Fintech startup SKUx is looking to create a new category of digital payment to address rampant fraud in online coupons, offers and promotions by using a distributed public ledger system to create serialized, one-time payments that can be tracked and traced. The digital currency, called SKUpay, is used to create offers across channels, including text, QR code, social media, mobile, on-pack and display, and drive daily settlement of payments. Offers and settlements can be managed in near real time to optimize campaigns and control costs.
Each one-time payment is serialized and fully trackable, eliminating fraud and mis-redemption. Retailers can settle transactions without using a coupon clearinghouse process. Through a partnership, SKUx's smart incentives program runs on Hedera Hashgraph's distributed public ledger, providing a secure network to log and verify all transactions and data.
In March, SKUx expanded its partnership with payment platform Blackhawk Network to power digitization and automation of offer delivery, redemption, and settlement. To illustrate how broken coupons are in the digital era, Bobby Tinsley, a co-founder and EVP of SKUx, used the analogy of rolling into a grocery checkout lane with £100 worth of goods and having your card declined. Estimates of losses from coupon fraud, often in the form of chargebacks, range from £300 million to £600 million per year.
"The clerk doesn't say, 'that's ok, you can get me next time,'" Tinsley said. "If you have no funds, you walk out. That standardization has not existed with coupons. It's literally, 'ok, we'll just charge back the brand later.' They're forced to pay the bank, but the brand isn't sure if the offer is valid, or past the redemption window.
In CPG, coupons don't work, they weren't designed for a digital environment." While initially targeting grocery and CPG, Tinsley said SKUpay can be used in any type of category using coupons or rebates today, including beauty and health and consumer electronics, among others. "In categories like electronics, you can drive spending off things you couldn't do traditionally," he said. "Right now, the rebate process is super painful, requiring consumers to jump through 100 hoops.
With a real-time rebate, retailers can provide incentives and higher-value offers. It's not limited to CPG and grocery, it's applicable to all retailers looking to drive one-to-one payments." Coupon fraud hit the big screen last month via "Queenpins" about the real-life story of a multi-million-dollar coupon ring run by three women in Arizona that was broken up by a postal inspector in 2012.
Tinsley, who worked for a decade as a recording artist in Nashville, founded SKUx in 2018 after switching his focus to investing and startups. Co-founder and CEO Jim Sampey is the former president of coupon giant Valpak, while co-founder and EVP Kenny Douglas is an entrepreneur who comes from fintech, payments, technology and blockchain. The fourth co-founder, Bob Zaccardo, is an entrepreneur who worked in the sports, retail and entertainment industries.
"Looking at the industry, we saw how coupons and promotions were working, with all the fraud and other issues plaguing it, including a lack of ROI and traceability," Tinsley said. "We thought, how can we do this better?
We saw that digital currency as a one-to-one payment like MasterCard and Visa was the future."