SECTION II: POSTAL KNOWLEDGE

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1 SECTION II: POSTAL KNOWLEDGE

2 POSTAL PROCESSING OVERVIEW

3 Section II Chapter 1 Postal Processing Overview Shape-Based Initiative Postal Operations Classes of Mail Shaped-Based Initiative A new Postal Service approach to pricing which reshaped the future of mail was implemented on May 14, The new pricing system is based on the shape of mail, not just the weight, reflecting the fact that the costs for handling letters, large envelopes and packages differs. Shaped-based pricing, in effect, creates a more flexible rate system by giving mailers the opportunity to obtain lower rates if they find ways to configure their mail into shapes that reduce handling costs for the Postal Service and that help keep rates affordable for everyone. The shape of the mailpiece plays a major role in postage pricing. The new price structure recognizes that each of these mail shapes has substantially different processing costs so each mail shape now has separate prices. Letter-size mailpieces that weigh 3.5 ounces or less that do not meet aspect ratio standards, or have any other nonmachinable characteristics, are subject to the nonmachinable surcharge for First-Class Mail or nonmachinable letter-size pricing for Standard Mail. Letters that weigh more than 3.5 ounces, or exceed one or more of the maximum letter dimensions, regardless of weight, are subject to the rates for flats. Similarly, mailpieces that exceed any one of the dimensions for a flat are subject to the rates for packages. The weight limit for First-Class Mail flats and parcels is 13 ounces and ounces for Standard Mail flats and parcels. Another change relative to shape-based pricing was a reduction in the additional ounce rate for First-Class Mail. As shape becomes more important in determining the price, less emphasis is placed on weight. If the contents intended for a large envelope can be folded and placed into a letter-size envelope, the mailer can reduce postage. On the other hand, a mailer may determine that using a large envelope will enhance the perceived value of the enclosed message to the addressee and choose to pay the higher price. Likewise, some items traditionally prepared and mailed as a package may be reconfigured and placed in a large (expansion) envelope, saving the mailer on the first ounce. When mailers choose to mail more efficient shapes, the Postal Service costs are lower and the savings can be passed on to the mailers through lower prices. The mailer has a choice as to the value of the shape of the mailpiece, versus the cost of preparing and mailing it. Machinable letters are automation-compatible letters not barcoded by the mailer but easily processed and barcoded on USPS processing equipment. To ensure efficient processing of commercial flat-size mail, all flats must be rectangular in shape, which includes square mailpieces, uniform in thickness, flexible and meet deflection criteria. Mailpieces that do not meet these criteria are subject to the rates for parcels. (Note: the physical standards for automation flats are based on the Automated Flat Sorting Machine-AFSM 100.) SECTION II CHAPTER 1 Page 1 Postal Processing Overview

4 Postal Operations First-Class Mail from collection boxes and carrier pickup is processed through the Advanced Facing & Canceling Machine (FCM). This is a process where mail is separated by sizes, sorted and oriented to face the same direction so it can be processed on postal automation equipment. It is then processed through different channels based on mail classification and size. A Facing Identification Mark (FIM) used on reply mail helps separate the mail by type. Certified Mail is found and culled from the primary mail stream by the special taggent on the label. Its number is then recorded. Stamped and metered mail has phosphorus in the ink of the impression and stamp that help to face the mail. Stamped mail needs to be completely cancelled, so the stamp cannot be reused and the date of entry into the mail stream shows on the mailpiece. Metered Mail is sometimes sprayed to indicate the date of entry into the mail stream although it is not required since the mailer is supposed to only print the actual date the mail is entered into the mail stream. This varies from Post Office to Post Office. Newer digital mailing systems do not allow the mailer to back date the mail. The newer Advanced FCMs perform the same function as the MLOCR (Multi Line Optical Carrier Reader) reading the address on the mailpiece and spraying the Delivery Point Bar Code (DPBC) in the bar code clear zone. If it can't read it, it sprays an orange barcode on the reverse and sends the information off to a remote encoding station where human operators read the mail and key in the correct destination information. This is then tied to that orange bar code so the next piece of equipment to read it will spray the correct DPBC in the bar code clear zone. If the bar code clear zone is not available to have the DPBC sprayed then it goes to a special machine called a LIM that applies a label and then sprays the DPBC on the label. From there the mail is put through a number of passes on a barcode sorter, arranging the mail in increasingly finer sortation levels with each pass until the mail is in carrier route delivery sequence. In between these passes, it is transported to various processing centers and commingled with other mail on similar journeys. Automation-rate First-Class Mail and Standard Mail skips most of the steps since it is entered thru the Business Mail Entry Unit (BMEU). The mail is already separated by size and processing category and does not need to be cancelled. It is 100% DPBC and is put directly on the barcode sorters. Nonautomation mail may require extra steps in order to process and that is why it costs more to send. Letters and flats are processed on different types of machines. It costs the Post Office less to process letter mail because the equipment is significantly faster and takes up much less floor space. The bar codes allow postal equipment to process mail to Carrier Route Walk Sequence thus saving time and allowing the carrier to spend his entire day delivering mail instead of manually casing it. Flat Processing machines were updated to eliminate the need for manual keying of the destination ZIP Code, and the roll-out the Flat Sequence Sorter (FSS) will further automate this process by sorting flats into carrier sequence. Small parcels have also been automated and there are savings for the mailers who presort and barcode them. SECTION II CHAPTER 1 Page 2 Postal Processing Overview

