Background
The U.S. Postal Service’s Delivering for America 10-year plan includes initiatives to support small and medium businesses and grow parcel revenue. The Merchant Rate Card program supports this initiative, offering discounted rates to businesses (merchants) through agreements between the Postal Service and third-party platforms used by the merchant. The Postal Service had agreements that accounted for over a billion in revenue through the Merchant Rate Card program in fiscal year 2024.
What We Did
Our objective was to assess the Postal Service’s management of the Merchant Rate Card program. We evaluated controls, compliance, and used data analytics to assess postage accuracy for packages from November 2023 to January 2025.
What We Found
The Postal Service’s management of the Merchant Rate Card program was generally effective as 86 percent of platforms (54 of 63) sent USPS merchant identity and contact information as required, and the Postal Service received accurate postage for 99 percent of packages. However, we identified opportunities to strengthen program management. First, we found nine platforms that did not meet requirements to send unique merchant contact information, but the Postal Service detected only three of these platforms. The Postal Service also identified but did not properly resolve one non-compliance issue timely. With small improvements, the Postal Service can continue to monitor and enforce compliance while ensuring the integrity and safety of mail.
Second, the Postal Service did not identify packages for which platforms submitted incorrect postage. Specifically, staff did not validate the platforms charged accurate postage during quarterly reviews and did not identify technical programming issues. As a result, we estimate the Postal Service lost $1 million in revenue during the review period. At the same time, its platforms also overpaid the Postal Service $2.6 million. In some cases, platforms advertised higher rates to merchants, which also could have caused the Postal Service to lose business to its competitors.
Recommendations and Management’s Comments
We made seven recommendations, management agreed with five and disagreed with two. We consider management’s comments responsive to recommendations 1, 2, 3, and 4, and partially responsive to recommendation 5. For recommendations 5, 6 and 7, we will work with management through the formal audit resolution process.
