Direct mailers no longer need to prepay postage

The U.S. Postal Service (USPS) has been granted permission by the Postal Regulatory Commission (PRC) to allow direct mailers to pay postage via credit rather than requiring prepayment, said PRC chairman Ruth Goldway on Jan. 6. The new rules went into effect Jan. 5.

In its decision, the PRC approved a USPS request that it provide credit lines to direct mailers that enter into a negotiated service agreement, giving them the ability to pay postage via online methods after mailing. Previously, all direct mailers had to pay upfront into an account for anticipated postage.

Comments were received by the PRC from both a public representative and from the Direct Marketing Association (DMA). While the public representative raised concerns regarding an increased “operational risk” related to delayed payments, the DMA noted that the current practice of requiring mailers to prepay into an account is “inconsistent with the practice of suppliers providing trade credit” and could further impact the embattled Postal Service’s cash flows and mail volume, according to DMA comments filed with the PRC.

“Our staff looked at the various issues and recommended that the risk was minimal,” Goldway said. “It’s the intention of the commission to encourage the Postal Service to act in a more modern business-like manner. Extending credit to large customers seemed to be a well-established practice and one they should engage in as they move to more flexible market practices.” 

The PRC noted in its decision that the USPS has the power to determine “the amount of postage and the manner in which it is to be paid.”

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