Address Verification

Residential Delivery Indicator

By 15 August 2023February 1st, 2024No Comments
Residential Delivery Indicator

What is Residential Delivery Indicator?

RDI or “Residential Delivery Indicator ”, as the name suggests, indicates whether a given mailing address is a residential one or a business location. The addresses that are registered for commercial purposes are constantly under the radar of the USPS. Why? Because the USPS keeps a postal address database so that businesses with authorized (CASS-certified) programs and software can access their data. By enabling you to find out whether an address is a business or residential address, an advanced address verification tool with RDI helps you make informed decisions, boost your deliverability rate, and have it optimized for operational efficiency.

Residential Delivery Indicator

Since there are many address verification tools available in the market, you must choose one that is ideal for your business and its unique requirements. For example, companies that send a high number of postal mails will need to check many addresses, which means you’d need an address verification tool capable of running bulk address verification. PostGrid is one of the most popular bulk address verification tools you can use with a simple CSV file and push it through to get a CSV file with the verified addresses. It even comes with a field inside the CSV file that gives you the “Firm Name” of your postal address database's available contacts.

Difference Between Residential Address & Commercial Address

The shipping process is not as simple and straightforward as one might think. In fact, some of the practices may even seem weird to us as an outsider because the process sometimes varies from one mail carrier to the other, in the case of differentiation between residential address and commercial address.

Most of the time, private mail carriers will choose to charge a single shipping rate to a commercial address and a different residential one. However, residential address delivery usually has a higher price. The downside is that we have no means of determining the address as home or office that is in any way intuitive. This means that if you do not know whether an address is residential or commercial, you could end up paying the price, and this price could be a big one considering that companies send postal mails in bulk. The last thing you want is to be blindsided by an unexpectedly high expenditure, even if it may be marginal.

But why does the shipping rate to a residential address differ from that of a commercial one? And why is it higher?

Well, it’s because the private carriers’ primary target is businesses. Although they make deliveries to residential addresses, these addresses are often outside their normal routes, which are based around commercial and industrial districts. This means that they are practically going out of their way just to deliver your small package, so it is only understandable that they would choose to charge you more for deliveries made to residential addresses. It has become necessary for businesses to determine which of the addresses they send their mails to are residential addresses and which of them are commercial addresses. It is at this point the importance of RDI becomes evident.

Benefits of Using RDI

Reduce Residential Delivery

Using the Residential Delivery Indicator, you can understand how many of your address database addresses are residential ones. This can be useful for companies who want to avoid residential addresses for whatever reason they may have. This can also come in handy if an emergency causes you to restrict the money spent on direct mail campaigns. You can then avoid sending mail to residential addresses with a higher deliverability rate for many private carriers. You can also choose a supplier based on the address type and use USPS postal delivery to bring down your expenses.

Superior Analytical Capability

The Residential Delivery Indicator or RDI gives valuable insights that you can use as a business. If you are willing to put some effort into it, you can figure out the patterns in parcel shipping and use it to your advantage just by examining the data provided by RDI. This pattern can then be used to minimize your expenses on sending mails through different carriers and improve the overall parcel shipping service you employ for your business.

Lower Shipping Charges

An important role or application of the Residential Delivery Indicator or RDI is to help companies lower their shipping charges through rate-shopping services given to the clients that enable them to compare the different shipping rates for the various addresses in your address database. This is one factor that could potentially be a dealbreaker for many businesses that are on a strict budget as well as for companies that seriously aim to bring down their expenses.

Understanding Residential Delivery Indicator (RDI)

The USPS keeps a comprehensive and official database of the postal addresses in the US, and therefore they already know whether an address is residential or commercial. The USPS came up with RDI, a data product capable of verifying whether an address or delivery type is classified as commercial or residential. The RDI was a product built explicitly for shipping parcels because some private carriers charge a higher fee for delivering to residential addresses.

The RDI enables the person or company sending a parcel to ensure that their shipping rate information is accurate and allows them to analyze patterns in parcel shipping and compare costs. By doing this, RDI allows you to make a well-educated decision in determining your most efficient option for sending postal mails.

As far as the USPS is concerned, RDI is merely a way of sharing their data with you but is there any other reason we overlook here? The USPS shares this data because they do not charge different rates for making a delivery regardless of whether it is sent to a residential address or a commercial one. This would make the USPS the first choice for sending mails for many people and companies who prefer keeping their expenses low. I mean, who doesn’t want to save their hard-earned money, right? Think about it, why would someone who knows that UPS or FedEx is going to charge him/her more money for the same service provided by USPS at a lower price simply because the address you are mailing to is residential. By no means will it look fair to an ordinary consumer unless there is some kind of incentive involved, but since USPS provides a reliable service at a uniform price, it is easier to account for.