5 There are several primary factors that determine the rates that apply to a specific mailing: 1. Classification of the mail 2. Physical size, shape and weight of the mailpieces 3. Contents of the mailpieces 4. The postal equipment the mailpiece is processed on Each of these factors is interdependent on the other and plays a role in determining the rates that will be applied to the mailing. Classes of Mail The United States Postal Service (USPS) divides mail into different services or classes of mail. Each class of mail has different standards, service levels, features, pricing and requirements. For most mailings, the contents, postage, shape and size will determine the class of mail that is selected. The maximum weight of any mailed item is 70 pounds. Determination of mail classification depends on the contents, size, weight, speed of delivery and price you are willing to pay. Almost anything that is mailable may be mailed using either Express Mail or Priority Mail service. What you gain in delivery speed however, you pay in higher postage. The following USPS chart will help you select the appropriate mail classification for your mailing. SECTION II CHAPTER 1 Page 3 Postal Processing Overview

6 Content Qualifiers Speed 1 Postage Service The following materials must be mailed as First-Class Mail: bills and checks statements of account handwritten materials typewritten materials personal correspondence Generally, Standard Mail can be mailed at First-Class Mail prices. 13 ounces or less 500 or more pieces per mailing 1 3 days $$ First-Class Mail Materials such as circulars, advertisements, solicitations newsletters, merchandise and printed matter not required to be mailed as First-Class Mail or Periodicals Authorized publications such as: newspapers newsletters magazines less than 16 ounces 200 or more pieces or 50 pounds or more per mailing 1 or more pieces per mailing 2 9 days 2 $ Standard Mail 1 7 days 2 $ Periodicals Permanently bound printed materials such as: advertising promotional material directory material editorial material Materials such as: books printed music videotapes (recorded) CD-ROMs (recorded) computer-readable media (recorded) printed educational charts 1 Estimated time of delivery. 2 Except Alaska and Hawaii. 15 lbs or less 300 or more pieces/ mailing (50+ pieces for barcode discount only) 300 or more pieces per mailing 2 9 days 2 $ Bound Printed Matter 2 9 days 2 $ Media Mail SECTION II CHAPTER 1 Page 4 Postal Processing Overview

7 Express Mail Service Express Mail is a money-back guaranteed overnight to 2-day service that includes tracking, proof of delivery, and insurance up to $100. Express Mail is delivered 365 days a year. A premium fee may be charged for Sunday or holiday delivery. Mailers may call or visit for delivery information between specific ZIP Codes. For mailers' convenience, Express Mail envelopes and boxes are available from local Post Offices or at at no additional cost. Customized preprinted labels are also available by contacting your local Post Office. Matter mailed in USPS provided Express Mail packaging is subject to Express Mail rates regardless of how the packaging is reconfigured or how markings may be obliterated. Express Mail International Service is available between the United States and more than 190 foreign countries. Express Mail tracking is available on the USPS Web site at Options: Express Mail Next Day/Second Day Services provide guaranteed overnight and second day service to designated delivery areas and Post Offices. Hold for pickup is a Post Office -to-post Office option. The sender must notify addressee for pickup. Express Mail Military Service is available between the United States and designated APOs and FPOs. Shipments are delivered in 2 to 3 days to more than 300 locations in Europe, Asia, and Panama Sunday and Holiday delivery is available for a premium fee. Physical Standards Maximum weight: 70 pounds. Maximum length and girth: 108 inches. Weight and size limitations vary for international and military service (see the International Mail Manual or your local postmaster for more information). Rates and Fees Except for the Express Mail flat-rate envelope, Express Mail prices are based on weight and zone. Items are charged the half-pound price for weights up to one-half pound. Items over a half pound are rounded up to the next whole pound. Express Mail commercial base prices are less than Express Mail retail prices (see Notice 123-Price List). These prices apply to: a. Customers who use an Express Mail Corporate Account (EMCA), including Federal Agency Accounts. b. Click-N-Ship customers. c. Registered end-users of USPS-approved PC Postage providers when using a qualifying shipping label managed by the PC Postage system used. d. Customers who pay postage using information-based indicia (IBI) postage meters when using an Express Mail shipping label. e. Customers using USPS-approved IBI postage meters that print the IBI with the appropriate price marking ("Commercial Base Price," "Commercial Base Pricing," or "ComBasPrice") and who electronically transmit transactional data to the USPS and use an approved Express Mail shipping label. f. Customers who pay postage with a permit imprint using the Electronic Verification System (evs) program to document and pay postage SECTION II CHAPTER 1 Page 5 Postal Processing Overview

