If you barcode your outgoing mail, or have it done for you by a presort house, you will be affected by a sweeping U.S. Postal Service initiative. Known as the Intelligent Mail barcode program, it takes effect, in part, May 2009. To fully implement the program, large mailers will have to invest considerable time and capital to comply with the directive. If they don’t, they will lose their automation (presort) discounts, in part or in total.

Considering that banking represents one of the largest mailer classes, and that individual large banks are significant mail originators, discounts of as much as nine cents per piece, on a million pieces of mail, add up.

That’s one reason why Bank of America, among the biggest bank mail originators, entered into a negotiated service agreement with the Postal Service, effective this April. The bank confirmed that the NSA is the equivalent of implementing the Full Service option of the USPS Intelligent Mail barcode. (There is also a Basic option requiring less investment, but garnering smaller discounts. Both are described further on.)

Big fight over BofA’s deal
The agreement estimated that over a three-year period, the bank could potentially save “double-digit millions,” according to a source familiar with the document, portions of which are public. Good news for the bank, but the American Postal Workers Union felt strongly that the USPS was far too generous and could lose millions on the BofA agreement, especially if the same terms were granted other large mailers. An October 2007 news article on the union’s website (www.apwu.org) quoted Postal Regulatory Commission Vice-Chairman Dawn Tisdale, who voted against the agreement, as saying that the cost to the Postal Service could be between $25 and $45 million, and that the terms of the NSA could be viewed by other mailers as being discriminatory.

That observation proved to be prescient when Capital One filed a complaint June 19 with the Postal Regulatory Commission claiming that the USPS declined to give it the same terms BofA got. Capital One said the Postal Service based the Bank of America NSA on out-of-date industry baseline data, not on actual and measurable improvements in the bank’s own read/accept rates. Further, the complaint said that the USPS is unwilling to do the same for other mailers, requiring them to use “mailer-specific baselines,” which Capital One maintains is discriminatory and illegal under various statutes.

The USPS disputes these allegations and some others in a 15-page response to the complaint filed July 21. It also filed a motion to dismiss the complaint.

All that is a side issue to the overall Intelligent Mail barcode (IMB) program, but gives an indication of the competitive issues involved for big players.

What IMB involves
The Intelligent Mail barcode program was initially announced in 2003, then became available in 2006 on a voluntary basis. It now will be required to receive the maximum USPS automation discounts, according to Kevin Conti, director of mailing solutions for Pitney Bowes. (A white paper, “Getting Smart About Intelligent Mail,” is available from Pitney Bowes at www.pb.com–click on “Intelligent Mail Update.” The Postal Service originally planned to implement this requirement in January 2009, but moved it back to May 2009 after hearing from mailers. It also will continue to offer automation pricing for the predecessor POSTNET barcode until May 2010, whereas that originally was going to be phased out when IMB became required.

The Intelligent Mail barcode combines the functions of several existing barcodes—OneCode ACS, POSTNET, and PLANET into one multi-service code. (ACS refers to Address Correction Service; POSTNET is a delivery point code; and PLANET is a confirmation code for tracking mail delivery, according to a Pitney Bowes document.)

The new program has two options: “Full Service” and “Basic.” Under the Full Service option, says the USPS, “mailers will be required to apply Intelligent Mail barcodes on their letter and flat mailpieces, trays and sacks, and other containers. Mailers will also be required to submit their postage statements and mailing documentation electronically.”

 

Further, and this is particularly significant, sources say, “unlike the POSTNET barcode that only contains the routing code, the Intelligent Mail barcode contains additional fields that encode special services, identify the mailer and the class of mail, and uniquely number the mailpiece.” In other words, each mailer will have an ID, and each piece of mail will have a unique number that cannot be reused for 45 days from the “date of induction” (when the piece enters the Postal System).

These requirements give the Postal Service a much deeper view of the mailing process. Each mailpiece can be tracked back to a specific sender, as Pitney Bowes notes, which should help mailers avoid being assessed higher postage for an entire mailing based on a spot check that finds a handful of items in the wrong tray. But it also means the Postal Service can better monitor mailers who are less than diligent about maintaining address and sorting quality.

Under the Basic option, mailers will only be required to use the IMB on letters and flat pieces in place of the POSTNET barcode, not on trays or containers. Mailers will not be required to uniquely number each mailpiece.

Kevin Conti said that most regional and all large banks mail with barcodes, while most community banks do not. He says a good rule of thumb is if a company mails 100,000 mailpieces a year or more, it makes sense to take advantage of automation pricing.

Tough to figure benefits
There are potentially very significant benefits to use of IMB, particularly the full service option. The Postal Service said in its rulemaking document that mailers using the full service option will receive address correction services, if requested, and mail induction information at no additional charge. Conti says that ACS is effectively free for 95 days while the Confirm data is free for the “first scan”—meaning when mail is inducted into the Postal System.

Conti adds that this data could be useful. Tracking certain pieces under the Confirm service, for example, could indicate when a critical document was received at a local post office (though not by the actual recipient). It can also be used to track incoming payments in conjunction with business reply mail.

Tracking information could help call center operators fielding customer calls—e.g. “the letter arrived at your local Post Office yesterday”—and could help a bank deal with inaccurate or fraudulent claims—e.g. “I didn’t get any notification.”
Automated address correction service can provide data to a bank electronically within hours if an item was forwarded or returned, says Conti. Typically, returned mail takes much longer to come back than outgoing mail, he says. 

Nevertheless, Conti says that it’s not possible to make broad statements about the cost to adopt IMB because it depends on a mailer’s current level of barcoding; how much of it they do in-house versus with third-parties; what type of equipment and software they are using; at what point they apply a barcode; and more.

Pitney Bowes’ white paper makes the point that the impact of conversion to IMB “may be felt well outside the walls of your mail production environment, affecting legacy systems, …document creation, paper stocks, database management,…” and more. On the other hand, the adoption of IMB is an opportunity to streamline workflows.

The primary complaint mailers have with the Postal Service about IMB right now is over the inability to make a business case to management, according to a banker at a large institution who requested to speak without attribution.

“‘Additional information at no cost’ is the USPS view of IMB,” this person said, “but what mailers don’t like are the huge costs” involved in implementing the program. “There is lots of nitty-gritty data to provide, and the program may not end up being free.” Specifically, a bank’s computers may not be capable of receiving address correction changes.

Mailers can’t develop a business case for Post Office approval,” says this banker, because the Postal Service won’t release price differential rates associated with the offering. 

In comments filed in response to the USPS proposal, a group of seven mailer organizations stated that it supports the concepts underlying the implementation of Intelligent Mail barcodes, but said that “Customers lack service, pricing, and technical information that is needed in order to make the business decisions necessary to make the capital investments and develop the technical infrastructure needed for IMB implementation.”

As spokesperson for the USPS says that at the Aug. 6-7 Mailers Technical Advisory Council (MTAC) meeting in Washington, D.C., Tom Day, senior vice-president of Intelligent Mail and Address Quality, was to address the group at length about Intelligent Mail barcode details.

The ABA has been working with large mailers and other mailer groups to help address these issues, including meeting with the USPS. The contacts on this issue are Greg Taylor, This e-mail address is being protected from spam bots, you need JavaScript enabled to view it and Joe Pigg, This e-mail address is being protected from spam bots, you need JavaScript enabled to view it BJ

 

The electronic version of this article available at: http://lb.ec2.nxtbook.com/nxtbooks/sb/ababj0808/index.php?startid=6

 

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