When a store accepts a manufacturer's coupon it is giving up cash that someone else has promised to repay. The settlement process behind that promise explains the rules attached to the paper.
The retailer is reimbursed, not the shopper
At the till the store reduces the price and takes the coupon as an asset. The manufacturer later pays the face value plus a handling fee for processing it.
The store's margin on the sale is therefore protected, which is why it can accept a discount it did not fund.
The handling fee also means processing coupons is a small business in itself rather than a favour to the manufacturer.
Clearing houses sit between the parties
Coupons are collected, counted and sent to a clearing agent that validates them against the issuing terms and invoices the manufacturer.
Settlement takes weeks, and the agent takes a share, so the true cost to the manufacturer exceeds the face value considerably.
Digital coupons shortcut much of this by matching at the point of sale, which is a large part of why they have displaced paper.
Strict wording protects the reimbursement
A coupon that does not match its stated terms, wrong size, wrong variant, expired, may be rejected by the clearing agent and the store absorbs the loss.
That risk is why staff enforce conditions that appear pedantic, such as a specific pack size when a similar one is on the shelf.
It also explains why terms are printed in detail on something worth a small amount, since the wording is the contract that triggers payment.
Coupons are marketing spend with measurement attached
A manufacturer issues coupons to bring new users to a product or to defend against a competitor's promotion, and redemption rates are tracked closely.
Because each coupon carries codes identifying its campaign and source, the response can be measured in a way general advertising cannot be.
Low redemption is not necessarily failure, since the coupon also acts as an advertisement wherever it appears.
Fraud shapes the design
Coupon fraud, through copying, misredemption or fabricated submissions, is a persistent problem for issuers and clearing agents.
Barcodes encode the product, value and expiry, and systems verify the matching item is actually in the basket before the discount applies.
Account-linked digital offers go further by tying the coupon to a person, which removes transferability and is why they cannot simply be passed to a friend.