8 Pickup on demand service is available for flat fee regardless of the number of pieces. Service and information is available by calling or at There is only one fee for all Express Mail, Priority Mail, or Parcel Post picked up at same time. Content Standards First-Class Mail (including Priority Mail or Express Mail ) is required for personal correspondence, handwritten or typewritten material, and bills or statements of account. It may also be used for any mailable item. Postage Payment and Documentation Express Mail may be paid by stamps, postage meter, or Express Mail Corporate Account. Deposit Express Mail Next Day and Second Day items may be mailed at Post Offices, stations, and branches; dropped into Express Mail collection boxes; handed to carriers; or picked up by the USPS. Acceptance and collection information may be obtained by calling or contacting your local postmaster. Extra Services Return receipt service is available. Insurance against loss, damage, or rifling is included at no extra cost up to $100. Additional merchandise insurance may be available up to $5,000, depending on the value and nature of the item. Claims must be filed within 90 days of the date of mailing. Waiver of signature: mailers may instruct the USPS to deliver Express Mail packages without obtaining the addressee's signature by signing the waiver on the Express Mail label. Waiver of signature is not available for COD Express Mail Military Service, or if additional insurance is purchased. Priority Mail Service Except for Priority Mail flat-rate envelopes and boxes, postage is determined by weight, zone and sometimes even size. Balloon pricing may apply to packages destined to zones 1-4 measuring greater than 84 inches in combined length and girth. Dimensional weight rating may apply to packages destined to zones 5-8 measuring greater than one cubic foot. The commercial base prices are available for: a. Click-N-Ship customers. b. Registered end-users of USPS-approved PC Postage products when using a qualifying shipping label managed by the PC Postage system used. c. Customers using permit imprint when a postal routing barcode matching the destination ZIP Code is on the mailpiece Flat-shaped mailpieces with permit imprints may bear a POSTNET or Intelligent Mail barcode instead of the postal routing barcode. d. Priority Mail Open and Distribute customers using permit imprint when a Service barcode containing a unique service type code 55 is on the address label under. e. Customers who pay postage using information-based indicia (IBI) postage meters in conjunction with an approved shipping label that bears a confirmation services barcode with a postal routing code.. SECTION II CHAPTER 1 Page 6 Postal Processing Overview

9 f. Customers using USPS-approved IBI postage meters that print the IBI with the appropriate price marking ("Commercial Base Price," "Commercial Base Pricing," or "ComBasPrice") and electronically transmit transactional data to the USPS. g. Permit holders using Merchandise Return Service (MRS) for Priority Mail mailpieces when all MRS requirements are met The Postal Service offers an optional "no fee" electronic Delivery Confirmation service, available through Click-N-Ship, some vendor-provided mailing systems and for manifest mailing systems (MMS) mailers. Think shape and size for the best value; here s an easy way to look at it: For the lowest postage rate possible, use the smallest envelope or box possible. For Envelopes: As an example, a letter mailed in a 6" x 9" envelope costs less than a 9 x 12 envelope and is considered the preferred envelope when converting from a large envelope to smaller one. For Boxes: Don t ship small, lightweight items in large boxes practice right-size shipping. This helps you avoid possible surcharges for oversized packaging. Or you can simply use Postal Service packaging that comes in a range of sizes to meet your shipping needs. Dimensional-weight pricing does not apply to Priority Mail Open and Distribute (formerly Priority Mail Drop Shipment) mailings of other classes of mail when enclosed in USPS -supplied containers. Priority Mail containers, including the Priority Mail Flat Rate Boxes, available at Post Offices and USPS.com are not based on weight and zone but are charged a flat rate regardless of actual weight (up to 70 pounds) of the mailpiece and domestic destination. SECTION II CHAPTER 1 Page 7 Postal Processing Overview

10 Express Mail and Priority Mail Open & Distribute Service Standards The Express Mail or Priority Mail shipment and the enclosed mail must meet all corresponding eligibility and preparation standards. The mail enclosed in an Express Mail or Priority Mail pouch must consist either entirely of single-piece rate matter or entirely of presorted matter that is part of the same mailing, unless an exception is granted by the PCSC. Authorization Except under , Zoned Rate Matter, no authorization is required for Express Mail or Priority Mail Open & Distribute Service, but the mailer must obtain necessary permits, licenses, or authorizations for the enclosed mail or postage payment method used and must pay any annual mailing fee applicable to the enclosed mail at the Post Office where the Express Mail or Priority Mail Open & Distribute Service is mailed. Basis of Rate Express Mail or Priority Mail postage must be paid on the weight of the entire contents of the Express Mail pouch or Priority Mail sack. The tare weight of the pouch or sack is not included in this weight. Zone Rates Zone rates for Priority Mail are computed from the accepting Post Office to the destination Post Office for the Open & Distribute Service (not the destination Post Office for the enclosed mail). Calculating Payment for Enclosed Mail Postage and fees for the mail enclosed must be prepaid under the applicable standards. When the enclosed mail is zone-rated, the zone is computed from the postal facility where the Express Mail or Priority Mail Open & Distribute Service destinates. Discounts otherwise available to the enclosed mail may be claimed if the applicable standards (e.g., volume and preparation) are met. SECTION II CHAPTER 1 Page 8 Postal Processing Overview

