Is a $6.50 “Paper Statement Fee” a Rip-off?
It costs less than 75 cents on average for companies to produce and mail a statement to a U.S. customer.
A case study from an energy provider that tested the efficacy of physical versus electronic mail found that paper outperformed digital in securing timely payments.
By Jim Haigh, Keep Me Posted North America
Consumers routinely share complaints about fees for paper bills and statements with Keep Me Posted (KMP). Our recent report on a large company in New York abruptly dropping its own $6.50 fee in the face of scrutiny naturally prompted a wave of questions and comments from concerned individuals.
North American consumer queries ranged from “How much are we being ripped off?” to “How can these fees even be legal?” and most expressed an underlying curiosity about the true costs their providers really pay for mailing paper bills and statements.
KMP has been diving into the numbers, and we found that a company would typically pay less than 75 cents — and the larger the company, the less the costs. So, in all the states that do not have laws declaring paper statement fees “a deceptive act and practice” as does New York, the term “rip-off” is appropriate from a consumer standpoint if not legal basis.
Actual costs will vary by the size, location, preparation and mail volume of a company. The largest and most predictable factor is postage, which ranges from a high of 46 cents for the easiest volume and preparation postal discount for a commercial enterprise to achieve — to as low as 39 cents per piece (with postage far less than that for nonprofits). All the other costs combined are eclipsed by the postage component, and can vary by market conditions, procurement and processing expertise.
KMP surveyed paper and envelope manufacturers, wholesalers and distributers, along with data, print and mail services providers and industry trade associations, on commercial retail costs, and used USPS 2020 First Class Mail rates in effect (1). We found that on the low end, outbound and return envelopes could cost less than two pennies apiece, and on the high end, 5 cents — which we use in our maximum average. The actual bill or statement would generally fall below our five-cent basis, with additional inserting, presorting and preparation to achieve postal discounts adding less than eight cents to the total cost.
Based on comprehensive feedback and analysis, KMP finds that a mid-sized firm is unlikely to pay more than 68.5 cents to mail a bill or statement with a return envelope for payment. Furthermore, a larger institution sending only statements with no return envelope and achieving the highest efficiency discounts provided by USPS could easily pay less than 46 cents per paper notice on account.
So as we see, the basic practice of mailing customers their bills and statements — considered routine and a cost of business for generations — is relatively inexpensive. Honoring the no-fee for paper preferences expressed by three quarters of American consumers (2) is just good business, and treating such reasonable expectations as just another nook or cranny to scrape for profit is shortsighted.
Moreover, there is evidence to suggest that companies can actually save money mailing this critical correspondence without fees — compared to related efforts in the push to digital-first and digital-only transaction schemes. A case study from an energy provider that tested the efficacy of physical versus electronic mail found that paper outperformed digital in securing timely payments — and as a result, the test population receiving emailed invoices costs far more because of new burdens created on the customer service department!
About Keep Me Posted North America
Keep Me Posted advocates for the right of every consumer in North America to choose, free of charge, how they receive important information – on paper or electronically — from their service providers. KMP is a coalition of consumer groups, charities and businesses who are committed to protecting consumer access to paper-based communications at no extra charge. These consumers include older adults, the disabled, low-income households without computers, printers or broadband service, and people in rural areas where unreliable internet access is common.
For more information on how to support KMP or to become a member, visit our website at keepmepostedna.org, and follow us on Twitter, Facebook, or LinkedIn.
(1) Compilation of data received from 8 organizations within the Keep Me Posted network and the United States Postal Service.
(2) “73% of US Consumers believe they should not be charged more for choosing a paper bill or statement” – Toluna and Two Sides North America, 2019.
SOURCE: Keep Me Posted North America