USPS sells nearly $20B worth of money orders a year | Hacker News Reader

USPS sells nearly $20B worth of money orders a year

federalreserve.gov

97 pointssaadalem99 comments

In the US, it was possible to do banking at the Post Office until the 1960s. Given the crappy reputation of the 'Payday Lending' type services, there've been many suggestions in recent years to make it possible to bank at Post Offices again.

This would end one part of the deliberate gutting of public services (and the sorry outcomes which usually result). And it would give the PO another source of revenue for services ... which in my estimation would a terrific thing. Once the USPO is gone, watch out.

ADDED: According to Bloomberg (in 2013), "Banks have shut 1,826 branches since late 2008, and 93 percent of closings were in postal codes where the household income is below the national median, according to census and federal banking data compiled by Bloomberg." https://www.bloomberg.com/news/articles/2013-05-02/post-cras...

Many branchless banks have partnered with AusPost to allow banking at any AusPost branch (of which there are many). And all for free! You can deposit, withdraw (within limits) send money, exchange currency, pay bills, etc. The US banking system seems so far behind, and for one of the world's largest economies it's laughable.

Many events in the US since 1980 are certainly laughable from a foreign perspective, and to many of us, more than painful from a native one. But watch as the pendulum swings.

(I'm not in a position to understand what 'all for free' means, but I've learned to be skeptical about that assertion. 'Until when?' for example.)

I agree that "until when" is usually a good caveat to keep in mind, but in this case branchless banks basically have to offer free services somehow, since banks with branches don't charge for any of those things. So in order to incentivise people to join, offering an alternative way to bank that is not any more expensive is a must. This is especially true for elderly people that prefer to bank in person. I never go into a bank unless I want to withdraw or deposit large amounts of cash, and prefer to hand cash over to a human than trusting an ATM not to stuff something up.

It’s an interesting class struggle for sure.

Rich? Get a free bank account with a personal bank rep, free personalized advice.

Poor? Spend $10 of your $200 weekly paycheck to cash it at a check cashing place, or maybe pay a $19 monthly fee to use a “basic” checking account.

> And all for free!

There’s no such thing as a free lunch. Auspost charges the bank a fee to do this, and at least one of the big four (ANZ) found this too expensive. The others are presumably passing the cost on to consumers.

https://www.smh.com.au/business/small-business/anz-customers...

Yeah, but I think banks like ING see it as a necessary cost, given that other banks with branches (such as the Big 4) offer these services for free. So for ING to compete, they need to have a way for customers to bank in person without having to pay for it.

If they treat it anything like your mail, they will gladly sell your information and fill your banking notifications with about 100 spam flyers with no opt-out.

Post office banking would not be in competition with payday lenders. US Post office banks didn't originate loans. They just offered accounts and basic services.

But on a related note, is there any reasonably populated place in the US that is more than 15-20 miles from a bank or credit union? I really doubt it. People are acting like the only reason someone is underbanked is because there aren't enough banks. As a matter of fact, if you're a US citizen, all you need to set up a bank account is a smartphone or computer.

Reading up on this years ago, some people will cash their paychecks at payday loans. I suspected some of my friends did and I think I tried once and was aghast at the fees and went elsewhere.

My understanding is many people don't have a bank account, many banks require you to have an account to cash a check, or they just don't have branches in those neighborhoods. A recent AP article[1] cites 6.5% lacking bank accounts, 16.9% of Black households, and 14% of Hispanic households. Some reasons for not having a bank account are lack of money, unfamiliarity with how banking works, and distrust of institutions. The number of households without bank accounts is dropping, though.

[1] https://apnews.com/8b2b93d4e9474c418853e0f20e79aaa8

And a social security number, and pass a credit check, and have money to pay for the account (either directly by paying a monthly fee or through having enough cash - $x0,000 deposited there). A permanent address also really helps too.

Those aren't obstacles if you already have them/can pass them, but it's quite difficult if you don't! (which; those that don't aren't the most privileged to begin with.) The unbanked/underbanked aren't usually that way because the bank building is inaccessible (though that can't help), they're that way because of other systemic issues, and having the USPS run an account ledger service to all would help.

(The number of places open to those with bad credit isn't zero, but they can't just wander into any Bank of America/Chase/large national bank branch to setup an account.)

>And a social security number, and pass a credit check, and have money to pay for the account (either directly by paying a monthly fee or through having enough cash - $x0,000 deposited there). A permanent address also really helps too.

How would having the USPS open new branches help then? Unless you mean to say that they won't have to abide by the KYC regulations that any other banking institution must work with. That just opens a new can of worms.

Requiring $30/month from people that don't have $30 keeps them from being banked, and has nothing to do with not selling guns to North Koreans.