11 Payment Method Postage on the enclosed mail may be paid with any method permitted for that mail class. Express Mail postage must be paid with adhesive stamps or meter stamps. Priority Mail postage must be paid with adhesive stamps or meter stamps affixed to Tag 159. Priority Mail may also be paid with a permit imprint through a manifest mailing system, optional procedure mailing system, or alternate mailing system. If a permit imprint is used for Priority Mail postage, the permit imprint must be affixed to or hand-stamped on the Tag 159. Open & Distribute Service Express Mail Description Express Mail Open & Distribute Service (Express Mail Custom Designed Service, Express Mail Next Day Service, or Express Mail Second Day Service) expedites movement of any other class of mail between domestic postal facilities. The open & distribute service receives the Express Mail service selected from the origin Post Office to the destination Post Office of the shipment, where the enclosed mail is processed and provided the appropriate service from that Post Office to its destination. This service reduces transportation time and expedites delivery of enclosed mail. Open & Distribute Service Objectives The service guarantee for an Express Mail shipment using Open & Distribute Service procedures ends on receipt at the postal facility where the shipment is destined. Preparation for Open & Distribute Service Shipment The mailer must present matter prepared as Express Mail Open & Distribute Service in Express Mail pouches. The proper mailing label must be placed in an EP-13 envelope and attached to each Express Mail pouch. Deposit Site An Express Mail Open & Distribute Service must be made at a postal facility designated by the postmaster to accept both the class of mail enclosed and Express Mail. The shipment must be prepared and presented to the business mail entry unit (BMEU) of the origin Post Office. Acceptance Time An Express Mail Open & Distribute Service must be presented to the BMEU with enough time for acceptance, processing, and dispatch to the Express Mail unit before the cutoff time for Express Mail. Extra Services No extra services can be added to the Express Mail portion of the Open & Distribute Service. SECTION II CHAPTER 1 Page 9 Postal Processing Overview

12 Open & Distribute Service Priority Mail Description Priority Mail Open & Distribute Service expedites movement of any other class or subclass of mail (except Express Mail ) between domestic postal facilities. The Open & Distribute Service receives Priority Mail service from the origin Post Office to the destination Post Office of the shipment, where the enclosed mail is processed and provided the appropriate service from that Post Office to its destination. This service reduces transportation time and expedites delivery of enclosed mail. Deposit Site A Priority Mail Open & Distribute Service must be prepared according to postal service guidelines and presented to the business mail entry unit (BMEU) authorized by the postmaster to accept the class of mail enclosed. Acceptance Time A Priority Mail Open & Distribute Service must be presented to the BMEU with enough time for acceptance, processing, and dispatch before the critical dispatch time for Priority Mail. Extra Services No extra services can be added to the Priority Mail portion of the Open & Distribute Service. Priority Mail Open & Distribute Service For a Priority Mail Open & Distribute Service, no extra services may be added to the Priority Mail segment, and the mail enclosed may receive only the following services: First-Class Mail pieces may be sent with Certified Mail service or special handing or, for First-Class Mail parcels only, electronic option Delivery Confirmation service or electronic option Signature Confirmation service. Standard Mail pieces subject to the residual shape surcharge (except Customized Market Mail pieces) may be sent with electronic option Delivery Confirmation service. Package Services mail may be sent with special handling or, for Package Services parcels only, electronic option Delivery Confirmation service or electronic option Signature Confirmation service. Basic Preparation Standards Enclosed Mail Mail enclosed in an Open & Distribute Service must meet the eligibility and preparation standards for its class and rate and for any extra services used. Classes of mail that may be included in a Priority Mail Open & Distribute Service are retail First-Class Mail, presorted First-Class Mail, Periodicals, and Standard Mail. Mail requiring cancellation may not be drop shipped. SECTION II CHAPTER 1 Page 10 Postal Processing Overview

13 Standards The Express Mail or Priority Mail portion of the Open & Distribute Service must meet the standards in 115 or 125, respectively, and the applicable standards. Containers for Expedited Transport Acceptable containers for expedited transport are as follows: An Express Mail Open & Distribute Service must be contained in a blue and orange Express Mail pouch, except that Customized MarketMailpieces under 1.0 may be contained in USPS -provided Express Mail envelopes and cartons or in any properly labeled container supplied by the mailer. A Priority Mail Open & Distribute Service must be contained in either an orange Priority Mail sack or a letter-size tray, except that Customized MarketMailpieces under 1.0 may be contained in USPS provided Priority Mail envelopes and cartons or in any properly labeled container supplied by the mailer. Tag 157 In addition to the Express Mail pouch label, Tag 157 must be attached to each Express Mail pouch to identify it as an Express Mail Open & Distribute Service and to identify the class of mail enclosed. This tag or an approved facsimile also must be affixed to containers used for Express Mail Open & Distribute Service of Customized MarketMail (CMM). Tag 159 In addition to the Priority Mail sack label, Tag 159 must be attached to each Priority Mail sack to identify it as a Priority Mail Open & Distribute Service. Tag 159 indicates the class of mail enclosed in the Priority Mail sack and provides a place to affix Priority Mail postage. This tag or an approved facsimile also must be affixed to containers used for Priority Mail Open & Distribute Service of CMM. Open and Distribute In addition to Tag 157 or Tag 159, USPS -supplied cartons and envelopes and mailer-supplied containers used for Express Mail or Priority Mail Open & Distribute Service must be addressed "POSTMASTER OPEN AND DISTRIBUTE"; followed by street address (mailing address) of the facility on the next line; and city, state, and ZIP Code on the last line. First-Class Mail Service First-Class Mail prices are the same no matter what the domestic destination and the price also includes forwarding and return services. Postage on First-Class Mail is calculated by the ounce. The maximum weight of a First-Class letter is 3.5 ounces and the maximum weight of a First-Class large envelope/flat or package/parcel is 13 ounces. First-Class mailpieces over 13 ounces become Priority Mail. SECTION II CHAPTER 1 Page 11 Postal Processing Overview

