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Fighting coupon mis-redemption

Fighting coupon mis-redemption
Tuesday April 23 2013

Brendan McKeown, voucher and coupon data management and financial clearing technology expert, highlights the benefits to retailers of adopting e-clearing

For many years coupons have not played an extensive role in the shopping experience, but consumer appetite has now increased considerably. The latest industry redemption figures reveal 448 million coupons were redeemed in 2012, up 33% from the previous year and worth £1.6 billion.

However, current coupon handling and clearing techniques are not keeping up with this huge demand and an increasingly fast-paced business environment, according to Brendan McKeown, IT director at UK coupon and voucher services provider Valassis.

He outlined the process at the moment, as follows: cashiers accept coupons, scan them and ensure the amount that has been accepted and the amount redeemed tally together.  The coupons are then taken to a clearing house, where they are counted, scanned and relevant data captured, before being settled and cleared. 

“As coupons are counted, processed, settled and cleared manually, there is a real opportunity for a more streamlined process to be put in place to benefit both retailer and manufacturer,” McKeown said.

Electronic coupon clearing (e-clearing) offers a solution that enables retailers to scan and validate coupons, he added, leading to accurate and quicker redemption and settlement for retailers. 

“The process of e-clearing is carried out via two methods,” he explained. “‘Real time clearing’ involves retailers scanning and validating coupons in-store via a real time database which connects to the till. This recognises the coupon and validates it, performing a match between the coupon and the product. An alternative current method is ‘batch clearing’ where the coupon business rules are stored in the promotional engine and retrieved upon presentation of a coupon.” 

Spotlight on benefits to retailers

The e-clearing process is certainly quicker than the current processing methods and is set to bring many benefits to both retailers and consumers. “As the coupon processing cycle is considerably shorter and therefore the financial settlement process between coupon issuers and retailers can be much quicker, retailers will be paid back faster,” McKeown added. Retailers can also take advantage of improved cash flow and reduced administration costs. “The faster processing also means that retailers can access data quickly and benefit from greater security and efficiency in the coupon redemption process. From the consumer’s point of view, the check out process is shortened resulting in reduced waiting time and an improved shopping experience overall.”

He also said that e-clearing enables retailers to redeem their own funded coupons securely as well as brand manufacturer funded coupons in any format – be it paper, loyalty card or mobile coupons – and to track and trace results in real time. This results in faster access to data providing insight and analysis. Information such as details about the product, the retailer and time of redemption, in turn enables the manufacturer to measure the true effectiveness of their marketing campaign and customise future programmes. 

“What’s more, the use of e-clearing brings an environmental benefit,” he added. “By eliminating the need for coupon transportation from the retailer to a clearing house, carbon emissions will be significantly reduced as will back office cash reconciliation and administration costs.” 

Tackling £1.5m losses from coupon fraud

Fraud and mis-redemptions are reduced by the process of instant product validation – immediate feedback from a central database avoids multiple or fraudulent usage. Here, McKeown argued: “Retailers stand to benefit from this as it helps to avoid delays in their repayment. Fraud is a significant area of concern for retailers particularly as, through our work with the majority of the UK’s retailers, we have identified a sharp rise in the number of high value fraudulent consumer care money off vouchers being redeemed at retailers. UK retailers are currently losing in the region of £1.5m per annum due to this fraud alone. This is important today more than ever as brands face challenges with rogue internet sellers.”

McKeown said the UK is currently lagging behind the rest of Europe when it comes to e-clearing, notably Spain, Germany and Italy. One exception is Tesco, which currently employs e-clearing technology to handle Tesco’s Clubcard coupon redemptions. 

“Retailers need to carefully consider the solutions available and consider what is best for their business. Many are understandably unwilling to invest money and resources in bespoke technology that may become quickly outdated,” he advised. “Off-the-shelf solutions represent a better option for retailers as they often require less financial investment. 

“E-clearing brings many benefits to all parties involved at every stage of coupon redemption – retailer, manufacturer and customer,” he concluded. “Retailers need to be aware of the rapid expansion of the coupon market, which has grown by 104% in the last five years, and its implications for the retail sector. In the face of increasing coupon use, e-clearing is an issue that retailers undoubtedly need to have high on their agenda.” 

Tagged as: Coupon | voucher | mis-redemption | fraud | loss prevention | security | Valassis | e-clearing | Tesco | Clubcard