According to the Houston Chronicle, prepaid envelopes are ones in which postage has already been paid and thus require no additional postage to be affixed before being mailed. All a customer has to do is drop the envelope into the mail, and it is delivered to the original company.
In order for a company to send prepaid mail, it must first purchase a permit. The company must also ensure that whatever is being sent out as prepaid mail conforms with guidelines set by the post office. The post office keeps track of the mail and only charges the company for the mail that is returned.