NEW YORK (MainStreet) -- The U.S. Postal Service is in a world of hurt, but judging by the rising use of mobile payments for regular bills, consumers aren't exactly begging the federal government to save snail mail.

While the Postal Service was able to survive the development of the telephone, fax machine and delivery services such as FedEx ( FDX), it's really starting to look like the venerable institution may have met its match with email and mobile payments.
In a world of mobile payments, the U.S. Postal Service faces default and possibly disintegration.

In a Sept. 6 notice on its website, the agency said it's running out of money and may not have enough cash to meet its mandated $5.5 billion employment retirement fund payment this month. Postmaster General Patrick Donahoe, testifying before a Senate committee last week, basically called the Postal Service a dinosaur whose extinction is certain unless big changes are made.

"The Postal Service is in a crisis today because it operates within a restrictive business model and has limited flexibility to respond to a changing marketplace," Donahoe told the Committee on Homeland Security and Governmental Affairs. "We need the ability to operate more as a business does. This applies to the way we provide products and services, allocate resources, configure our retail, delivery and mail processing networks and manage our workforce."

He added that the Postal Service must cut its budget by $20 billion by 2015 to have any chance of returning the agency back to profitability.

That sounds like tough going, especially in an economy that just can't shift out of first gear. And that begs the question -- is saving the USPS worth it?

The U.S. Postal Service has always had one trump card in its wallet -- people needed the post office to handle checks and payments. But the Internet fueled a rise in online payments, and now smartphone and computer tablet technology are attracting millions of consumers to mobile payment apps. While questions have been raised about the safety of mobile payments, that hasn't stopped people from adopting the technology in increasing numbers.

According to IE Market Research, a market intelligence firm, mobile payments will increase 30-fold from 2010 to 2015. In cash terms, the rise in mobile payment use is staggering. The firm's 2011 Global Mobile Payment Market Forecast report, released last week, says mobile payments will jump from $31.5 billion last year to a whopping $945 billion by 2015.

Furthermore, the group says there were 1.5 billion NFC transactions (when the phone is swiped on a reader at the cash register to pay for items) on a global basis last year. The firm expects that number to skyrocket to 55.3 billion in 2015 -- a compound annual growth rate of 105.2%.

"M-commerce and mobile contactless transactions, driven by their allure of convenience, are poised to promote 'less-cash' societies all over the world," notes Nizar Assanie, vice president of research at IEMR. "Our usage surveys reflect a trend of mobile payments growing commonplace in the Western world, corroborated by the fact North American and Western European markets are geared up for the beginning stages of a full-fledged adoption of the digital wallet."

With the promise of faster transactions and the days of the check getting "lost in the mail" a fading memory with electronic payments, the Postal Service may not have a leg left to stand on. And that seems fine for consumers who have found a new way to send and receive money.

Much to the Postal Service's chagrin, the new way has nothing to do with that mailbox in front of your house.

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