Sticking It To The New Postal Rate Increase

BLOG VIEW: Are you looking forward to an increase in the price of postage? Even though the U.S. Postal Service (USPS) is only pushing for a two-cent increase on the price of first-class postage, those little pennies add up to considerable dollars if you have a company that sends out thousands of mail pieces per year.

In making a pitch for the rate increase, Postmaster General John E. Potter played the hard-luck card to the fullest.

‘There is no single solution to the dire financial situation that the Postal Service faces,’ Potter said in a statement. ‘These proposed rate adjustments are moderate and part of a fair and balanced approach to insuring mail service for all Americans well into the future.’

Or at least until the next rate increase after this one: The USPS is projecting a $7 billion deficit next year, but the rate hike is designed to cover only $3 billion, according to the USPS.

It is asking a lot for the public to pay for the USPS' financial problems – particularly sectors such as the financial services industry, which rely heavily on using the USPS for its billing, marketing and legal mailings. The financial services sector in general – and mortgage banking in particular – are trying to get back to a state of stability, and the last thing that is needed now is more expenses.

As a way of showing displeasure for a postal rate increase, the financial services industry needs to play its own card to save money for itself and its customers. The answer is to shift business away from the mailbox and onto the Internet.

Even at this late date, many financial services companies are not using the Internet as a vehicle for applications and payments. For years, it has been nearly impossible to attend any mortgage banking conference that doesn't have at least one panel discussion playing up the potential of e-mortgages – with an emphasis on "potential" because so many companies were still clinging to paper.

For those who have been pushing e-mortgages, this latest postal rate increase should be used as a tool to leverage the marketing of this product line. In many ways, the USPS is giving the e-mortgage sector an early Christmas present.

A potentially radical answer would be for mortgage banking companies to wean themselves and their customers completely away from paper-based transactions that require postal delivery. One reason why fewer people are using postal services is because they are handling their financial transactions online – bill paying for credit cards, auto loans and other transactions gets done quickly and efficiently with a mouse click, as opposed to going through the time- and cost-ineffective manner of mailing a check.

Admittedly, there is still a concern about the safety of doing any sort of business solely online. I can speak from experience about online jitters – I recently experienced an attempted hacking of my e-mail account, so I can understand why some people would be extremely hesitant to put their full trust in anything that requires Internet delivery.

But if mortgage bankers can address that concern – and that shouldn't be too difficult, considering the glut of information available regarding phishing, computer viruses and other online disruptions – it would benefit both lenders and borrowers to get their transactions accomplished outside of the USPS.

However, that raises another question: What about the USPS' deficit? Personally, I think that the USPS should lower the price of postage rather than raising it. After all, retailers don't attract shoppers by raising the prices of their merchandise – what makes the USPS think it would attract more customers by making the mail process more expensive? If the USPS needs to cut its red ink, it shouldn't put a burden on those who were not responsible for its financial bumbling. In the long run, it will lose even more customers.

– Phil Hall, editor, Secondary Marketing Executive

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