PRC Approves Market Test of Fee for RPNs
Repositionable notes, or RPNs, have been shown to improve response rates and do not cost more to process or cause processing problems, according to U.S. Postal Service studies. In its decision, the PRC stated that the USPS could, on a limited basis, charge a higher rate based on the "value" of a category of mail and not solely on the processing costs directly attributable to that category.
The market test still needs approval from the USPS Board of Governors, which next meets Jan. 11.
A coalition of mailers groups opposes added fees for RPNs, arguing that rate increases must be justified by costs and that the USPS is trying to set a precedent by charging more for RPNs because they generate better response rates. The coalition includes the Direct Marketing Association, Association for Postal Commerce, Magazine Publishers of America and the Mailing & Fulfillment Service Association.
However, in its decision, the PRC said the Postal Reorganization Act does not forbid pricing above costs directly attributable to mail. Arguably, any price put on RPNs above direct costs could be put toward the institutional costs of the USPS as a whole, the PRC said.
"The Commission is not persuaded that 'value' pricing is unfair per se," the PRC wrote in its decision. "Value of service is one of the factors that the Act directs the Commission to consider when it evaluates proposed rates."
However, the PRC also wrote in the decision that the mailers raised important questions and that the USPS will have to provide more extensive evidence if it wishes to make the rate increase for RPNs permanent. The PRC said it would commission a white paper by an economics expert to examine issues raised by the mailers about the postal service's "novel pricing approach."
The USPS currently does not charge for RPNs on mail, though they are allowed only on automation-rate letter-size mail. Under the postal service's proposal, RPNs would be allowed on more types of mail. Prices would include 0.5 cents on First-Class mail and 1.5 cents on Standard mail and Periodicals.