14 Some mailed items are required to be sent as First-Class Mail or Priority Mail. These include: Handwritten or typewritten material Bills, statements of account or invoices, and credit cards Personal and personalized business correspondence All matter sealed or otherwise closed against inspection First-Class Mail pricing includes: Postcards Letters Large Envelopes/Flats weighing 13 ounces or less Packages/Parcels weighing 13 ounces or less First-Class Mail letter-size pieces must meet certain physical requirements or be subject to surcharges or shape based pricing. A letter-size mailpiece that is square, rigid or meets at least one nonmachinable characteristic will be subject to a surcharge and flat sized mailpieces that are rigid, non rectangular or have uneven thickness will be charged parcel rates. Many smaller and beginning mailers use First-Class Mail for letters and post cards because mailings at single piece rates do not require a special payment method, mailing permit, and the extra time to presort the mail and prepare it for acceptance at a Business Mail Entry Unit (BMEU) of the USPS. It is simple and quick to place a stamp on the mailpiece and drop it in any collection box. For larger mailings (500 pieces or more), the USPS offers workshare discounts with rates for preparing the mailing for the USPS before bringing it to the BMEU. There are various levels of discounts based on the amount of presorting and automation compatibility of the mailing. Periodicals The Periodicals class of mail is designed for newspapers, magazines and other periodical publications whose primary purpose if transmitting information to an established list of subscribers or requesters. To become a periodicals mailer, one must apply and become authorized to mail using these rates. For publications to quality, they must be published at regular intervals, at least 4 times per year from a known office of publication and consist of printed sheets. There are specific standards for circulation, record keeping, and advertising limits. There are also special rates for Nonprofit, Classroom and Science-of- Agriculture types of periodicals. Periodicals have no minimum weight and can weigh no more than 70 pounds. Rates are based on pounds, pieces, advertising content, shape and containers. Periodicals mail is subject to postal inspection. Meters, stamps and permit imprints are not used to evidence postage for Periodicals. Rather, Periodicals must contain and ID statement. Standard Mail Service Standard Mail is mail matter that is not required to be mailed as First-Class Mail or Periodicals and must weigh less than 16 ounces. A Standard Mail mailing must have at least 200 pieces or 50 pounds within the same processing category, i.e., all letters, all flats or all parcels. Standard Mail is only for domestic mail and there are no single-piece prices for Standard Mail. All Standard Mail is considered Commercial discounted mail. There are specific guidelines regarding how much personalization can be on the mailpiece and still qualify as Standard Mail. Personal information may not be included in a Standard Mail mailpiece unless all of the SECTION II CHAPTER 1 Page 12 Postal Processing Overview

15 following conditions are met; a.) The mailpiece contains explicit advertising for a product or service for sale or lease or an explicit solicitation for a donation. b.) All of the personal information is directly related to the advertising or solicitation. c.) The exclusive reason for inclusion of all of the personal information is to support the advertising or solicitation in the mailpiece. Standard Mail has pricing for letters, flats and parcels. Postcards are mailed as letters or flats if sent Standard Mail. Mailers use Standard Mail to send out: Printed matter, flyers, circulars, advertising Newsletters, bulletins and catalogs Small parcels Postage for Standard Mail pieces weighing 3.3 ounces or less is determined by the piece charge. Standard Mail weighing over 3.3 ounces is subject to a per pound and per piece charge. There are extra services that can be used with Standard Mail parcels such as electronic Delivery Confirmation, bulk insurance and Return Receipt for merchandise. Standard Mail can only be forwarded or returned if the mailpiece includes and ancillary service endorsement which may result in additional fees or postage. Standard Mail is subject, or open to postal inspection. Undeliverable Standard Mail Undeliverable-as-addressed (UAA) mail is forwarded, returned to sender, or treated as dead mail as authorized for the particular mail class. A mailer endorsement is used to instruct The Postal Service regarding the mailpiece's appropriate disposition upon determining that it is UAA. Standard Mail with proper endorsements will allow the mailpiece to be delivered and reduce the UAA volumes. If the mailer does not receive returned mail with the endorsement Returned to Sender this indicates that the mailpiece was delivered, it maybe was delivered, it was destroyed, or it was lost in the postal system. Proper addressing will allow mailers to save money. Standard Mail Nonprofit Nonprofit mailers who qualify can mail at reduced rates. Only political committees, voting registration officials, and organizations that meet specific standards for qualified nonprofit organizations and that have received specific authorization from the USPS may mail eligible matter at the Nonprofit Standard Mail rates. Except for mailings deposited under the plant-verified Open & Distribute Service program, a separate authorization is required at each Post Office where Nonprofit rate mailings are deposited. Pieces mailed at the Nonprofit Standard Mail rates must meet the general standards for Standard Mail for letters, for flats, for parcels and the standards specific to any other discount or rate claimed. Nonprofit mailings are the only class of mail that continues to receive congressional appropriations to subsidize postage. Qualified organization: organization is not organized for profit, and none of its net income inures to the benefit of any private stockholder or individual. SECTION II CHAPTER 1 Page 13 Postal Processing Overview

