Managing intercompany pricing

The Remuneration of International Mails Agreements – REIMS – and the Interconnect Remuneration Agreement - Europe – IRA-E – are the Terminal Dues systems developed by IPC and its members, including electronic accounting system (iPep).

The aim is to ensure that payments of terminal dues for delivery of cross-border mail are cost-related, but also taking into consideration the actual quality of service performance provided to the consumer.

Known as the REIMS Agreement, the system was implemented in April 1999. IPC has been central to the arrangement, as the administrator of the agreement, as the facilitator of negotiations and as the chair of steering committees and working groups.

The REIMS Agreements have two core principles.

  • Firstly, payment of the terminal dues will only be made in full if a guaranteed level of quality of service is met. The agreement has qualified for two exemptions by the European Union under its competition rules.
  • Secondly, payments to delivering posts, known as Terminal Dues, must be linked to actual costs and the receiving country’s domestic postal rates are accepted as a proxy for costs.

Therefore, all REIMS agreements provide a system for intercompany pricing based on cost and quality of service for postal operators. The quality of service standards in REIMS are much more ambitious than the targets set under the EU Postal Directive.

The latest agreement, REIMS V, encompassed in 2016 24 signatories including all major European designated postal operators.

In 2015, the INTERCONNECT Remuneration Agreement – Europe (IRA-E), first multilateral Terminal Dues agreement covering both letters and parcels products, was developed and signed by 22 designated postal operators by the end of 2016.

One of the main objectives targeted under the IRA-E was to lower the Terminal Dues level in order for postal operators to be more competitive on the e-Commerce market.

Therefore, this remuneration agreement is one of the building blocks of the new INTERCONNECT system setting the basis for a global postal e-Commerce delivery network. This new agreement addresses the higher importance of e-Commerce volumes for the postal operators without leaving aside the historical postal business.

In order to support the accounting of Terminal Dues, the electronic accounting tool – iPep – has been developed by IPC in collaboration with its members to produce, exchange and approve data – sampling, weight – and forms – eNO1 (equivalent to e53), e55, e09, CN61… A more detailed description of the functionalities of iPep is available here.