One of the most annoying things is that some US government agencies still require payment via money order. For example, we were not able to get our daughter’s birth certificate without paying via MO. That turned out to be the most inconvenient $20 I’ve ever scrounged up.

Inconvenience is an understatement. I tried to get my kid's birth certificate from our state's health department; waited three weeks for them to send it back because of a minor typo. Ended up spending one morning driving 1.5 hours (one way) to the capitol to get it in person.

Let me tell you about my actual birth date and the birth date the social security administration has on file being different.

I have spent at least a decade trying to get them to correct it but as far as they are concerned I was born one month earlier than the date on my birth certificate.

I gave up and when I retire will enjoy one extra month of social security benefits courtesy of the federal tax payers.

Have you contacted your member of Congress? They have constituent services that help with these kinds of things.

You could also submit a Privacy Act correction request.

> I gave up and when I retire will enjoy one extra month of social security benefits courtesy of the federal tax payers.

$10 says that they finally fix the error after you collect your first check, and then prosecute you for fraud.

Not quite the same but my father misspelled my name on my birth certificate, but spelled it correctly on my as ss application. Didn't find out until it was flagged when I was 16 and getting my driver's license. It has caused me problems several times in background checks and the like.

You can get one at a Walgreens.

Before TransferWise became widely available, and would have mitigated this, I needed to get a birth record from the civil registry (Standesamt) in Kaiserslautern, Germany. I had the option of using wire transfer, for a $35 international wire fee from my credit union.

Alternatively, I suppose owing to K-town's long association with the US military, I could mail them a USPS money order. Not an "international money order," a regular USPS "Postal Money Order" denominated in US dollars. For $1.25, it was no contest.

TransferWise has been a game changer for me in paying overseas contractors. It's such an excellent product and my limited experience of it has left me a very happy customer.

TransferWise is incredible. It was cheaper for me to take USD in my account, forex it to Yen, send the Yen to transferwise when paying a co-creator in USD. Sending a USD swift transfer would skip 2 forex transactions yet TransferWise is still cheaper.

I'm curious to learn why this is the case. Does your transfer involve non-US account? If both accounts are in the U.S. there are bank accounts that don't charge wire fee, or you can use Zelle / Venmo / FB Messenger / Square Cash and avoid paying altogether if the amount is small.

Did you also have to apply for it via fax?

The Federal Reserve should buy a bunch of stamps from the USPS if Congress won't bail it out.

The fed doesn't just give away money... they can only loan money out, which had to be repaid later.

They can use the stamps.

What OP is saying would not be "giving away" anything. The stamps would be an appreciating investment (the value of a Forever stamp increases every time the postal rates increase) and could be sold or used at any time.

Postage rate increases are capped to inflation, though. So they don't really appreciate.

But it wouldn't ever lose value and could inject some cash into the USPS.

They likely have a better implied return than Treasuries and many corporate bonds though, and people invest trillions of dollars in those. Risk-free investments that beat inflation aren't easy to find.

There are some issues with postage stamps as an investment, though. They're not as liquid as T-bills, though if they become a popular investment that problem solves itself. More worrying is that the USPS is not quite as reliable a borrower as the US federal government - can you really be certain this would never lose value? I'd like to see where the bond ratings agencies would rate USPS stamps.

But they can certainly buy assets.

> The Federal Reserve should buy a bunch of stamps from the USPS if Congress won't bail it out.

I get this site doesn't like talking politics but it has been a largely Republican lead effort to 'starve the beast' and this is a simple fact easily confirmed by looking at voting records.

Most recently: https://www.congress.gov/bill/116th-congress/house-bill/2382...

What's really weird is that I don't know anyone who's ever bought one. It must be really confined to specific cultures or economic classes.

That's weird, every property I've ever rented from required that the security deposit be paid in a money order.

It varies a lot by class and region. I’ve never needed anything other than a first and last month cheque.

For what it's worth, I've been asked for MO for a rental deposit in the Midwest, but never on the two coasts.

I believe they're mostly used by people who can't afford to have a checking account but need to do something that would otherwise require a check. The poverty tax is real.

i use them to pay security deposits on apartments, since i still use a credit union that only exists in a city i haven't lived in for a decade

all banking i do online and their web/mobile presence is really good, so i don't really wanna switch, but there's no way for me to get cashier's checks, so postal money orders it is

postal money orders are really convenient for the limited purpose i need them for, and post offices are everywhere. i can imagine that they're much more useful for unbanked people, and think it would be really good to expand postal banking, but alas

I must be a really advanced landlord, because I take deposit payments via Zelle and Venmo (and rent too). Seems like a pretty safe bet. If you reverse the transaction, our contract isn't valid and I don't give you the keys.

Yes, you are. :)

I have never had a landlord that accepts online payments. On top of that, most online services charge a merchant fee for business transactions - paying via check is cheaper for everyone.

