The Future of Coupon Redemption:
Innovations and Legislative Challenges
While many shoppers are used to whipping out their smartphones to search for digital deals or scan the web for discount codes, the world of coupons still looks strikingly similar to what your parents experienced years ago: Take a paper coupon to the register, hand it over to the cashier, and look for the savings on your receipt. The good news is, the coupon industry, along with coupon redemption services, is in the process of rolling out some of the biggest innovations we’ve seen in decades, offering exciting benefits for both manufacturers and shoppers.
Key Leadership Innovations in Coupon Redemption Services
As the industry undergoes these changes, lawmakers nationwide are starting to take a look at how coupons are delivered to ensure equity for all shoppers. Manufacturers and retailers will need to understand the promise of innovation, while ensuring they are up to speed on potential legislative changes that could impact their businesses at both state and federal levels.
Let’s start with the Universal Coupon, (AI)8112. This is a monumental shift, allowing manufacturers to offer both paper and digital coupons that can be used in any store, are single-use, and validated at the point of sale through The Coupon Bureau. Once validated, the customer receives their discount, and the data is sent to a third party for immediate reconciliation.
It’s a win for shoppers because it allows them to use either a digital or paper version of the coupon at any retailer, thanks to the single-use code preventing the coupon from being shared multiple times. For the retailer, the win is rapid reconciliation. For manufacturers, the rewards are immense. The single-use code can dramatically reduce fraud and provide data to measure the success of a campaign. Because it’s electronically validated, it also creates processing efficiencies.
The Impact of Electronic Clearing in Coupon Redemption
Another innovation, electronic clearing, is a more streamlined reconciliation process leveraging the retailer’s point-of-sale (POS) system. Shoppers present their coupon at the POS, where the system creates and sends a digital file of the coupon and transaction details to a clearinghouse for faster processing. The experience remains the same for the shopper, but the retailer benefits from quicker reimbursement compared to traditional methods. It’s also a win for manufacturers who would no longer pay to ship paper coupons to a clearinghouse.
Legislative Considerations for Coupon Industry Innovations
While the march toward digital seems inevitable, driven by shopper preferences as well as manufacturers, lawmakers in some states are concerned that digital-only discounts could exclude shoppers who either don’t have access to the necessary technology or find the process difficult to understand.
For example, a large grocery chain uses digital coupons within its store app. To get the discount, shoppers must first “clip” and save the digital coupons, which has proven confusing for some less tech-savvy shoppers. Last year, legislation introduced in New Jersey requiring retailers offering digital coupons to make an in-store alternative available didn’t pass after opposition from business groups. The bill has been re-introduced this year.
States such as Illinois, Massachusetts, Rhode Island, and Washington have also been considering similar legislation. In Washington, a bill currently in the state legislature would mandate all grocery shoppers automatically receive a discount on any digital coupon item, whether or not they present the coupon.
The Future of Digital Coupons: Opportunities and Challenges
On the federal level, over a dozen House members, backed by consumer groups, signed a letter delivered to the Federal Trade Commission in Fall 2023, urging an investigation into potential harm caused by store-issued digital coupons on consumers who can’t access the discounts.
Legislators’ scrutiny of coupons underscores their continued importance in marketing strategies. A 2023 Capitol One survey found nearly 178 million U.S. adults have redeemed digital coupons, and 86% of shoppers said they would be more likely to try a new business because of a coupon.
Manufacturers, vendor partners, and retailers should monitor legislative efforts to understand how they might impact digital coupons. However, nothing proposed to date should stop brands or retailers from adopting either the universal coupon or electronic clearing, which allow for both digital and paper coupons.
Adapting to Change in the Coupon Industry
An industry not known for innovation is suddenly finding itself at the crux of major advancements that offer benefits to manufacturers, consumers, and retailers alike. Manufacturers and retailers may need to be nimbler to take advantage of technological advancements while staying compliant with state laws. While change can be disruptive, what is happening now in the coupon industry represents exciting steps forward and highlights the value shoppers place on these promotions.
Contact us today to learn more about how Arrowhead can help you navigate the evolving coupon landscape and stay ahead of industry changes.
