Where does your coupon go after you redeem it?

Did you ever wonder what happens to your manufacturer's coupon after you give it to the cashier at the grocery store?

A Frugal Follies reader asked me that question recently, and I have to say, I wasn't sure.  I knew that coupons generally state that the manufacturer will pay the store the coupon value plus a handling fee, but I didn't know how that actually happens.

So, I did an Internet search, and found this article from How Stuff Works.

Here's a summary of the process of how the store is reimbursed for your coupon.  Specific details might be different for each store, but this is a typical way:

• At the end of the day, the coupons collected by each cashier are totaled up.  Manufacturer's coupons are separated from store coupons, and all the manufacturer's coupons are sent to the store's corporate headquarters.
• A headquarters employee takes all the coupons received from the all of the store branches and sends them to a separate company which specializes in redeeming coupons.
• The coupon redemption company sorts the coupons by manufacturer, and separates out the scanable ones from ones that cannot be scanned due to rips or other damage that has occurred during handling.   There is so much hands-on work at this step that some coupon redemption companies outsource this work to other companies - and some of the outsourcing is done to companies outside the United States!  Yes, your coupon might actually end up in Mexico or another country.
• Once all the coupons are sorted by manufacturer, they are totaled up (either by scanning the UPC or by hand for the damaged ones).  The coupon redemption company then sends the coupons to the manufacturer along with an invoice.
• Then, the manufacturer either pays the store directly, which will then give the coupon redemption company the handling fees, or the manufacturer pays the coupon redemption company, which takes its handling fee and passes the rest on to the store.
• The manufacturer will also total up the coupons received to make sure that no errors, accidental or intentional, have occured.  So the coupons may be sent again to an outside company to be counted and totaled. 

That's a lot of work for a lot of companies so that you can save money on your groceries!  That's why I think supermarkets will more and more go to smartphone-based coupons or services like Cellfire, where you can download your coupons to your store rewards card - and the store will avoid all of the costs of redeeming a paper coupon. 

So your coupons have quite a journey ahead of them once you give them to the cashier!