Most credit unions are part of the shared branch program. Assuming yours is, it's pretty easy to find one near you that is and you should be able to get a cashier's check there. I've only done a cash withdrawl though (craigslist buy was over the daily atm limit)

I need checks so rarely that I've never bothered to pay for any, and just use money orders when it comes up. I honestly think it's strange so many people in this thread have found them to be such a hassle, I just swing by the post office or grocery store and it takes two minutes.

I had to get one to pay a $10 or $20 parking ticket in Ely, MN in 2002. They sometimes come up in situations where paying cash for something presents a massive opportunity for abuse.

Imagine the cop who wrote that ticket being able to collect the fine in cash, and that's $10 into his or her pocket rather than $10 less overhead into the city coffers.

In towns in NY, it seems to be the law to write the property tax checks in the name of the receiver of taxes, who is then supposed to place them in the treasury of the town. That always looked weird to me.

This is how I used to buy stuff on Craigslist.

Also, if you ask the people you know and you might be surprised. Perhaps what’s more accurate is that you haven’t heard about it.

I've used them for four main reasons:

1) You're paying for something already going through the mail (e.g. sending a form to the government).

You can usually send a check, but some banks don't issue checkbooks anymore.

2) You're sending a payment to an individual online (e.g. eBay, Craigslist), and who won't accept online payments. Some merchants do accept PayPal, but raise the price to account for the merchant fee; a money order may be significantly cheaper for large purchases.

If it's a scam, it also becomes mail fraud and you have the Postal Inspection Service on your side.

3) You need to make a deposit payment to someone like a landlord. They often won't accept checks, because they can bounce. Money orders and cashiers checks are sometimes the only accepted payment. Of the two, a money order is usually cheaper than a cashier's check.

4) payment for illegal goods/services

> a money order is usually cheaper than a cashier's check

My bank (one of the big U.S. banks) issues cashier's checks for free if you have an account there - you just hand them a withdrawal slip and they'll give you the check instead of cash. (I just have a basic checking account, not some kind of fancy "premier relationship" with my bank.)

I vaguely recall having used one once, but I don't remember what it was for. Practically everything I've ever purchased has been via check, ACH, or debit/credit (with the largest purchases, like my home down payment, happening via cashier's check).

I've had a checking account my whole adult life (and then some), though. Some 22% of US households are either unbanked or underbanked (have a bank account but still have to use alternatives like check cashing services or payday loans in order to make ends meet)-- those are the people who are most likely to need to use money orders, even for routine payments like utility bills or rent.

I used one to exercise stock options without spoiling the surprise by asking for wire transfer info

I use them whenever possible in place of checks. I have a hard enough time managing my finances without waiting for the money to come out of my account. Just my two cents!

Landlords were the last kind of business to accept online payments, and before that many of them preferred money orders.

I used them when I was in my late teens and did not have a checking account. I've used them since as well.

Peaked at $60B in Q1 2001.

Edit: Looking again, appears items peaked at 60B, dollar value peaked at $9B in Q1 2007 (but inflation).

That column is 60M orders. The dollar amount was $30B.

In other words, $20B is untraceable to origin. Not bad, considering how much physical currency in circulation $20B/330M population = $60 per capita. Uncle Sam must be happy.

Why is this surprising?

It is surprising that in the day and age of online/phone banking so much money is transferred via. the post office. Postal orders have stopped being used in many other countries. My country (NZ) stopped them in 1986.

In New Zealand every few months another bank stops issuing and accepting checks.

Some people in the U.S. don't have bank accounts and may need to pay a bill.

More like many. About 6.5% of US households do not have a bank account. There's also the concept of the "under-banked", which covers people who have them but still use non-bank fiscal implements such as payday loans and money orders. That number is about 19% of US households.

https://www.fdic.gov/householdsurvey/

Poor people have no problem paying in cash for most services.

When an organization does a lot of business using money orders that's a red flag that it's an organization so in the wrong, so terrible, that it can't trust its employees not to skim cash and look the other way when they see each other skim cash.

American banking is surprisingly backwards to outsiders... I went last year and PayPass was like magic to the 7-11 attendant in SF. Transferring money between banks has been a non-trivial issue in America.

If a 7-Eleven clerk is your sample size, you might be surprised what they consider to be magic.

The land of the rent-seeking.

Not everyone in the US has a checking account or a credit/debit card - banks are picky if you are poor, for many people this is the only way they can pay bills by mail

Western Union had 300 full service money transfer locations, as of 2018.

https://www.westernunion.com/nz/en/home.html

Given the increasing number of unbanked individuals, I don't find it surprising at all. Also, you cannot accidentally overdraft a money order.

Money orders have many advantages over checks. You don't have to wait for someone to fill them out. Since they are printed when you buy them, you don't have to worry about people filling the check out wrong. Money orders clear in a pre-determined amount of time, checks take forever. You don't have to fill out deposit slips for checks.

