Last month, Popwallet had the privilege of attending the annual conference of the Association of Coupon Professionals (ACP). A longstanding mainstay of the coupon industry, the conference is well attended by major retailers, manufacturers, clearinghouses and technology vendors. Popwallet was one of a host of new ACP members at the event, reflecting the fact that the coupon industry as a whole continues to thrive and, importantly, evolve.
The ACP acts as a bridging organization between an alphabet soup of industry groups, including the Grocery Manufacturers Association (GMA), Food Marketing Institute (FMI), GS1 (the standards body responsible for, among other things, the barcodes you see on printed manufacturer coupons today, and whose name I am reliably informed is not actually an acronym) and the Joint Industry Coupon Committee (JICC). All of these play a crucial role in the way coupons work today.
The conference's theme, "Creating Harmony," reflected the need for all of these industry participants to collaborate on the opportunities ahead, not least of which is the work toward what is being labelled the "universal paperless coupon" standard. At present, there is no universally accepted digital equivalent of paper manufacturer coupons that can be redeemed at any retailer. The coupon industry is in many ways startlingly low-tech: once redeemed by consumers, paper coupons are collected by retailers and must be shipped to a clearinghouse for counting and processing before the retailer can be reimbursed for their face value. Because of this, there is no way for manufacturer coupons to be generically applied to online purchase transactions, a scenario which has led to many large retailers each requiring use of their own branded mobile apps that facilitate coupons valid only at their own stores.
The world of digital coupons is on a path toward rapid change, however. The JICC and GS1 are spearheading the effort to establish a new standard, a process that began in earnest last year with the announcement of a new Application Identifier for paperless coupons. An Application Identifier is the first step in defining a method that allows manufacturers and retailers to recognize a specific set of codes (in this case, codes starting with the numbers 8112) and agree on their meaning. Today's paper coupon barcodes (to use their full name, GS1 Databar Stacked), in contrast, use the 8110 Application Identifier. The new identifier will allow for not only the recognition and handling of paperless coupons -- including those to be used with mobile wallets -- but also a wide range of new functionality that is only possible in the paperless format.
While the announcement of the new Application Identifier has been greeted with enthusiasm, it is only the first step toward the implementation of a new standard. Work is in progress to fully define the data string for 8112, a process that is expected to be complete in Q3 2017. In existing paper coupons, the data string encodes important details like the specific product or product families that are applicable, the valid redemption dates of the coupon, and other business rules around the usage of the coupon. This encoding is a universal language that retailers' point of sale systems can recognize to help decide whether to accept a coupon. 8112 is expected to provide many of these same features as well as important extensions that serve to prevent fraud and enhance the consumer experience in the digital arena by leveraging real-time validation technology.
The JICC has urged industry participants not to think of 8112 as a new type of barcode, but rather the digital protocol whereby mobile devices -- most immediately, Apple and Android smartphones, but conceivably smartwatches, voice assistants like the Amazon Echo and Google Home, loyalty programs and more -- can store coupon offers and communicate them during a purchase transaction. This communication could take a number of forms, including contactless NFC, a feature that is now prevalent on the majority of smartphones on the market.
Once the data string is finalized, the last remaining hurdle will be retailer implementation. This will, in most cases, require a software upgrade to the point of sale systems that connect each till to in-store systems. The time to roll out upgrades will vary for each retailer, so we would expect to see the universal paperless coupon standard begin to be phased in to major stores in 2018.
As this wave of new possibilities hits, expect to see a sea change in the way consumers interact directly with brands, driven by the built-in capabilities of mobile wallets like Apple Wallet, Android Pay and Samsung Pay. We are excited to be working with the coupon industry to bring these new standards to fruition.