Stamps.com Receives Approval From U.S. Postal Service

In what it says is the first new form of U.S. postage since the invention of the postage meter 80 years ago, Stamps.com, Inc. (Nasdaq: STMP) announced today that it has received regulatory approval from the U.S. Postal Service to start selling stamps over the Internet.

The Santa Monica, California-based company was one of two online companies to be authorized by the Postal Service to begin selling stamps this Fall. The other is E-Stamp Corp. of San Mateo, California.

The company has spent the last year field-testing its service with 1,500 customers in California, Hawaii and Washington D.C.

“The digital revolution will change the postal industry forever,” said Stamps.com CEO, John Payne. “By using the Internet to deliver postage, we have transformed a centuries-old product requiring proprietary machines into a simple service, available 24 hours a day from any PC.” Payne’s reference to “proprietary machines” is likely aimed at postage meters and the company, which is synonymous with them, Pitney Bowes.

Pitney Bowes filed a lawsuit against Payne’s company in U.S. District Court in Delaware last June alleging that Stamps.com infringed on its intellectual copyright. Four days later, Stamps.com released a statement saying it would honor a subpoena issued by the U.S. Department of Justice’s Antitrust Division which requires them to provide information it has on Pitney Bowes.

The Department of Justice is reportedly investigating Pitney Bowes for possible monopoly holds on postage meters and the online postage business.

Postal Service Opens New Age

With the exception of incremental stamp price increases and a spate of workplace violence, the U.S. Postal Service doesn’t really receive all that much attention from the American public. Perhaps that’s understandable when you are selling stamps, hardly a glamorous item.

However, the Postal Service has quietly undergone a transformation, shedding layers of bureaucracy and gross inefficiency to become that rarest of rarities: A government entity that acts like a corporation in delivering the bottom line.

This latest innovation seems logical, of course, but there were a number of technical hurdles to overcome, including security issues. Stamps.com will provide free, downloadable software to users, and it apparently has met the Postal Service’s stringent security requirements.

The company has signed marketing agreements with Office Depot, Quicken and others and is keen to seize a foothold in the small business market.

Stamps.com — which recently reported a second quarter loss of $6.1 million was formerly known as StampMaster, Inc. It changed its name in 1998 and received a first round of financing of $30 million from Vulcan Ventures, Chase Capital Partners and Marvin Runyon, the former Postmaster General of the U.S.

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