16 Types of organizations that may qualify: Religious Educational Scientific Philanthropic Agricultural Labor Veterans Fraternal Ineligible nonprofit organization: Service Social Hobby clubs Citizens' and civic improvement associations State, county, and municipal governments Eligible and ineligible matter: Nonprofit rates not permitted for mailing promotional material for credit cards, insurance policies, and travel arrangements. Authorized organizations may not let any other person or organization use their authorizations to mail at Nonprofit Standard Mail rates. Cooperative mailings: mailable at Nonprofit Standard Mail rates only if each cooperating organization is individually authorized to mail at Nonprofit Standard Mail rates where the mailing is deposited. Package Services Package Services is a class of mail primarily intended for merchandise, catalogs and other printed material. It is not an expedited service and there are four subclasses of mail in Package Services: 1. Parcel Post 2. Media Mail 3. Library Mail 4. Bound Printed Matter Each subclass is suited for a type of mail and offers different levels of service and requirements as far as advertising and content. There is no minimum weight to be mailed using a package service and the maximum weight is 70 pounds for Parcel Post, Media Mail and Library Mail service. Bound Printed Matter has a maximum weight of 15 pounds per mailpiece. Insurance, Delivery Confirmation and other extra services can be added to Package Services mail for a fee. All subclasses of Packages Services mail are subject, or open to postal inspection. Package Services does not include free forwarding and return for undeliverable mail but these services can be added by using ancillary service endorsements. Bound Printed Matter sent with out an endorsement that is refused or undeliverable will be disposed of at the local post office. The other Package Services will be returned to sender postage-due. Before mailing merchandise, compare the costs and service between Priority Mail and Packages Services. In some cases, the postage cost is nearly the same but Priority Mail is faster and includes free forward and return services for undeliverable mail. SECTION II CHAPTER 1 Page 14 Postal Processing Overview

17 Parcel Post Parcel Post is Package Services matter not mailed as Bound Printed Matter, Media Mail, or Library Mail. Any Package Services matter may be mailed at Parcel Post prices. Parcel Select is used by commercial mailers for merchandise, books, circulars, catalogs and other printed matter. There are bulk pricing, destination entry and barcode discounts for large volume mailers. Bound Printed Matter Bound Printed Matter must: Be paid by permit imprint Consist entirely or a combination of advertising, promotional, directory or educational material. Be bound securely by permanent fastenings such as staples, spiral binding, glue or stitching. Loose leaf binders are not considered permanent. Consist of sheets of which at least 90% are imprinted by any process other than handwriting or typewriting with words, letters, characters, figures or images or a combination. Cannot be personal correspondence Cannot be stationery, such as blank pads of printed forms There are postage discounts available for barcoding, carrier route and destination entry sorting for bulk quantity mailings. Media Mail Media Mail is generally used for books or at least 8 pages, film, printed music, printed test materials, sound recordings, play scripts, printed educational charts, loose leaf pages and binders consisting of medial information and computer readable media. There are advertising restrictions when using Media Mail. Postage rates are based on pounds. There are potential discounts presorted mailings of 300 or more pieces. There is also a barcode discount for machinable parcel-size mailings consisting of at least 50 pieces. Library Mail Library Mail can be used by qualifying institutions such as libraries, universities, zoos, research institutions and non profit organizations to mail educational and research materials. Postage rates are based on pounds. There are potential discounts presorted mailings of 300 or more pieces. There is also a barcode discount for machinable parcel-size mailings consisting of at least 50 pieces. SECTION II CHAPTER 1 Page 15 Postal Processing Overview

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19 PROCESSING METHODS & CATEGORIES

20 Section II Chapter 2 Processing Methods & Categories USPS Processing Equipment Processing Categories Cards, Letters and Flats Automation Letters and Cards Manual and Automated Processing The Postal Service processes mail through three types of operations: machinable, nonmachinable, and automation Machinable (or automation compatible) operations allow nonbarcoded mailpieces to be processed on machines. Nonmachinable operations require an employee to read the address on each piece of mail and then sort the mail into "pigeon holes" in a letter case. Automation mail is machinable mail that is barcoded and received barcoded discounts. If your presorted mail is not compatible with Postal Service automation standards, it has to be processed manually. This is time-consuming, costly, and likely to reduce the worksharing discounts you might otherwise be entitled to on mail entered at a business mail entry unit (BMEU). The Postal Service handles mailpieces differently according to their size. The size of your mailpiece determines which sorting equipment will be used to process your mail. The type of processing that's needed often determines your potential discounts. Automated Letter Processing Equipment The Postal Service uses a variety of automated equipment. The most efficient and accurate mail processing results from using automated, high-speed, computerized mail sorting and processing equipment. The Postal Service uses two basic types of automated equipment to process letter-size mail: multiline optical character readers and barcode sorters. Multi-Line Optical Character Reader A multi-line optical character reader (MLOCR) scans the address block on each letter-size mailpiece to determine the ZIP+4 code and the delivery point information. The MLOCR verifies the address information against an internal database. To locate the address, the MLOCR must be able to scan all the elements clearly. That's why a complete address and "good" print quality are so important. The MLOCR converts that information into a POSTNET barcode. The MLOCR then prints the barcode in the lower right corner (barcode clear zone) of the mailpiece and performs an initial sortation. The barcode is then used for further sortation. From that point on, the mailpiece is sorted by high-speed barcode sorters (BCSs) that read and interpret the barcode. MLOCRs are capable of reading, barcoding, and sorting mail at a rate of 40,000 pieces per hour about 11 pieces per second. These machines are used not only by The Postal Service but also by large companies and collateral mailing agents like presort bureaus and letter shops. SECTION II CHAPTER 2 Page 1 Processing Methods & Categories

