How UPC Bar Codes Work

What is a Coupon Code?
UPC code from a box of Post Honey Nut Shredded Wheat
UPC code from a box of Post Honey Nut Shredded Wheat
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The coupon code is interesting (number system character 5). If you have ever wondered how the scanner can read a coupon and reject it if you haven't bought the product, here's your explanation.

Coupon code for Post Honey Nut Shredded Wheat
©2000 HowStuffWorks

If you look at the coupon code, you can see that the coupon's bar code starts with a 5 to indicate that it is a coupon. The 43000 is Post's manufacturer ID. The next three digits (186) are called the family code. The next two digits (70) are a value code. The final digit is the normal check digit.

The family code and value code are set up arbitrarily by the UPC coordinator for the manufacturer. It must be done that way because a coupon will often be usable for a whole family of products. For example, a coupon might be good for four different kinds of soap made by the same manufacturer. In the same way, the value code represents the value of the coupon arbitrarily. The manufacturer sends the retailer the data that tells the retailer's computer exactly which products fit the family code, and exactly how much to take off. When the coupon is scanned, the POS computer:

  1. Decodes the family code
  2. Checks to make sure the customer purchased an item from the family
  3. Decodes the value code
  4. Sends the discount back to the cash register

The next time you go to the store, pick up a product -- any product. Look at its UPC code: Now you know what it means!