A manufacturer coupon costs the shop nothing, because the shop is reimbursed by the brand that issued it. The settlement chain behind that explains the small print.
Two different kinds of coupon
A retailer coupon is a discount the shop funds itself, and it reduces the retailer's own margin on the transaction directly.
A manufacturer coupon is funded by the brand, and the retailer recovers the face value plus a handling allowance after the coupon is processed.
The distinction determines who bears the cost, which is why the two types are often allowed to be used together on the same product.
How reimbursement actually works
Redeemed coupons are counted and submitted to a clearing house, which sorts them by issuer, verifies them and invoices each brand on the retailer's behalf.
The brand pays the face value plus the agreed handling fee, and that fee compensates the retailer for the administrative work of processing paper.
The cycle takes time, so a retailer accepting a coupon is extending credit until the settlement clears, which is one reason terms are enforced carefully.
What the conditions on the back are protecting
Wording specifying the exact product, size and quantity exists because the brand will only reimburse against the item it intended to promote.
Expiry dates limit the brand's exposure, since an open-ended liability would sit on its accounts indefinitely with no way to forecast it.
Statements about cash value and transferability address fraud, because coupons that could be exchanged for money would function as an unregulated currency.
Why brands issue them at all
A coupon reaches price-sensitive shoppers without lowering the shelf price for everyone, so the brand discounts only where the discount changes a decision.
It also generates trial for new products, which is the hardest thing to buy with advertising alone and the main reason coupons appear on launches.
Redemption rates are measurable, so the brand learns which channels, which offers and which regions responded, and it can plan the next campaign against that.
The shift to digital redemption
Loading a coupon to a loyalty account removes the paper handling, the clearing house delay and most of the fraud exposure at once.
It also identifies the redeemer, which turns an anonymous discount into a record the brand and the retailer can both use for targeting.
Paper persists mainly where reach matters more than data, particularly in printed circulars and on packaging, which reach households no digital scheme covers.