Will USPS Changes Be Another Nail In The Paper Check’s Coffin?

“The check is in the mail.”

It’s a classic American cliché — and an instantly suspect statement that makes people wonder if they will ever actually receive their money.

In the past those suspicions were mostly directed at the payor claiming the check was in the mail and simply hadn’t arrived on time — and a belief that the check had in fact never been written and was not as of yet actually in the mail. But going forward, claims that a check is stranded in the mail might in fact be true and uttered in honesty. Because the mail, it seems, will be getting slower.

In a hearing with Congress a month ago, U.S. Postmaster General Louis DeJoy said the United States Postal Service (USPS) lost more than $9 billion in 2020 and owes some $80 billion in unfunded liabilities. DeJoy said the system was “in a death spiral” and in need of  big changes fast if it is going to remain viable.

“My message is that the status quo should be acceptable to no one,” he said then.

As of this week, DeJoy was back with his plans for fixing the broken status quo with a 10-year plan for recreating the USPS. That vision involves longer delivery times for some first-class mail, shorter hours for some post offices and more expensive postal rates across the board, according to reports.

The specifics of the plan remain hazy — how many post offices will be closed or have their hours reduced has not been quantified, and how much that price of first-class mail will increase is unknown. Past assurances indicate that it will be a “small number” of reductions and closures.

And though delays in delivery times may be particularly unpalatable for consumers who have come to expect two-day free delivery of just about everything, according to USPS EVP Kristin Seaver the changes in delivery windows will only be seen on “the fringes of our network.”

Meanwhile, she said, 70 percent of  first-class mail will still be delivered in two or three days under the proposal, while 20 percent of “coast-to-coast” mail “might not arrive for five days.”

Moreover, the USPS noted, delayed mail that one can plan for is superior to sporadic intermittent delays — the goal is to deliver the mail on time 96 percent of the time, something the postal service has not achieved since 2016. The year 2020 was particularly disheartening in this regard, with on-time rates dropping as low as 38 percent during the holiday season.

And slow mail didn’t just mean people’s Christmas presents weren’t under the tree on the big day. According to Washington Post reports, there were real and calculable costs for all of those consumers whose checks really were in the mail and delayed on their way to paying bills.

Mike Currie of Virginia saw three checks tangled up in postal delays in three months, while Oklahoma’s Jim Rice says two insurance companies canceled policies for his property management business after his payments got lost in the mail.

And it’s not a handful of isolated incidents, according to the Post, but a downward spiral that seems to be feeding off itself. As large-scale mailers like banks and utility providers are actively moving to paperless communication and payments systems, the postal service is seeing its revenue fall, which has in turn has slowed service. That leaves small and medium-sized businesses (SMBs) and consumers waiting weeks and months for checks to arrive, creating cash-flow crunches and a pull toward more expensive but more consistently reliable shippers — or killing off the check entirely and switching entirely to digital. Which further depresses revenue, thus further slowing services and speeding the decline.

Killing The Check

The pressure to kill off paper checks, and the USPS-dependent, paper-laden transaction processes they entail has already been greatly accelerated by the pandemic period. As CSI (Corporate Spending Innovations) President David Disque told Karen Webster, in response to COVID-19, companies were already increasingly automating keying in invoices, printing paper checks and other formerly manual tasks as a means of survival as they transitioned their workforces to remote status.

Those office shutdowns “created a lot of havoc,” he said. “It was delaying payments — putting pressure on buyer-supplier relationships.” Companies that formerly relied heavily on checks have had no choice but to move to digital forms of payment like virtual cards or ACH, he told Webster. Or at least they had to offer vendors such options, even though up to 40 percent of companies still use paper checks and the mail to deliver payments.

In the pre-pandemic era, “a lot of businesses didn’t [see digital payments] as a top priority, because things were good and we were focused on other aspects of the business,” he said. “But now this has shifted to a higher priority.” After all, bills need to be paid regardless of what’s going on in the broader world.

While it might be an overstatement to say that the rickety status of the postal service alone would have been enough to hammer the final nail in the paper check’s coffin, in a post-pandemic world it might just be the straw that breaks the camel’s back.

Unless of course, the USPS can miraculously get its act together, although a plan to officially delay some of the mail some of the time instead of all of it most of the time doesn’t seem to be the kind of categorical improvement the system would need.

Whether that 10-year plan actually comes to fruition remains a rather open question given its mixed reviews and the simple fact that a decade is a near eternity in government time. And whether DeJoy, whose selection as postmaster general was controversial when initially announced, will still be postmaster general for all or even most of that time remains an open question.

But given how little confidence the USPS generates at the moment, the days of saying “the check is in the mail” are possibly winding to a more rapid close that anyone would have guessed a year ago. Because digital works too well — and the mail is straining too much credibility.

 

 

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