USPS Launches New Micropayment Program

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The U.S. Postal Service began a new micropayment program yesterday that allows customers to use First-Class stamps as legal tender to pay for low-cost, nonpostal goods and services.


The USPS unveiled the program at the first of four 'N Sync concerts at Madison Square Garden in New York. The group's official tour photographer -- a company called the Fan Association -- is using the micropayment program to allow concertgoers to pay for photos of the event.


Fan Association gave courtesy reply cards to attendees who wanted the company to send them photos of the band performing live and a catalog of 'N Sync memorabilia. They could return the CRC to the Fan Association with six postage stamps affixed to it.


Fan Association turns in the postage stamps to the USPS and redeems 85 percent of the stamps' face value. The USPS receives 15 percent to offset handling of the stamps, which are considered uncancelled postage. Companies can receive a refund of 85 percent to 90 percent, depending on volume.


The band suggested that its fans use the adoption stamp, because Fan Association was promoting its Challenge for Children II charity event, which will take place on July 29.


John Ward, USPS vice president of core business marketing, said Fan Association had used the program in a test mode and saw a "response rate that is 10 percent better than when fans sent in checks and cash."


In addition, he said the program offered "a new, innovative use of an existing postal product -- courtesy reply mail -- and a new use of postage stamps for currency, as well as tying in the stamp subject matter."


He also said that "what really excites us, for this particular application, is that we are talking about the 10- to 13-year-old age group, which is a whole new generation of mail users. We are excited they are getting exposed to an application using the mail at this early age and hopefully grow up to be the future postal customers who find value in our products and services."


In addition to memorabilia from fan clubs, Ward said, "there are many possibilities for companies that offer low price-point items or premiums to use micropayments and allow customers to pay using First-Class postage stamps on a reply card."


For example, Ward said the micropayment program -- which can apply to products and services between $1 and $10 -- could be used for premiums such as those sold in comic books or on the backs of cereal boxes, because "these premiums don't really lend themselves to cash, credit card or checks." Ward said a customer has committed to using the program in a cereal promotion.


The program is designed to help the agency reverse the erosion of its flagship First-Class Mail product -- which has grown only 1.4 percent this year, even though 1 million or more new customer delivery points are added to the network each year.


The USPS plans to launch an advertising campaign that will include trade magazines and newspapers as well as direct marketing. It also will prepare materials for its own direct sales force to distribute to its customers and to customers of postal association members.
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