Legacy processes for offering, accepting, and using coupons are about to give way to a modern approach. With consumers doing more of their shopping with mobile devices, the legacy coupon standard, (AI) 8110, isn’t meeting the industry’s needs. Moreover, that standard is also increasingly vulnerable to fraud. A new universal coupon standard (A1) 8112 from FMI, the food industry association, and the Consumer Brands Association (CBA) will help decrease risks and enhance experiences for merchants and consumers.
(AI) 8112 features a new universal digital coupon Positive Offer file to validate single-use coupons in real time. Originally only available on mobile, this file is hosted by The Coupon Bureau (TCB) and can now be used on any medium.
Overcoming Challenges with the New Universal Coupon Standard
It’s difficult to control and manage paper coupons. They’ve always been vulnerable to theft, copying, and forging. Furthermore, advances in scanning and printing technology have made it increasingly difficult for consumer packaged goods (CPG) manufacturers to make fraud-resistant coupons. With $2.7 billion in coupons redeemed per year, this kind of fraud can be very expensive for the industry.
Additionally, collecting paper coupons and submitting them for reimbursement is time-consuming for merchants. Moreover, merchants often have no idea whether or not they will receive the total reimbursement they’re counting on for the discounts they have already given to their customers.
The new universal coupon standard helps CPG companies offer discounts through coupons more securely and lets merchants know at the point of sale that the offer is valid and they’ll receive funds to cover the discount. Here’s how it works:
- Coupons are available to consumers in digital format that they can store on their smartphones or in mobile wallets. CPG companies also have the option to include coupons in newspapers, magazines, or flyers. They can also use a shelf talker to distribute coupons when a customer is looking at the product on a shelf, allowing them to tailor offers to customers interested in their products.
- At the checkout, the consumer scans the coupon. Some systems are available that allow the customer using electronic coupons to create a code that shares data on all coupons they want to redeem rather than scanning them one by one.
- A solution designed for Universal Coupon acceptance immediately verifies if the coupon is valid.
- The solution also initiates reimbursement, eliminating the need for the merchant to count, calculate discounts, and send requests for reimbursement manually.
Consumers’ Response to the New Standard
While the industry is still in the early stages of adoption, there is some promising data. A study at the University of Illinois Geis School of Business in partnership with the Association of Wholesale Grocers reviewed real, anonymized coupon usage data. Key findings include:
- Customers who used digital coupons checked out with larger basket sizes than those who did not.
- When consumers used a digital coupon to purchase a product, they were more likely to buy that same product again, even without any coupon.
- Usage of digital coupons is steady year on year, with usage increasing at the end of year holiday shopping season.
Takeaways for the Point of Sale and Payment Industry
With CPG brands behind the change, obvious time-savings and decreased risks for merchants, and greater convenience for consumers, adoption of the new Universal Coupon standard will become mainstream.
Total point of sale and payment solutions must include the ability to accept these coupons and share data with solutions that validate them in real time and automate reimbursement. Furthermore, with a predicted rapid adoption rate, the time to act is now.