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USPS Nets $21M From First Year of Capital One NSA

The U.S. Postal Service netted more than $21 million in benefits from the first year of its negotiated service agreement with Capital One Services Inc., McLean, VA, including the period between September 2003 and the same month last year. The agreement took effect Sept. 1, 2003.

The Capital One deal represented the first NSA. Capital One is the postal service's fourth-largest customer and its largest generator of First-Class mail.

The three-year NSA provides pricing incentives based on increased mail volume and productivity gains that can save the postal service money. Capital One gets discounts of 3 cents to 6 cents per piece during the three years if its annual First-Class bulk volume exceeds 1.225 billion pieces. The discounts rise as Capital One's volume increases.

Capital One converted its systems to use the USPS' Address Change Service, which provides electronic notification of forwarded mail and undeliverable pieces. Capital One no longer must open returned pieces and enter data manually to update bad addresses on its mailing list. The USPS no longer has to sort and return millions of undeliverable pieces of mail.

The USPS estimates that it received $12.4 million in net revenue and $9.3 million in savings.

Another three-year NSA between the USPS and Discover Financial Services Inc., Riverwoods, IL, a business unit of Morgan Stanley, took effect Jan. 1. Also, in December, the Postal Rate Commission recommended in favor of the USPS' proposal for a three-year NSA with Bank One Corp., which merged in July with J.P. Morgan Chase & Co., New York.

Melissa Campanelli covers postal news, CRM and database marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters

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