The USPS should become a payment processor
First published .You know who should be relieving Paypal, Stripe, and other online payment processors of their ridiculous profit margins? The US Postal Service. With a little bit of extra software development, maybe provided by the US Digital Service, the USPS could become the safe, trusted, anonymous and painless online payments processor the US has needed for years, while addressing its revenue woes. Picture the following:
As a customer online…
I can place an order at a merchant’s website and immediately receive a USPS tracking number, before entering any payment information. With this tracking number, I can see when the seller has been notified of my order, received my payment, and shipped my order.
I then go on to pay the USPS for my order. I can do this with a credit card online, make an ACH push from my bank to a USPS-owned account, or go to my local post office and pay by check or cash using the tracking number. Whatever I do, I only need to trust the USPS with my payment. I don’t need to trust the seller or a private third party with my payment information, and I can pay anonymously in cash if I want.
Once I have paid, the USPS notifies the seller to ship my order, complete with shipping label, and holds my payment until they do. My order is automatically insured for the correct amount when it ships, and if the seller fails to ship, my payment is automatically refunded (or, if I paid cash, I can get cash back using my tracking number).
As an online merchant…
I only need to deal with a single provider for a payment and shipping workflow. I get notified when an order is placed, and when the customer’s payment has arrived at the USPS and I should ship. Customer payments, minus shipping fees, are automatically deposited to my account when I ship orders.
Because customers don’t need to enter payment information before confirming an order, and because they have more payment options, my conversions are higher (hopefully).
The USPS can even provide me with in-person-only services. Does a customer want to remain fully anonymous? She can pay in cash, and choose to pick up her order from a storage locker. Am I selling something that requires identity or age verification? The USPS can check the customer’s ID for me when collecting the payment.
As the Postal Service…
I can offer these payment services to sellers and their customers without a substantial investment in new infrastructure: I already have local branches that accept both cash and credit card payments, as well as online services payable by credit card. I just need to start thinking more like a bank.
By building a payment workflow that sellers can integrate into their online shopping carts, I gain insight earlier into what’s being shipped, where and when it’s shipped, and what its value is; and can thus offer more competitive rates on shipping.
And by acting as a payment intermediary, I gain access to an important new revenue stream that is very profitable to operate. I am already a large, highly-trusted third party that both online merchants and their customers already interact with, so my prospects for competing with the likes of Paypal are a lot better than an unknown fintech startup’s.