The coupon industry changed shopping by turning discounts into a marketing tool. Coupons began with Coca-Cola’s free-drink tickets in 1888, moved online by the mid-1990s and today include promo codes, app offers, cashback and gift cards. Shoppers save on planned purchases, while brands use coupons to attract new customers and measure price sensitivity.
Key Takeaways
- A coupon is a ticket, document or code redeemed for a discount or rebate; most are issued by manufacturers or retailers as sales promotions.
- Coca-Cola’s “free glass” coupon, first issued in 1888, is the earliest documented coupon.
- By the mid-1990s couponing had moved to the internet; promo codes, mobile coupons, apps and cashback sites followed.
- Gift cards are regulated: in the US, funds generally cannot expire for at least five years; in India, an RBI-regulated gift card is capped at Rs 10,000 per instrument.
- Anyone who demands payment in gift cards is a scammer, according to the US Federal Trade Commission.
Shopping habits around the world have changed considerably since couponing moved from newspaper clippings to the internet in the mid-1990s. Many people now take a coupon-driven approach to online shopping, and to buying in malls and brand outlets. As shopping channels have diversified, coupons, promo codes and cashback offers have become part of how many buyers decide where to spend.
Coupon Changed the Way You Shop
As shoppers gained access to more choice, coupons became one of the most convenient ways to save. Offers from payment apps such as Paytm (an Indian digital-payments company founded in August 2010 and based in Noida) and from coupon websites give customers another way to cut the price of a purchase.
Coupons, vouchers and gift cards are used as gifts, rewards and incentives. A gift card lets the giver reward someone without guessing their personal taste, because the recipient chooses what to buy.
Coupons have changed the way people shop. Employers and organizations also hand out gift cards and vouchers as rewards, letting recipients shop for themselves.
Coupons are most useful when they apply to something the shopper already planned to buy. Depending on the terms, they can be redeemed at malls, brand outlets or online stores.
Used this way, coupons stretch a household budget; an offer that tempts a shopper into an unplanned purchase saves nothing.
Why coupons and gift vouchers work as gifts
Many people no longer have hours to spend hunting for the right gift. Gift cards relieve the giver of selecting a specific item, which is one reason they became so popular. Individual shoppers, employers and team leaders all use coupons and vouchers for this purpose.
Coupons have been constructively used by various brands and they are distributed for promotion, rewards, gifting as well as incentives. Technology has changed how coupons are delivered: online retailers now issue promo codes, discount codes and voucher codes that shoppers type in before completing a purchase.
Many companies also email internet coupons that are redeemed without any paper. Shoppers in many countries can use them, but codes are often limited to a particular country, store, product or date, so the terms matter.
How brands use coupons to win customers
Coupons work both as a discount for shoppers and as advertising for brands. New brands often hand out welcome coupons, launch offers and first-time-customer discounts to persuade shoppers to try their products, hoping they stay as long-term customers.
Coupons can be a useful marketing tool for many companies and of course the consumers who get to shop, avail discounts and be a part of engaging campaigns, products and brands! 🙂
What Is a Coupon?
A coupon is a ticket, document or code that can be redeemed for a financial discount or rebate when buying a product. Coupons are usually issued by manufacturers of consumer packaged goods or by retailers as part of sales promotions, and they are distributed by mail, in newspapers and magazines, by email and social media, directly by stores and through mobile phones. Most coupons carry an expiration date.
Coupons offer several kinds of value: a percentage or fixed discount, free shipping, buy-one-get-one deals, first-time-customer offers, free trials, launch offers, festival offers and free giveaways.
How Did the Coupon Industry Start?
The coupon industry is older than most shoppers assume. These milestones are recorded in the history of couponing:
- 1888: Coca-Cola issued a coupon for a “free glass” of the drink, the earliest documented coupon. Coupons were mailed to potential customers and placed in magazines.
- 1894-1913: An estimated one in nine Americans received a free Coca-Cola in this period, about 8,500,000 free drinks in total.
- 1929: Betty Crocker began a loyalty points program with coupons that could be redeemed for premiums such as flatware; from 1937 the coupons were printed on packages. The program ended in 2006.
- 1986: In Australia, a company called Shopa Docket began printing offers and discounts on the back of shopping receipts.
- Mid-1990s: Couponing moved to the internet, first as “clipless” and later “downloadable” coupons, and then as the promo codes typed in at online checkouts.
Types of Coupons Compared
| Type | Who issues it | How it is redeemed | What to check |
|---|---|---|---|
| Store coupon | The retailer | At that store; some stores also accept competitors’ store coupons | Which branches and products qualify |
| Manufacturer coupon | The product’s maker | At any coupon-accepting store that sells the product | Expiry date and product size or variant |
| Online promo code | Online retailers and brands | Typed in before the sale is finalized | Minimum order value, excluded items, country limits |
| Mobile or app coupon | Retailers, brands and payment apps | Shown on a phone in store or applied in the app | Whether the offer needs a specific payment method |
| Cashback offer | Cashback websites and apps | Paid back after the purchase is confirmed | Tracking rules and when the cashback is paid |
| Gift card or voucher | Retailers, banks and card networks | As stored value at the issuing store, or wherever the network is accepted for general-use cards | Expiry, fees and where it can be used |
Some grocery stores double or even triple the value of coupons on certain days or weeks to bring customers in. Store policies on doubling and on combining coupons differ, so check them before relying on a deal.
