Lately it has seemed like the bad news has just been piling up. From the bank account freezes in Canada to sweeping legislation on cryptocurrency here in the United States and then the war in Ukraine, 2022 has been off to a rocky start. However, one spot of good news came when the final version of the omnibus spending bill that President Biden signed into law revealed that the funding planned for another postal banking pilot program had been removed.

Originally, $6,000,000 was allocated for a new postal banking pilot program despite last year’s test of the program only reaching 6 people. The spending was spelled out in an appropriations bill that called for a new pilot program that would feature surcharge-free ATMs, wire transfers, check cashing, and bill payment services at five rural and five non-rural United States Postal Service (USPS) locations. In other words, it would have doubled the footprint of last year’s failed attempt to introduce postal banking.

This attempted expansion was all despite the fact that it had already been revealed that people are not interested in banking with the post office. In November of last year, employees at the postal banking pilot location in the Bronx, New York said they had not seen any customers since the September 13^th start of the program.

The reality turned out to be much worse, though: the USPS reported that, across all locations, just 6 checks had been cashed for a total value of $548.46.

To put the postal banking pilot’s performance in perspective, the Financial Services Centers of America (FISCA) reported that more than 30 million customers cashed $58 billion with check cashers in 2020. And this should be no surprise considering the private sector offers a far better service. Last year’s postal banking pilot charged $5.95 to load business and payroll checks up to $500 onto single-use gift cards. In contrast, Walmart cashes checks up to $1,000 for just $4.00. Even smaller chains like Check Cash Depot, which is just around the corner from the Baltimore Post Office, only charge a fee of 1% ($5.00 to cash a $500 check).

If it’s going to be more expensive than the private sector––especially where such private-sector alternatives are right around the corner––then there should be no debate about whether postal banking is a worthwhile endeavor. It clearly is not.

Yet many postal banking advocates say that prices are not the full story. Rather, they argue that the post office is the perfect conduit for channeling banking services into areas without brick-and-mortar banks. The fact that only 6 people used the postal banking pilot is evidence that this argument is clearly flawed, but it’s important to note that this result should not be a surprise.

The Federal Deposit Insurance Corporation (FDIC) surveyed Americans to better understand why so many people do not have bank accounts. Not only do those surveys show that the number of people without bank accounts has been decreasing for years (from 8.2% of the population in 2011 to just 5.4% in 2019), but they show that 75.1% of those without bank accounts don’t have one simply because they are not interested in having one (Figures 2 and 3). Moreover, those surveyed rank inconvenient bank locations and hours as the least important reasons for not having a bank account (Figure 4).

Therefore, if the best postal banking can do is create new brick-and-mortar locations, it’s not doing much of anything to help the unbanked.

The theory had clearly predicted that postal banking was not a solution. Now the experience has supported that prediction. Postal banking was discontinued in the United States in 1966 because there was so little demand for it, and it seems little has changed. It’s time to leave this failed idea in the past. The government made the right decision when it chose to remove the funding for the postal banking expansion.

Looking to the future, if Congress wants to help the unbanked, there are areas where improvements can be made. Expanding access to industrial loan charters (ILCs) and master accounts at the Federal Reserve both would open the banking industry to a new wave of competition that could decrease prices and improve services for all Americans––banked and unbanked, alike. More so, the continued success of fintech and cryptocurrency firms has shown that these are solutions that Americans actually want. Rather than pursue new legislation on postal banking, Congress should focus its attention on policy that can make real change for the unbanked.