ZIP code data is an integral part of business operations in the United States. It’s an important parameter for sending mail, managing fraud detection, or researching demographic information.
The goal of this article is to help you understand the context behind this combination of numbers in more depth and detail, so that you can effectively leverage this data point in your business.
The role of the ZIP code is to process data with expediency and efficiency. Errors in ZIP codes may result in processing delays. For an in-depth understanding of the ZIP code, the United States Postal Service is the definitive resource. This comprehensive FAQ resource will be helpful. What you’ll notice is that every digit within a ZIP code conveys meaning as part of a methodical plan.
United States ZIP codes are five numerical digits long. ZIP+4 codes, also known as add-on or plus-four codes, include four additional digits that identify a geographic segment within a ZIP code delivery area.
The first digit in a ZIP code represents a defined group of U.S. states. The second and third digits represent a region in that group, such as a large city.
To send mail, only the first five digits of the ZIP code are required. Including the full ZIP+4 code; however, can expedite delivery times due to the specific geographic detail communicated.
ZIP codes are translated into barcodes that enable the automatic sorting of mail, which reduces the amount of human oversight necessary.
The ZIP code came into existence during a time of economic prosperity in the United States. It evolved out of necessity due to a rapid swell in the population, as well as a boom in commerce following the first and second World War eras. During this time, old systems for delivering mail had begun breaking down due to a need for information to travel across the United States continent, faster.
In response, Robert Moon, who spent his career with the United States Postal Service (USPS), invented a new system that became formally implemented in 1963 after a 20-year development process. This system relied on a defined numerical system rather than a less structured recall of familiar cities, counties, and states. This shift, from a more casual and personal way of managing mail to one with more definition and order, incited controversy and a 20-year conflict. When Moon passed away in 2001, he was credited with the establishment of the first three digits in the ZIP code.
By 1967, all mail delivered in the United States had ZIP codes. At this point in history, the United States Postal Service was responsible for moving 80 billion pieces of mail compared to 30 billion during the Great Depression. Meanwhile, there was a new world of transportation evolving through trucks and airplanes, which were capable of moving goods more efficiently than railroad based systems.
As the years passed, ZIP codes began to take on more function in American society. For instance, the United States Census uses ZIP codes to organize demographic information that includes, but is not limited to, educational attainment, household income, household size, and other population health characteristics. Financial entities such as banks, insurance providers, and credit card companies use ZIP codes to calculate rates. Zip codes are also used in online shopping use cases, with regards to fraud detection and prevention.
ZIP codes are a pillar for understanding the demographic characteristics of and doing business within the United States.
The United States is a member country to the Universal Postal Union (UPU). The postal code standards developed and maintained by the United States are integral to the UPU’s mission to facilitate the free exchange of global mail.
The UPU, a United Nations regulatory body, relies on member countries such as the U.S. for funding, insights, and scientific leadership. In recent years, the UPU has utilized Geographic Information Systems (GIS) technology from the United States to build new postal systems in developing nations, from the ground up. The UPU also provides moderation for disputes in a complex global trade environment.
The United States, with its ZIP code system and expertise, is one of the top funding members of the UPU. For this reason, it is important to technologists working with ZIP code data to understand that postal code systems have far-reaching geopolitical significance as problem-solving tools.
Postal codes in Canada and the United States are two separate systems. For one, ZIP codes are specific to the United States only and are managed by the USPS. In Canada, the postal code system is governed by Canada Post, which is the country’s mail service.
As with the United States, Canada maintains one of the most well-defined postal code systems in the world. This system evolved in the 1950s and 1960s, alongside a population boom in the country. The first postal code was a three-digit system that evolved into a six-digit system in 1969.
The first three digits are known as a forward sortation area (FSA), which correspond to a geographic region such as a province or territory. The second set of three digits corresponds to a local delivery unit (LDU), which describes a group of addresses.
Postal codes in Canada have taken on a similar function to ZIP codes in the United States with regards to mail sorting, automation, and the management of demographic data.
Loqate helps businesses around the world verify customer addresses by combining our global datasets with best in class technology. Our easy to integrate API helps our customers verify customer data at the point of capture. Find out more about how Loqate address verification solutions can help your business.