They're just a pain in the ass.

Are checks still a thing in the US?

Yes, I only use a few of them a year. I bought a box of 500 of them back in 2006 or so and still have 2 unopened packages of them.

I pay my bills online but I've needed a check for things like government fees where they don't take credit cards (or charge a fee), paying the company who fixed my roof, etc. I've also gotten certified checks for things like a house downpayment.

Yes. Rent is usually paid via check, and they're still useful when interacting with some government agencies via the mail.

Even for online bill pay, checks are still very much a thing. Payments to big financial institutions, like credit card and mortgage payments, usually go electronically and are more or less instant. But not everyone is set up to receive electronic payments -- when I pay my property taxes or dentist using online bill pay, my bank just prints out and mails them a paper check, and it takes a week for them to receive it!

Well, the money orders sold at Walmart and the USPS do require you to fill out your and the recipient's information. The amount of money is pre-printed.

It is surprising that in the day and age of online/phone banking so much money is transferred via. the post office

When the lights go out, when the internet stops, cash, checks, and money orders still work.

My country (NZ) stopped them in 1986.

Considering the number of earthquakes in New Zealand, I'd think that having multiple forms of redundant payment would be a benefit. I've been through enough natural disasters to know that putting all of one's money into one form of payment is a really bad idea.

We still use cash, just not checks or money orders.

Modern mobile infrastructure is quite resilient against earthquakes. Towers are backed by generators and mobile phones have batteries. Payment terminals here are often mobile (3g) connected and contain batteries.

I've seen plenty of cell phone towers knocked over or disabled by earthquakes. And in emergencies, cell infrastructure is often gridlocked.

Maybe it's fine for NZ, but I have yet to go through a hurricane or tornado where the mobile networks didn't crumble. I've seen and read about blizzards, floods and sandstorms halting communications networks.

In respond to your comment on checks: Do a quick search on HN for "cashless" and you'll turn up a whole lot of reasons to have something other than credit cards. Even you Kiwis don't want that.

It shouldn’t, the US is a backwards country for retail banking. Patriot act made it much more difficult for people outside of the mainstream.

It’s really difficult to bank as a poor person. Post offices are everywhere with reasonable fees.

Curious if there are any obvious reasons for the total value to rise from 3bn/q to 7bn/q only to stabilize around 5bn in 2010?

Competition? MoneyGram and Western Union kind of picked up then.

It's easier to go to Walmart and get a MoneyGram money order. I would imagine that is the biggest competition. I'm also pretty sure Walmart is cheaper.

Walmart money orders are about $1 cheaper than USPS money orders, but there are geographies where USPS is more convenient than Walmart for purchasing or cashing said money orders (my local post office is closer than a Walmart, for example).

Also, USPS money orders never expire. Those from other providers start to incur fees after a duration of time.

Wal-mart often also has bilingual employees and the post office may not, in my experience.

unless you live in AZ. You got to bring in a DNA test of your first born, social, DL, state occupancy, address, etc etc

I for one am glad that the postal service sells money orders especially if I'm out at strip mall sushi place with a broken credit card machine and I don't have cash, but there's a post office nearby to get a money order to pay the bill. (This actually happened).

There wasn't an ATM?

According to the USPO website, they don't accept credit cards anymore to purchase a MO but they do accept debit.

Lots of money laundering it sounds like.

I would hope that the Fed is investigating (along with FBI/SS/etc), but there is a whole lot of shady shit happening through money orders and gift cards these days...

If you are referring to people gaming the credit card points/rewards system using gift cards and money orders, I don't think there's anything shady about that.

If you actually think people are doing that for money laundering, now that probably deserves an investigation but I doubt money launderers are dumb enough to use money orders.

Postal money orders are probably pretty low fraud targets given their relationship to the federal government and pretty harsh penalties,

Gift cards are a whole other universe. There are many many grifts, from scammers looking to rip off people, to moving cash, avoiding payroll taxes, or other frauds. There’s a pretty active market online for gift cards from places like Home Depot or Walmart.

Is that why I've been able to sell Best Buy and Amazon gift cards on eBay for about face value?

People are paying employees in gift cards to avoid payroll taxes.....reminds me of the Nevada guy who was paying employees in face value of gold coins.

Money orders through the post office are the subject to the same $10,000/day Currency Transaction Report filing requirement under BSA as commercial banks. Additionally, the size of each order is limited to $1,000.

So you go to another post office. Nothing ties you to an account.

Sure, but there's a practical limit. If you've got a sack of hundreds to launder, you will be visiting a lot of post offices, and if you do it more than one you are gonna raise some suspicions. USPS offices have tons of cameras and their own law enforcement agency.

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