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Merchant processor Vantiv Inc. has won one of the biggest retail merchant-processing contracts out there—the U.S. Postal Service’s credit and debit card business, including its USPS.com online component.
Counting post offices, branches and substations, the Postal Service has more than 35,000 retail outlets in all 50 states, U.S. territories and military bases. A spokesperson tells Digital Transactions News by email that the USPS has 67,000 point-of-sale terminals and processed 363 million credit and debit transactions totaling $12 billion in 2014.
The contract officially took effect May 12, although Vantiv, based in suburban Cincinnati, won’t be live at all USPS locations until next year. In addition to credit and debit card processing both at the point of sale and online, the contract includes risk-management and data-security services such as encryption and tokenization technology.
“We will be providing a full suite of omni-channel payment solutions,” a Vantiv spokesperson tells Digital Transactions News in an email message. “Vantiv’s processing services will support the efficiency, scale and functionality required for the large volume of retail visits to Postal Service locations nationwide as well as those to USPS.com.
Neither the Postal Service nor Vantiv would discuss the contract’s pricing or financial terms. The contract has a four-year base length and includes three two-year renewable options.
The Postal Service’s incumbent processors are Bank of America Merchant Services, a joint venture of Bank of America Corp. and processor First Data Corp., for credit transactions and Fidelity National Information Services Inc. (FIS) for debit, according to the USPS spokesperson.
Three processors bid for the contract; the USPS spokesperson did not identify the other two. “Vantiv was awarded the contract because it represented the best value to the Postal Service based on the evaluation factors stated in the solicitation,” she says.
The Postal Service for years has been struggling with declining mail volume as Americans increasingly turn to online channels for personal and business communications and bill payments. Mail volume last year totaled 155.4 billion pieces, off 27% from the peak of 213.1 billion pieces in 2006, according to a USPS backgrounder. Total first-class volume fell 35% in the same period to 63.6 billion pieces, and first-class single-piece volume—letters, cards and other mail bearing stamps for personal correspondence and bill payments—plummeted 52% to 21.5 billion pieces.
Despite rate increases, the reduced volumes led to a 7% decline in total USPS revenues since 2006 to $67.8 billion last year. Retail revenues, however, rose for the third straight year in 2014 to $19 billion—good news for the Postal Service’s payment processors.
The Postal Service is trying to counter the volume declines with new shipping services, including grocery deliveries in New York City as well as by reducing its headcount and closing mail-processing centers throughout the country.
