TRADING STAMP

any of the printed stamps of value given as a premium by retail dealers to customers and redeemable for cash or merchandise from a trading stamp company when accumulated in specified amounts. The retailer purchases the stamps from the trading stamp company at a cost usually amounting to about 2 to 3 percent of total sales. Trading stamps existed in the United States and Great Britain in the late 19th century but did not become popular in the United States until the 1930s and in Great Britain until the 1960s. They also became well established in Japan during the '60s. In some companies stamps are redeemable for bank deposits rather than merchandise. The introduction of a stamp plan by one merchant may enable him to draw customers away from his competitors; if they respond with comparable plans, however, the efforts are likely to cancel each other out. The cost of the stamps is a merchandising expense, passed on to consumers through higher prices.