Why Do Brands Issue Coupons?
Brands issue coupons for more than goodwill. The main business reasons are:
- Attracting new customers: manufacturer coupons advertise a product to shoppers who have not tried it.
- Measuring price sensitivity: by sending coupons of different values to different groups, a company learns how much a discount changes buying behavior.
- Tracking channels: marketers give different codes to different channels or audiences to compare response rates.
- Targeting markets: coupons can be aimed at regional markets where price competition is strongest.
Cashback websites add another layer. A cashback website pays members a percentage of what they spend through its affiliate links: the retailer pays the site a commission, and after the purchase is confirmed the site shares part of it with the shopper. Well-known US examples include Capital One Shopping, Ibotta, Rakuten Rewards and PayPal Honey. For more on how these services fit together, see this guide to price comparison, coupons and cashback.
Are Gift Cards and Gift Vouchers Regulated?
Gift cards are regulated in several major markets, which makes them safer gifts than they once were. As of October 2026:
- United States: under the federal gift card rules in Regulation E (introduced after the Credit CARD Act of 2009), the funds on a gift certificate, store gift card or general-use prepaid card sold on or after August 22, 2010 cannot expire sooner than five years after issue or after money was last loaded. A dormancy or inactivity fee is allowed only after one year with no activity, and no more than one such fee per calendar month.
- India: the Reserve Bank of India’s Master Directions on Prepaid Payment Instruments (issued August 27, 2021, as updated) cap each gift instrument at Rs 10,000, make it non-reloadable and bar cash-out or fund transfers. All prepaid payment instruments must be valid for at least one year from the date of last loading. The RBI has also published draft revised directions, so check the current rules with the card issuer.
- Canada: under the federal Prepaid Payment Products Regulations, effective May 1, 2014, federally regulated gift cards may not set an expiry date for the funds, and all provinces have passed laws banning expiry dates and fees on gift cards.
Store-specific details such as where a card can be used still vary. This explainer on the eBay gift card shows what one issuer’s terms look like.
Do Coupons Affect Sales Tax?
In the United States, the answer depends on who issued the coupon. A retailer’s coupon reduces the price charged, so it lowers the tax. A manufacturer’s coupon is treated differently by state: in Colorado and New York, manufacturer coupons are taxable because the manufacturer reimburses the retailer, while in Connecticut and Pennsylvania they do reduce the tax the customer pays.
Coupon and Gift Card Scams to Avoid
Gift card demands are a common route to fraud. The US Federal Trade Commission says no real business or government agency will ever tell someone to buy a gift card to pay them. According to the FTC, scammers typically:
- say the payment is urgent and that something terrible will happen if it is not made right away;
- insist on specific cards, such as Google Play, Apple or Amazon, from particular stores, and stay on the phone during the purchase;
- ask for the card number and PIN, which let them take the money loaded on the card.
Anyone who has already paid a scammer with a gift card should contact the card company immediately with the card and receipt details, ask for a refund (the company may be able to freeze unused funds) and, in the US, report it at the FTC’s ReportFraud website. Broader advice is in this guide to safe online shopping.
How to Use Coupons Without Overspending
- Start with a list. Look for coupons on items already planned, not the other way round.
- Read the terms. Check the expiry date, minimum order value, excluded products and whether the code works in your country.
- Get codes from the source. Use the retailer’s own site, app or newsletter, or an established coupon site, and avoid “coupons” that ask for card numbers or passwords.
- Ask about combining. Some stores accept a store coupon and a manufacturer coupon on the same item; others do not.
- Compare the final price. A discount on an inflated price can cost more than another store’s normal price.
- Track cashback. Cashback is shared only after the purchase is confirmed, so keep the order details until it arrives.
For practical techniques, see how to save money with coupons, offers and online deals and how to score the best deals on online shopping sites.
Frequently Asked Questions
What was the first coupon?
The earliest documented coupon is Coca-Cola’s “free glass” coupon, first issued in 1888. The coupons were mailed to potential customers and placed in magazines, and an estimated 8,500,000 free drinks were given out between 1894 and 1913.
What is the difference between a store coupon and a manufacturer coupon?
A store coupon is issued by a retailer and is valid at that retailer, while a manufacturer coupon is issued by the product’s maker and can be used at any coupon-accepting store that carries the product. Some stores also accept competitors’ store coupons.
Do gift cards expire?
In the United States, funds on gift cards sold on or after August 22, 2010 cannot expire sooner than five years after issue or the last reload. In India, RBI rules require prepaid instruments, including gift cards, to be valid for at least one year from the last loading.
How do cashback websites make money?
Cashback websites earn a commission from retailers when members buy through their affiliate links. After the purchase is confirmed, the site shares part of that commission with the shopper as cashback.
Is it safe to pay someone with a gift card?
Paying a stranger, a “government official” or a “tech support” caller with a gift card is not safe. The US Federal Trade Commission says anyone who demands payment by gift card is running a scam, because no real business or government agency asks for it.
