In January of this year, the Postal Service notified the Postal Regulatory Commission that it intends to conduct a market test of Gift Cards. USPS said, “This product will provide postal customers with the ability to purchase a card loaded with a specified sum of money, which can be sent as a gift through the mail. The test will begin on or after May 1, 2011.” American Express Travel Related Services Company has entered into a contract with USPS to be the first supplier of gift cards in the experimental product test. However, Food Market Institute, a “national trade association that conducts programs in public affairs, food safety, research,education and industry relations on behalf of its 1,500 member companies – food retailers and wholesalers – in the United States and around the world,” is opposed to USPS selling gifts cards at retail windows.
Here is an excerpt of comments submitted to PRC by Food Market Institute :
FMI believes that the United States Postal Service should not compete in commercial markets unrelated to its core postal functions. FMI believes that this government-sponsored competition is unnecessary and exceeds the Postal Service’s authority pursuant to the PAEA.
Competition in the retail food industry is fierce, and many retailers consider gift cards to be a key convenience item that they provide consumers. The private sector is clearly meeting the public need for gift cards. The Postal Service’s filing acknowledges this fact.2
FMI believes that this government-sponsored competition is unnecessary and exceeds the Postal Service’s authority pursuant to the PAEA. Indeed the Postal Regulatory Commission previously determined the sale of stored value cards is a nonpostal service prohibited by the Act.3 Market share acquired by the Postal Service will be at the expense of our members. Gift card sales and ancillary consumer purchases at food retailers will be reduced.
Forms of government competition like this not only hurt private enterprise, but local communities as well. FMI members pay billions in federal, state and local taxes each year and collect sales taxes as well. The Postal Service does not. Our members also contribute to their communities in a multitude of other ways, from raising money for local charities and schools to sponsoring local sports teams and providing food to those in need.
The Postal Service is seeking to offer a new nonpostal service in commercial markets unrelated to its core postal business. The Commission should order the Postal Service to cancel the market test. Gift cards are available in more outlets than ever. Competition is thriving in the private gift card marketplace, and allowing the Postal Service to sell gift cards would only serve to diminish it.
Pitney Bowes Inc and American Bankers (in part) are also oppose to granting USPS to sell gift cards at post offices. Hallmark cards and American Express with current partnerships agreements with USPS, are in favor of allowing the sell of gift cards.