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Trading stamps are small paper coupons given to customers by merchants in loyalty marketing programs that predate the modern loyalty card. Like the similarly-issued retailer coupons, these stamps only had a minimal cash value of a few mils (hundredths of a cent) individually, but when a customer accumulated a number of them, they could be exchanged with the trading stamp company (usually a third-party issuer of the stamps) for premiums, such as toys, personal items, housewares, furniture and appliances.
The practice started in the 1890s, at first given only to customers who paid for purchases in cash, to reward those who did not purchase on credit. It grew with the spread of chain gasoline stations in the early 1910s and the then-new industry of chain supermarkets in the 1920s, and merchants found it more profitable to award them to all customers. Trading stamps were at their most popular from the 1930s through the 1960s.
An example of the value of trading stamps would be during the 1970s and 1980s where the typical rate issued by a merchant was one stamp for each 10¢ of merchandise purchased. A typical book took approximately 1200 stamps to fill, or the equivalent of US $120.00 in purchases.
In the United States, the most popular brand of trading stamps was "S&H Green Stamps", sometimes informally simply known as "green stamps". Other larger brands included "Top Value Stamps", "Gold Bond Stamps", "Plaid Stamps", "Blue Chip Stamps", "Buccaneer Stamps", and "Gold Strike Stamps". "Texas Gold Stamps" were given away in their namesake state mainly by the H-E-B grocery store chain, and Mahalo stamps in Hawaii.
Merchants would pay a third-party trading stamp company for the stamps, and then would advertise that they gave away trading stamps with purchases. The intent of this was to get customers to be loyal to the merchant, so that they would continue shopping there to obtain enough stamps to redeem for merchandise. Customers would fill books with stamps, and take the books to a trading stamp company redemption center to exchange them for premiums. Books could also be sent to the trading stamp company in exchange for premium merchandise via mail order catalogs.
In the early 1960s, the S&H Green Stamps company boasted that it printed more stamps annually than the number of postage stamps printed by the US government.
By the 1960s, trading stamps had spread to other countries. Entrepreneur Richard Tompkins established Green Shield Stamps in the United Kingdom (independent of S&H Green Stamps, but with a similar trademark), selling stamps at filling stations, and signing up Tesco supermarkets to the franchise in 1963. By 1965, the British co-operative movement was offering trading stamps as a new means of allocating patronage dividends to its consumer members.
The bottom fell out of the trading stamp business in 1965, when many supermarkets stopped issuing stamps altogether and started spending more money to advertise lower prices. Their role has been subsumed by rewards programs offered by credit card companies and other loyalty programs, such as grocery "Preferred Customer" cards.