21 If you accurately barcode your letter-size mailpieces, they can skip the entire MLOCR process and go straight to a barcode sorter. Mail in this category can receive the maximum postage discount. Barcode Sorter A barcode sorter (BCS) "reads" POSTNET and Intelligent Mail barcodes on letter-size pieces and sorts the mail accordingly. This machine doesn't read addresses, so it will mis-sort a piece if the customer has applied an incorrect barcode. The BCS can read and sort 40,000 pieces per hour as well. With the advent of wide area barcode readers (WABCRs), a BCS can find a barcode almost anywhere on the face of a lettersize mailpiece, including the address block area and the barcode clear zone. This allows mailers to apply barcodes so they can qualify for lower rates and take advantage of faster, more efficient mail processing. But, for other reasons, the barcode must always be printed within 4 inches of the bottom edge of the piece either as part of the address block or within the barcode clear zone in the lower right corner. When buying any ZIP+4 matching software, make sure that the product bears The Postal Service certification seal. The software must be Coding Accuracy Support System (CASS ) certified. Postage Discounts The Postal Service offers a variety of postage discounts for correctly prepared automation-compatible mailings. You can qualify for automation rates for delivery point POSTNET or Intelligent Mail (IM BC) barcoded mailpieces prepared and submitted according to postal standards. Your local Post Office can help you or refer you to another source for information. This is an excellent way to workshare and save money! When entering bulk mailing at the BMEU mailers will have their mail run through a verification piece of equipment called MERLIN (Mail Evaluation Readability Lookup Instrument). MERLIN is a tool that is used by the U.S. Postal Service to assist with the acceptance of business mail. All business mailings presented for acceptance must be verified to Confirm their eligibility for reduced postage rates. Verifications are separated into two categories: Initial review Business mail entry clerks inspect a mailing for fees, funds, and eligibility. In-depth review MERLIN uses a sampling procedure to produce reports for verification. It automates the previous manual acceptance process for presorted First-Class Mail, Standard Mail and Periodicals to qualify for workshare discounts. MERLIN processes letters, postcards, and flat-size pieces. MERLIN verifies First-Class Mail, Standard Mail, and Periodicals mail against the standards set in the Domestic Mail Manual (DMM ) for: Postage discounts Sorting Barcodes Piece counts SECTION II CHAPTER 2 Page 2 Processing Methods & Categories

22 Barcode Specifications Barcoding your mail affects mailpiece design. Because there are no OCR readability standards, you have more latitude in selecting colors, type styles, and the location of the address if you barcode your mail. When an automation rate mailing barcoded according to postal standards is processed directly on BCSs, the mailing doesn't need to meet the standards for MLOCR readability. If you aren't able to barcode your mailpieces, they should meet all MLOCR readability standards. Meeting these standards will enable a mailing agent (such as a presort bureau or letter shop) to barcode your mail using an MLOCR and to be sure that the read rates will be high. Mailings of letter-size pieces that receive a barcode discount require the customer to barcode 100 percent of the pieces with a delivery point barcode. Physical Standards for Commercial Letters and Postcards The Postal Service classifies letters and cards into one of three categories: machinable, nonmachinable, and automation. For the purposes of determining mailability or machinability, the length for letters and cards is the dimension parallel to the address as read. SECTION II CHAPTER 2 Page 3 Processing Methods & Categories

23 Machinable Letters and Cards Letters and cards having an accurate address and that can be processed on Postal Service equipment is machinable and eligible for presort prices. Machinable mailpieces must meet specific standards, including size, shape, and weight. Machinable letters cannot have any nonmachinable characteristics. Maximum weight: o First-Class Mail and Standard Mail machinable letters: 3.3 ounces o Periodicals letters: 3.5 ounces. Nonmachinable Letters Maximum weight: o First-Class Mail and Periodicals 3.5 ounces o Standard Mail 3.3 ounces. Presorted First-Class Mail letters are subject to a nonmachinable surcharge if they have nonmachinable characteristics. (Note: nonmachinable characteristics do not apply to pieces mailed at card prices.) Standard Mail letters weighing 3.3 ounces or less and having one or more nonmachinable characteristics are subject to nonmachinable letter prices o Standard Mail letters that weigh more than 3.3 ounces and are prepared as nonmachinable letters are mailable at Not Flat-Machinable prices Nonmachinable Criteria A letter-size piece is nonmachinable if it has one or more of the following characteristics : a. Has an aspect ratio (length divided by height) of less than 1.3 or more than 2.5. b. Is polybagged, polywrapped, enclosed in any plastic material, or has an exterior surface made of a material that is not paper. Windows in envelopes made of paper do not make mailpieces nonmachinable. Attachments allowable under applicable eligibility standards do not make mailpieces nonmachinable. c. Has clasps, strings, buttons, or similar closure devices. d. Contains items such as pens, pencils, keys, or coins that cause the thickness of the mailpiece to be uneven; or loose keys or coins or similar objects not affixed to the contents within the mailpiece. Loose items may cause a letter to be nonmailable when mailed in paper envelopes; e. Is too rigid (does not bend easily when subjected to a transport belt tension of 40 pounds around an 11- inch diameter turn). f. For pieces more than 4-1/4 inches high or 6 inches long, the thickness is less than inch. g. Has a delivery address parallel to the shorter dimension of the mailpiece. h. Is a self-mailer that is not prepared according to tabbing and sealing regulations. i. Is a booklet that is not prepared according to tabbing and sealing regulations. Pens, pencils, key rings, bottle caps, and other similar odd-shaped items are not permitted in letter-size or flat-size paper envelopes unless they are wrapped within the other contents of the envelope to streamline the shape of the mailpiece and prevent damage during postal processing. If an odd-shaped item is not properly wrapped, it could burst through the envelope and cause injury to employees and damage to USPS processing equipment. Odd-shaped items that are properly wrapped within paper envelopes and sent at letter prices may be subject to the nonmachinable surcharge. Certain types of odd-shaped items, when properly wrapped, are permitted as automation price letter-size mail. SECTION II CHAPTER 2 Page 4 Processing Methods & Categories

