By John Anderson
April, 2000

Did you ever think the day would actually arrive when you could print money from the Internet?

Well you can't print money but you can print postage stamps.

Internet postage lets you purchase and print postage using your personal computer, a printer and the Internet, twenty-four hours a day, seven days a week, from your home or office.

The United States Postal Service originally designed Internet postage for the small office and home office (SOHO) market.

It lets you avoid those long lines at the post office. It also allows you to dump that annoying low-end postage meter in your back office that you pay for each month (along with its reset and special ink fees). Disabled and elderly people no longer have to rely on friends and neighbors for trips to the Post Office either.

Internet Postage

Internet postage technology allows you to print addresses and postage in one step, right from your PC. You can analyze detailed postage purchase and use reports. It easily integrates with your existing software applications like Microsoft Word and QuickBooks. Finally, no more wondering about zip codes-it even verifies addresses for you-instantly.

PC Postage is a government invention stemming from the need to protect postage revenue. In the early 1990s, the Postal Service realized that certain technologies had drastically eaten away at the Postal Service's revenues.

Since postage meter revenues exceeded $20 billion annually, over one-third of the Postal Service's total revenue, the Postal Service knew it had to do something. It looked to key advances in technological security to protect against counterfeiting and meter tampering.

At the same time, the Postal Service sought to reach an untapped market segment—SOHOs.

The result? PC Postage.

The Technology

The heart of PC Postage is a digital stamp that produces digital postage, Information Based Indicia (IBI). The introduction of IBI is the first new form of postage for the public in over eighty years.

PC Postage uses several technologies: the PC, a printer, the Internet, database management systems, secure file transfer protocol, public key infrastructure, cryptographic certification, two-dimensional barcodes, scanning, and easy-to-use software that makes understanding most of what is in this paragraph unnecessary.

How Do You Get Started?

When you decide to use PC Postage, all you need to have is a PC, a printer and Internet access. You get the software that you need from any of many sources including your friendly neighborhood computer store, or you could download it over the Net.

Once you install the software, you apply for a license on-line by submitting it to the Postal Service over the Net.

Once you get your license, the Postal Service initializes your postal security device. This postal security device is pre-loaded with a digital certificate issued by the Postal Service's certificate authority with cryptographically signed messages. This allows the Postal Service to recognize your device digitally. (If you didn't get this paragraph, don't worry. It all translates to the Postal Service turning your postage stamp maker on while using secret codes to prevent fraud and counterfeiting.)

Better than a Postage Meter

The postal security device that performs the cryptographic (coding and decoding) functions has to meet certain "tamper resistant" guidelines. Previously, postage metering systems only had to be "tamper evident."

The difference between them is that a tamper resistant device won't work if a counterfeiter has violated its security features while a tamper evident device will work after somebody has tampered with it. What a tamper evident device will do is show signs of tampering when it's physically inspected.

Once you have securely downloaded your postage, you can print it. However, what you print is not actually a stamp on an envelope. Rather, it is an IBI.

An IBI includes a two-dimensional barcode which carries information and a digital signature to ensure authenticity. The Postal Service requires the IBI to contain information including the destination ZIP code, the cost of the postage, the date and time you posted the envelope, and a digital signature so that the Post Office can be sure that the IBI is authentic.

The Post Office uses a scanner to certify that the IBI is, in fact, valid.

The Postal Service has detailed product submission procedures for the approval of all stamp-making products, including traditional postage meters and IBI products.

Is the Market Ready for Net Postage?

Within a month of its introduction, over 100,000 people signed up as users. The Postal Service expects this number to increase as market awareness of the new technology increases. In a survey, approximately 2.5 million SOHOs indicated that they would adopt PC Postage soon after the Postal Service rolls it out.

To date, the Postal Service has only licensed two companies to produce PC Postage: E-Stamp and Stamps.com. In 1998, E-Stamp got to the market as the first company with Net postage.

Analysts estimate that E-Stamp had 30,000 users at the end of 1999, while tamps.com had 87,000 customers.

Discounted Postage?

The Postal Service recently proposed a penny increase in the price of first-class and postcard stamps and larger increases for sending periodicals through the mail.

Under its new proposal, which probably won't drain our wallets until 2001, a first-class stamp will cost 34 cents, and each additional ounce would rise a penny to 23 cents. Priority mail would go to $3.45 from $3.20 for the first pound.

I like to suggest that the Postal Service take a leap into our new century and, at the same time, encourage people to get onto the Net. They could choose to have the penny increase only apply to old-fashioned postage stamps and meters.

This would probably be enough of an incentive to jump-start the use of a technology that certainly will bring cost savings to the post office and that's good for everybody. 

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