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I hope you never feel bad about using coupons. Even though cashiers sometimes grumble, the stores are NOT getting shortchanged.
Because — spoiler alert — coupons are as good as cash to them even though there’s a process they go through in order to get paid.
It’s kind of like a coupon life cycle. Here’s how it goes:
Step 1: Shoppers hand coupons to store cashiers.
A cashier scans coupons when you pay and puts them in something like a cash drawer.
They’re generally responsible for counting the value of the coupons in addition to the cash in their till at the end of their shift.
Step 2: Store managers mail coupons to headquarters or a coupon clearinghouse.
Whether the store manager collects coupons once a week or more often, and whether they send the coupons to their own store headquarters or straight to a third-party clearinghouse depends on each store. But soon after you pay with a coupon, it ends up on a clearinghouse conveyor belt.
Clearinghouses are huge centers where coupon values are scanned and totaled so stores can get paid by manufacturers. Many clearinghouses are located in Mexico, where coupons are sorted.
Think: Kroger submits a batch of coupons, and clearinghouses sort the Procter and Gamble coupons from the General Mills, Kraft, and Unilever coupons.
Step 3: Clearinghouses give manufacturers a total amount to pay the store.
After coupons are sorted, scanned and totaled at clearinghouses, a total reimbursement value is determined.
Clearinghouses provide a total amount manufacturers owe to each store.
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Step 4: Manufacturers pay stores (like Kroger).
Once a manufacturer learns what they owe each store, they cut a check — either to the regional office or to the individual store, depending on how the coupons were sent. This whole redemption process generally takes one to two months.
Step 5: Manufacturers issue new coupons for Sunday newspaper inserts.
This step doesn’t necessarily happen after Step 4 — it’s more likely to happen once a week, regardless of coupon payout to stores, but it’s part of the coupon life cycle.
New coupons are born every week in the Sunday newspaper inserts and online at Coupons.com. Of course, this is where you get your hot little hands on them, and the entire process starts over again.
So, coupons are like cash to stores. Fine. But how do manufacturers make money issuing coupon discounts?
Manufacturers make money because they’re hoping customers will continue to buy a product they otherwise wouldn’t have tried without a coupon.
Think of it — coupons are for name-brand items. It’s a great marketing strategy for manufacturers.
What about digital coupons? Surely those don’t get sent to clearinghouses.
Surprise — in a sense, they do. If we are just talking about manufacturers’ coupons, which we are, all digital coupons must be printed to be redeemed.
In essence, manufacturers’ digital coupons are actually what we call “printables.”
How do manufacturers know stores aren’t just clipping and submitting coupons in order to get paid?
Well first, this would be fraud and most stores don’t want to break the law. But manufacturers ask stores to provide “proof of purchase” for nearly all types of coupons.
This includes supplier information, product purchase receipts, and product movement reports.
Who pays the clearinghouses?
Manufacturer coupons provide a handling fee, usually around $0.08.
If a small grocery store handles, sorts, totals, and invoices the manufacturer on its own, that store keeps the handling fee in addition to the coupon value as reimbursed by the manufacturer.
But if a store uses a clearinghouse as addressed above, the clearinghouse cost is covered by the handling fee, and the store is reimbursed for the coupon’s face value only.