Behind SKUx’s Bid To Turn Coupons Into Digital Currency

In a bid to help brands and retailers counter fraud, counterfeiting, and misredemption losses from coupons, all of which can total more than $100 million annually, fintech SKUx early Tuesday introduced SKUPay. The application allows brands to replace paper and digital coupons with serialized digital offers that have individualized tracking information to ensure one-time-only redemption.   

By reducing the redemption risks around paper and digital coupons, SKUPay enables brands and retailers to engage consumers digitally one-on-one, rather than creating marketing campaigns that use coupons sent en masse to attract new customers. SKUx argues. Incentives created through SKUPay can be targeted down to the product SKU or UPC code and are redeemable wherever mobile payments are accepted.

One advantage of SKUPay is that it prevents marketers from going over budget through accurate tracking of redemption rates for an offer. Typically, marketers can only predict redemption rates for coupons sent out en masse, which means they can go over budget if their redemption rate forecasts are off target, since settlement can take weeks or months. With SKUPay, marketers can set a budget for their promotion and shut down the promotion once redemption rates have exhausted the budget, SKUx says. They can also tweak the offer and budget mid-campaign based on redemption rates. 

Offers generated using SKUPay can be made readily available to consumers through a variety of channels, including mobile devices and email. When a serialized offer created using SKUPay is redeemed, the SKU platform updates to reflect redemption and takes that specific coupon out of circulation. Settlement for redeemed offers occurs daily.  

“Coupons are essentially IOUs, because payment [to the merchant] is processed and managed after the fact,” says Bobby Tinsley, executive vice president and co-founder of SKUx. “With SKUPay, coupons are tender, because retailers can be reimbursed daily, not in weeks or months, since settlement rides the payment rails.”

A significant portion of the fraud that occurs with coupons is unintentional, Tinsley says, since it often occurs when a consumer mistakenly uses a coupon for the wrong product or uses an expired coupon that is unintentionally accepted by the merchant. Still, criminals have turned coupon fraud into a thriving industry, Tinsley adds. 

With digitalization reinventing how merchants sell and interact with consumers, sellers need to take a harder look at the cost-effectiveness and efficiencies around coupons, Tinsley says. “SKUPay is built for the future of retail, not the past,” he adds.