USPS cleared to offer more payment options for direct mailers

The US Postal Service has been given the green light to allow its major direct mail customers new ways to pay for their mailings. The US Postal Service has been given the green light to allow its major direct mail customers new ways to pay for their mailings.

US regulators approved changes on Wednesday, which would mean that companies that have a negotiated service agreement with USPS would no longer have to pay up front before they can mail their advertising materials.

USPS made its request last month, stating that alternative payment would only be allowed for NSA contracts for monopoly or competitive services when those contracts specify a particular payment term for the customer concerned.

These payment terms could still include prepayment, USPS noted, but could also specify other payment methods such as direct electronic bank transfers (known as the Automated Clearing House – ACH – system in the US).

Testimony from the Direct Marketing Association suggested that the longstanding requirement for postage to be paid up front went against standard business practice of suppliers providing trade credit.

The DMA suggested that the prepayment requirement was a “roadblock” to increasing direct mail volumes.

Benefit

The view from DMA senior vice president for government affairs Jerry Cerasale was that “alternative postage payment methods can and should be encouraged, not just in the narrow context of an adjunct to Negotiated Service Agreements, but whenever doing so has the potential to benefit the Postal Service in its quest to grow mail volume.”

The Postal Regulatory Commission approved the changes to take effect as of yesterday (January 5), ruling that the benefits for mailers would outweigh the credit risk to USPS from no longer holding pre-paid funds ahead of carrying out contracted work.

“The Commission is unaware of any prohibition which would bar its use by the Postal Service,” the regulators concluded, adding that future negotiated services agreements would have to specify the alternative postal payment method being used.

Advertising mail, which comprises most of the Standard Mail class, has been one of the growth areas for the US Postal Service over the past few years, and large business mailers provide most of its direct mail revenue.

In the 12 months up to September 2011, Standard Mail saw revenues growing by 2.9% year-on-year at USPS, while First Class Mail revenues declined by 5.8%.