Difference Between Residential Address in Private Carriers and USPS

Both private carriers and the USPS categorize addresses as either residential or commercial, and you’d be wrong if you assumed that only USPS does this. However, there exists the possibility that an address classified as residential by a private carrier may not necessarily be the same by USPS because they may categorize it as a commercial address. This is because most private carriers like UPS and FedEx categorize the addresses most likely based on their location and not on the property's actual purpose or usage. Cities are divided into different “zones” such as residential, industrial, and commercial, which often restricts what kind of buildings can be built there, resulting in similar buildings being clustered in their respective zones. This would also mean that the residential buildings are built in a particular area or residential zone, whereas commercial ones are built in a commercial or commercial zone.

To put it in a simpler way, as far as a private carrier is concerned with any address that belongs to a residential zone, then the address is residential regardless of whether the said building is a commercial one or a residential one.

Similarly, a residential building in a commercial zone is considered a commercial address as long as it is inside the zone and a lower rate applies to them. What does this mean?

It means that you can start a small workshop in your spare garage, and your address would still be categorized as residential if your house or the garage were in the residential zone. This also means that even if someone were to send a postal delivery to the garage, even if it is indeed an official letter, the letter would still be classified as residential, and you’d need to pay a higher price if you are using a private carrier for the delivery.

Unlike this practice followed by the private carriers, the USPS RDI only shows you the property's use and not what zone it belongs to. So suppose you opened a garage in your home. Even if it is built in a residential zone, you’ll still be told that your parcel is being delivered to a commercial location even if the actual location falls inside a residential zone as per the city’s classification.

However, despite the USPS address classification, it still charges the same rate for both residential and commercial addresses making USPS the obvious choice for many companies out there. Using an advanced CASS-certified address verification tool like PostGrid, you can send your postal mails directly to your target audience, and you can even automate the entire process via an API. As long as your choice for a postage carrier is USPS, all you need is an advanced address verification tool like PostGrid.

Reducing Return Mails

By using RDI coupled with a CASS-certified address verification software like PostGrid, you can be sure that you have got the absolutely correct address information. Information that can help you accurately deliver your postal mails without fail and also help you reduce unnecessary expenses. Reducing the return mail rate of a business saves valuable resources, including time and cost. Furthermore, you are able to ensure that the efforts you make are being transmitted to the target audience.

Enhancing Customer Relationship Management (CRM)

Customer Relationship Management (CRM) can be optimized using a CASS-certified address verification tool by maximizing the penetration of your marketing efforts made via postal mail. Furthermore, they are able to give valuable insights into the CRM that can further be used for implementing advanced marketing tactics. It also enhances the efficiency and accuracy of your shipping practices.

Identifying Shipping Patterns

Using the Residential Delivery Indicator (RDI), you can start to identify certain shipping patterns. For instance, consider a commercial building that is built in a residential zone or vice-versa and then consider the many such cases like this. By using RDI, you can map out these odd addresses and use that data to come up with the optimal delivery routes. Similarly, you can use RDI to determine shipping patterns, both pre-existing and potential.

USPS RDI and Its Relevance

The easiest way to use a USPS RDI is to use a CASS-certified address validation API system with RDI capabilities. However, it is also important that you consider more than just RDI because your business is unique, and so are its requirements. It is worth noting that having RDI capabilities doesn’t necessarily mean that it will be helpful for your business.

Suppose your business’s choice of postal delivery is through USPS, then the cost of sending a post to residential and commercial addresses is the same. In such a case, there is no point in having RDI because there is no cost difference between the posts sent to residential addresses or commercial addresses.

Similarly, it is important to consider what use you have for address verification and whether you really need RDI, or does your priority lie elsewhere? Imagine yours is a company that frequently runs postal marketing campaigns, and you send out postal mails in bulk. The preferred choice for sending postal mails for such a requirement is usually USPS in the case of most businesses.

Here, the real requirement for the business is to bulk verify the address and not to determine whether the addresses are residential ones or commercial ones. Therefore, the relevance of USPS RDI is negligible, but that may not be true for every case. While some companies don’t need to consider their customers' address status, some others may need it.

Similar to the example above, let us consider a business that has long been using a private carrier for its bulk postal mails. They are targeting an audience of commercial businesses. Imagine a big marketing effort being launched in all major commercial zones using postal mail. To avoid wastage, you need to filter out the residential addresses in the area. In such a case, you will require the usage of USPS RDI because it’s a sure-shot way of recognizing commercial and residential addresses. Using the system, you can establish an optimized route and formulate geography-based marketing efforts.


A Residential Delivery Indicator or RDI is important for many businesses that are picky about their audience and often formulate postal mail plans based on the targeted area. The RDI is extremely relevant to companies that employ private postal carriers for their bulk postal services like UPS and FedEx because there can be a considerable difference in expenditure as the rate for sending posts to residential addresses is often higher than the rates for sending the same sized postal mails to a commercial address.

While RDI holds such significance in certain businesses, it is not the same for some other businesses. For example, businesses using USPS as their preferred choice for sending their bulk postal mails don’t have to consider the price difference because there isn’t one. For them, the best choice is a CASS-certified address checker tool that can optimize their postal mail process and allow for easy bulk verification, such as the one offered by PostGrid.

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