Postage is on sale on the Web

E-Stamp Corp., the first company to sell U.S. postage over the Internet to desktop PC
users, plans a midyear nationwide rollout of its SmartStamp software-hardware postage

The Palo Alto, Calif., company began beta-testing SmartStamp with about 500 users last
year. A PC acts as a meter to download and store the postage and print out the
indicia—or postal marking—on envelopes, labels or documents.

E-Stamp is one of four companies taking part in the Postal Service’s
Information-Based Indicia (IBI) program. The others are StampMaster Inc. of Santa Monica,
Calif., Neopost Inc. of Hayward, Calif., and Pitney Bowes Inc. of Stamford, Conn.

IBI’s goals are to deliver postage to the mailer via electronic commerce and to
streamline automated mail handling. The indicia produced by PC postage products must
contain a standardized address and bar code.

“The linear bar code is the core technology that we use in our automated platform
to sort mail,” IBI program manager Ray Gordon said.

SmartStamp integrates with Postal Service legacy systems already used for postage meter
payments and for audits of service providers. All payment methods used for meters,
including the Automated Clearing House system, will be available for PC postage, Gordon

The system settles accounts daily by electronic data interchange to ensure that
customers pay for all the postage they receive, said Milton Howard, E-Stamp’s
director of product development. EDI also directs batches of new applications for postage
meter licenses to the Postal Service once a day over a dial-up connection.

E-Stamp was the first of the four companies approved by USPS to participate in IBI, and
it produced the first PC postage about a year ago. Its software is now in its sixth

USPS developed the software specifications and set the security standards. Because USPS
treats postage as currency, a postage meter license is essentially a license to print
money. Storing postage on a hard drive or in software is not secure enough for USPS.
SmartStamp stores postage in a small hardware device called an electronic vault, which
connects to a PC port. The software-only vault system developed by rival company
StampMaster resides on a server.

Mailers can pay for their postage online with a credit card, by electronic funds
transfer or by check—just the same as for a postage meter. But mailers pay a premium
in license fees for using the online service. Any laser or ink-jet printer can print the
indicia on envelopes or labels. SmartStamp also lets Microsoft Word users print the
address and indicia on documents for mailing in windowed envelopes that have an extra
window for the indicia. The vault stamps the indicia with a digital signature to prevent

At the time it prints the indicia, SmartStamp verifies the address and adds the
nine-digit ZIP code.

E-Stamp is pushing SmartStamp only for the small-office market. E-Stamp has marketing
agreements with several office supply vendors to bundle its software with their labels,
envelopes and postage scales.

Consumers in general are not expected to buy PC postage because of the premium for the
online postage license, said Ellen Perelman, E-Stamp’s director of business
development. Large enterprises generally have mailing centers and lack an incentive to
decentralize mailing to the desktop, she said.

“That leaves the small-office segment,” Perelman said. The nation’s 25
million home offices and 7 million small businesses mail 10 to 25 pieces of mail a day and
make an average of two trips a week to the post office, she said.

PC postage will help the Postal Service compete with alternatives such as e-mail, and
it will bring extra convenience to certain customers, Gordon said, but it is not a
replacement for stamps, meters or other forms of postage.

About the Author

William Jackson is a Maryland-based freelance writer.

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