24 Aspect Ratio Machinable Aspect Ratio: 1.5 Nonmachinable Aspect Ratio: 1.25 Automation Letters and Cards Letter-size mailpieces that are machinable and display the correct delivery point barcode or Intelligent Mail barcode may qualify for automation prices. A letter or card meets automation standards and qualifies for automation prices if it meets the specific addressing, barcoding, and design standards. Maximum weight 3.5 ounces Heavy letter mail weighing over 3 ounces must be in a sealed envelope, have no stiff enclosures and bear a barcode in the address block Rectangular. Aspect ratio (length divided by height): 1.3 to 2.5 Dimensions: o Minimum: 3-1/2 inches high, 5 inches long, and either inch thick if not more than 4-1/4 inches high and 6 inches long; or inch thick if more than 4-1/4 inches high or 6 inches long, or both. o Maximum for First-Class Mail card prices: 4-1/4 inches high, 6 inches long, and inch thick. o Maximum for letters and other cards: 6-1/8 inches high, 11-1/2 inches long, and 1/4 inch thick. *Length is the dimension parallel to the address as read Automation Design Standards Overview Making your mailpieces automation-compatible is important. Automated equipment can process mail more efficiently, allowing The Postal Service to maintain lower rates for those pieces. Your automation-compatible mailpiece should: Meet the size and weight standards in this chapter. Be made of good quality white or light-colored paper. Contain no sharp or bulky items. Be sealed securely. Be readable by automation equipment. SECTION II CHAPTER 2 Page 5 Processing Methods & Categories

25 Mailpiece Materials, Construction and Sealing Paper Weight The following recommendations for paper and card stock refer to the minimum basis weight of the materials. Basis weight is defined as the weight (in pounds) of a ream (500 sheets) cut to a standard size for that grade. For example, envelopes for automation-rate mailings should be constructed of paper weighing at least 16 pounds (minimum basis weight). The specific grade of 16-pound paper recommended for envelopes is defined as 500 sheets measuring 17 inches by 22 inches (17 inches by 22 inches by 500 sheets). Recycled paper and card stock are compatible with postal automation if the materials satisfy the recommendations and the guidelines of the USPS. Envelopes Envelopes (the preferred container) and other letter-size containers sealed on all four edges must be made of paper with a minimum basis weight of 16 pounds (measured weight of by-22-inch sheets). For business reply mail envelopes, the minimum basis weight is 20 pounds (DMM section S922). Cards Thickness, stiffness, and tear strength are the most important compatibility characteristics for cards. The minimum thickness is inch. The minimum required basis weight for card stock is 75 pounds or greater, with none less than pounds (measured weight of by-38-inch sheets). The grain of cards should be oriented parallel to the long dimension of the card. Long-grain cards are less likely to jam postal automated equipment than are cards with the grain parallel to the short dimension of the card. Cards at automation rates must be inch thick if more than 4-1/4 inches high or 6 inches long, or both. When preparing postcards with perforations, it is recommended that the perf-to-bridge ratio be 1:1. A typical perforation is from 0.1 inch to 0.2 inch. Vertical perforations in the center area of the card are not recommended. Sealing Letter-size mailpieces not in envelopes must be secured (tabbed) to prevent an open edge from jamming high-speed processing equipment. Standards for tabbing are based on basis weight of paper stock used and the location of the folded or bound edge. As an alternative to tabbing, the open edge of the length of the mailpiece may be continuously glued or spot glued. Tabs, wafer seals, cellophane tape, or permanent glue (continuous or spot) must not interfere with recognition of the barcode, rate marking, postage identification, or required address information. Cellophane tape is not acceptable within the barcode clear zone. Basis weight: the minimum basis weight standards vary, depending on the construction of the mailpiece. Letter-Size Folded Self-Mailers: Folded edge (bottom) must be parallel to the longest dimension (length) and address of the mailpiece. SECTION II CHAPTER 2 Page 6 Processing Methods & Categories

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