Understanding Coupon Validation: Paper vs. Digital Coupons

Monday March 3^rd, 2025

When setting up coupon offers, it’s essential to understand how retailers validate purchases at the point of sale. The way a coupon is processed depends on whether it’s a paper coupon or a digital-only coupon, and each method has different levels of product specificity.

Paper Coupons: How Retailers Validate Purchases

For paper coupons, we can categorize an offer in your account to reflect target products or product groups. However, retailer POS systems do not scan the full UPC to validate purchases. Instead, they rely on a subset of the product UPC, known as the GS1 Company Prefix (GCP).

What Is a GS1 Company Prefix?

The GS1 Company Prefix (GCP) is a unique set of numbers assigned to a company by GS1, the global organization responsible for barcode standards. This prefix appears at the beginning of all UPCs assigned to a brand’s products and helps retailers identify the manufacturer of an item at checkout.

Here’s an example of how a UPC is structured:

Full UPC-A (12-digit code): 012345678905
GS1 Company Prefix (GCP) extracted by retailer: 012345
Retailers use only the first 6 to 9 digits of a UPC (the GS1 Company Prefix) to determine whether a product is eligible for a coupon. This means:
1. If your company’s GCP is 012345, then all products with UPCs starting with 012345 would be accepted for a coupon that validates based on the GCP—even if you only intended the offer for a single product.
2. This system simplifies processing but may lead to unintended redemptions if you want to limit the coupon to specific products.

Using Family Codes for More Precise Validation

If you need the coupon to be valid only on specific products or groups of products, Family Codes may be a potential solution.

Family Code Set-up

Family Codes are assigned by the manufacturer to group products within a “family” together. A single Family Code can be assigned to multiple products, and POS systems at participating retailers use them to validate that the correct item was purchased.

How Family Codes Work

Family Codes ending in ‘0’ are group-level codes and cause the POS system to allow all products within that group.

For example:

If the coupon Family Code is 110, then all products with Family Codes 111 through 119 are valid.
If the coupon Family Code is 200, then all products with Family Codes 211 through 299 are valid.
Products without a Family Code will only accept coupons with a ‘000’ Family Code.

Example of a Family Code Structure

Family Code Product

111 Cranberry and Almond Granola

112 Blueberry Granola

113 Peanut Butter Granola

121 Blueberry Waffles

122 Strawberry Waffles

211 Chocolate Ice Cream

212 Vanilla Ice Cream

221 Frozen Chocolate Cake

Using this Family Code structure, a manufacturer could create different coupon offers based on levels of validation:

$1.00 off Cranberry and Almond Granola

Coupon is barcoded with Family Code 111
POS allows only Cranberry and Almond Granola

$1.00 off Granola – Any Flavor

Coupon is barcoded with Family Code 110
POS allows any product with Family Codes 111, 112, 113

$1.00 off any Granola or Waffles

Coupon is barcoded with Family Code 100
POS allows products with Family Codes 111, 112, 113, 121, 122

$1.00 off any (Manufacturer Name) product

Coupon is barcoded with Family Code 000
POS allows all products from that manufacturer

Key Considerations for Using Family Codes:

More precise targeting – Helps prevent coupons from being used on unintended products.
Retailer-dependent – Not all retailers validate at the Family Code level.
Additional costs – There are costs associated with setting up and distributing Family Codes.

If you’re interested in implementing Family Codes, we have a detailed guide outlining setup costs and the list of retailers that validate at this level.

Digital-Only Coupons: Targeted Product Validation

If your coupon is digital-only, meaning there is no paper component, then product validation is handled differently. Retailers rely on the partner distributing the digital coupon content—such as retailer loyalty apps—to ensure the coupon is applied only to the correct products.

How Digital Coupons Are Validated

Unlike paper coupons, digital coupons do not rely on GCP or Family Codes for validation.
You provide a list of approved products to your digital coupon provider, who configures the offer to only work on those specific items.
The retailer’s digital coupon system enforces these restrictions at checkout.

For manufacturers looking to avoid unintended redemptions and ensure more control over coupon eligibility, digital-only promotions can be a great option.

Need Help Setting Up Your Coupons?

Understanding these validation methods is crucial for ensuring your coupons work as intended. Whether you’re planning a new promotion or refining your strategy, our team can help you navigate the process and make sure your offers are set up for success.

https://www.gs1us.org/upcs-barcodes-prefixes/what-is-a-prefix