People have been sending letters to each other ever since paper and pen were invented, but it was not until 1840 that a new idea was introduced where people could prepay the cost of delivering their letter to their chosen destination using a Penny Black postage stamp. This was the Universal Penny Post. No longer did the recipient have to give money to the person who delivered the letter or pay a wildly differing amount depending on how far and how long the letter had travelled. The post system became highly efficient, and at one penny a stamp, it was a service just about anyone could afford.

In 1837, Roland Hill had the idea that a prepaid adhesive stamp could be used for all letters, wherever their destination in the British Isles. The government adopted the idea since it would surely boost revenue and help pay for a more reliable and regular postal service. The first postage stamp carried an engraving of Queen Victoria in profile and cost one penny. The queen's portrait gave some authority to the little pieces of paper; the queen even gave the design her royal approval. The words 'POSTAGE' and 'ONE PENNY' clearly indicated the purpose and cost of these tiny receipts of payment. The stamp's colour and price gave it its familiar name: the Penny Black. There was also a two-penny version, which was a deep blue. The Penny Black covered the cost of delivering a half-ounce (14 g) letter anywhere in the British Isles. Anything weighing more than half an ounce simply required fixing more stamps on the envelope.

The design of the Penny Black was line-engraved (aka recess-printed) using a steel plate. Letters in each of the bottom corners of the stamp varied depending on the position of the individual stamp within the sheet of printed stamps. This system, which created 240 varieties, was designed to prevent forgery or the combining and reusing of non-postmarked parts of different stamps. The intricate design of the left and right sides of the stamp and the background were also intended, like banknotes, to make illegal replication difficult. Another device to prevent forgery was to use watermarked paper so that each stamp had a small crown watermark.

The Penny Black stamp has a reputation for rarity, but millions were printed as the idea of a prepaid postal system took off. Unlike today, when national post offices worldwide issue new sets of stamps each month, the Penny Black was in service from May 1840 to February 1841. At one point, the printers were producing 600,000 stamps every day. Around 68 million Penny Blacks were printed; it is estimated that only around 5% of these have survived today, and most of those are in poor condition.

The Penny Black was a roaring success, but it did have its problems. Postmasters were required to add an ink stamp to 'obliterate' the postage stamp so that it could not be reused, adding what we would today call a postmark. Because the postage stamp was black, expensive red ink was required for the obliteration, or it would not be visible. A special mix of red was recommended, but postmasters often struggled with getting the right proportions. In addition, a poorly applied red obliteration was sometimes difficult to see, especially in the dimly lit offices of the Victorian period before electric lighting. It was for these reasons that, within a year, the Penny Black was replaced by the Penny Red, which was very similar in design but red-brown in colour. Now postmasters could use black or blue ink for their obliterating stamp, and more importantly, it was now much easier to detect a used stamp. Some obliterating stamps, such as the Maltese Cross variety (1840 to 44) or hand-cut stamps of particular cities, have become collector's items in themselves.

Britain soon adopted other universal rates such as a half-penny for postcards, a special parcel rate, and even a rate for posting books. The system of stamps and universal postage worked so well that other countries soon adopted it, notably the United States in 1847. The success of cheap postage stamps caused a boom in letter writing, and from the late 1840s, the tradition of sending Christmas cards took off, too. Other spin-offs of the new postal system included the appearance of post boxes in public places for senders and letter boxes in private homes for receivers.

The Penny Black was an imperforate stamp – there were no perforation holes to make separation from a sheet easy; rather, they had to be cut out using scissors. Each sheet had 240 stamps (20 rows of 12 stamps). Postmasters who were more careful with their snips and left a nice, clear border all around the stamp are responsible for giving these stamps a much higher value in today's collector's market. Similarly, a Penny Black still attached to its envelope or even to a scrap of it is often worth more than those that have been soaked off. An unused or mint Penny Black is worth many times more than the much more common used variety. Value depends on the condition of the paper (both front and back), the depth and neatness of the white margin, and the lightness and aesthetic appearance of the obliterating stamp. According to the prestigious London-based stamp dealers Stanley Gibbons, a good used Penny Black can be worth around £100 while a good mint example can fetch £13,000. Prices can be considerably higher for very fine examples and those printed on the lesser-used printing plates, particularly the rarest of all, plate 11.