USPS May Reduce Rates for Capital One

The Postal Service has proposed special discounts for large credit-card company Capital One Financial Corp., the nation’s heaviest user of first-class mail, in hopes of generating new revenue. It is the first time the world’s largest mail system has offered reduced rates specially created for just one customer. Capital One now pays about 29 cents an item for each mailing; the discount could save the company as much as six cents on every delivery. A decision by the federal Postal Rate Commission could come by the end of this month. Thousands of businesses already get standardized price breaks for sorting their mail by ZIP Codes and other chores that shrink the post office’s workload. But the agency wants to do more for companies that could help it resist the invasion of e-mail and electronic bill-payment systems. After three years of red ink, the Postal Service expects a profit of $600 million in its current fiscal year ending Sept. 30, but lucrative first-class deliveries are headed for a six-year low. ‘We have to balance universal service with how we pay for it,’ says Stephen Kearney, the Postal Service’s vice president of pricing and classification. ‘Larger customers who mail more at discounted prices are doing everybody a service.’ The agency hopes eventually to strike one-on-one deals with possibly thousands of mailers that might include discounts on everything from catalogs to packages. An economist hired by the post office has concluded that its bottom line will be ‘dramatically improved’ if specialized discounts take off. Still, any revamping of the Postal Service price structure isn’t likely without a fight. The Newspaper Association of America, representing about 2,000 U.S. papers that could lose advertising if using the mail gets cheaper, maintains that offering special discounts to companies like Capital One is unfair to anyone stuck paying 37 cents for a stamp.” The Wall Street Journal: “Capital One’s rivals aren’t happy, either. FleetBoston Financial Corp. has asked the Postal Rate Commission to delay the start of discounts for Capital One until other companies have ‘had the chance to negotiate similar arrangements.’ In response, the post office is spelling out rules for other big mailers to follow.” (Source: the Wall Street Journal, Rick Brooks reporting)