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USPS first-of-its-kind contract moves forward

Tuesday, April 05, 2011

Press release from the issuing company

Washington — In a first-of-its-kind contract the Postal Service and Discover Financial Services have entered into an agreement that will help to retain First-Class Mail and grow Standard Mail volume. On March 15 the Postal Regulatory Commission notified the Postal Service that the agreement could be implemented. This is the first such agreement for domestic market dominant products under the Postal Accountability and Enhancement Act (PAEA).
 
“This ruling benefits both Discover Financial Services and the Postal Service,” said Paul Vogel, president and chief marketing/sales officer. “It is important in its approach as the first multi-class agreement that is designed to add new vitality to billing and statement mail.” The agreement provides incentives to slow the diversion of First-Class Mail to electronic channels while spurring a corresponding increase in Standard Mail.

The agreement with Discover Financial Services provides a rebate for a portion of the postage paid for First-Class Mail and Standard Mail as a result of future price increases. To qualify for the rebates, Discover’s postage revenues must meet or exceed an established dollar threshold. The full-service Intelligent Mail barcode (IMb) would also be required for all qualifying mail volume under this program. The basic agreement includes five components:

- revenue threshold,
- revenue threshold adjustment,
- postage commitment,
- rebates on First-Class Mail, and
- rebates on Standard Mail.

The Postal Service receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations.

 

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