using an ATM, in addition to any fees the ATM provider might charge.
No, these fees are not the best for the consumer, but they should work well for Canada Post, especially with their traditional revenue streams on the decline.
Meanwhile, the USPS is considering laying off 120,000 workers and shuttering 3,653 post offices, in order to staunch the bleeding; 2011 will be the second year of over $8 billion in losses for the organization, which charges only 44 cents to deliver a piece of mail anywhere from Florida to Alaska. Canada Post charges 59 Canadian cents for similar service, which at current exchange rates is equal to the same amount in American dollars.
But a postage rate change is not where the USPS should be looking to raise revenue — and fortunately, they are not — as they seek to cut costs and future liabilities. Expanding their services outside of parcel delivery and modernizing the agency’s services (to say nothing of negotiating a more reasonable contract with labor) will be the only way USPS can survive this tough economic and political climate.
In the United States, 21 million people are underbanked, meaning they use “alternative financial services,” like check cashing services, third party money orders, and pawn shops to finance their day-to-day expenses. In addition to the underbanked, a full 8 million Americans are unbanked — lacking both checking and savings accounts. Both of these groups would be ideal customers for a USPS debit card because unlike commercial banks, the USPS is required to have outlets just about everywhere in the country. Well, as long as they don’t close a few thousand of them.
The good news: the USPS is considering it, at least according their “Pushing the Envelope” blog . The bad news: they’ll need congressional approval to do anything.